Estate Tax Planning Attorneys
Estate tax planning coordinates the transfer of your assets with your family’s needs, access to funds, and federal and state taxes. Many families fall below the high, indexed federal exemption but still need to consider state taxes. New York and Connecticut impose estate taxes, and New York’s exclusion can disappear when an estate exceeds the applicable threshold. New Jersey no longer has an estate tax, but its inheritance tax applies to certain beneficiaries.
The tools are well developed: lifetime gifts, trusts that remove appreciation from the estate, trusts that hold life insurance, charitable strategies, valuation planning for business and real estate interests, and, for some, a change of domicile. Choosing among them requires weighing tax savings against access to your assets, the income tax step-up at death, and simplicity.
Milvidskiy Law Group P.C. plans estates for families, coordinating with your CPA and financial adviser to align estate and income tax decisions with your family’s goals.
Key Takeaways:
- For 2026 the federal estate and gift tax exemption is $15,000,000 per person, indexed for inflation. New York’s estate tax exclusion is $7,350,000, with a cliff that eliminates the exclusion once the estate exceeds it by more than five percent. Connecticut taxes estates above the federal amount at 12%, capped at $15 million. New Jersey has no estate tax but taxes inheritances passing to certain classes of heirs.
- Estate tax planning should account for liquidity, control, and the income tax step-up in basis. The right plan minimizes total tax, not estate tax alone.
- Married couples have tools that single people do not, including the marital deduction, federal portability, and spousal trusts, and New York couples in particular need to plan around the absence of state portability.
The Landscape in 2026
Federal
The federal estate and gift tax share a single lifetime exemption, called the basic exclusion amount, which the Internal Revenue Service lists at $15,000,000 per person for 2026. Taxable gifts during life reduce what remains at death. A separate exemption of the same size applies to the generation-skipping transfer tax on gifts and bequests to grandchildren and later generations. The annual gift tax exclusion is $19,000 per recipient for 2026; gifts within it do not use exemption and need not be reported. A surviving spouse can elect to carry over a deceased spouse’s unused exemption, which is called portability and requires a timely estate tax return even when no tax is due.
New York
New York imposes an estate tax with a basic exclusion amount of $7,350,000 for deaths in 2026, according to the New York State Department of Taxation and Finance. The exclusion works as a credit that phases out quickly: under the statute, no credit is allowed once the New York taxable estate exceeds 105 percent of the basic exclusion amount, so an estate modestly above the line is taxed on the whole estate, not just the excess. This is the New York cliff, and it makes an estate of a few hundred thousand dollars over the threshold worse off than one at the threshold. New York has no gift tax, but taxable gifts made within three years of death are added back to the estate. New York does not offer portability of a deceased spouse’s unused exclusion, so a married couple’s planning must use the first spouse’s exclusion at the first death or lose it.
Connecticut
Connecticut imposes both an estate tax and a gift tax, the only state in the region to tax lifetime gifts. Under the Connecticut statute, the exemption equals the federal basic exclusion amount, $15,000,000 for 2026, and the tax on the excess is a flat 12%, with total Connecticut estate and gift tax capped at $15 million. Because gifts count against the same exemption, Connecticut residents cannot use lifetime giving to sidestep the state tax the way New Yorkers can.
New Jersey
New Jersey repealed its estate tax for deaths on or after January 1, 2018, according to the New Jersey Division of Taxation. It kept its transfer inheritance tax, which depends on who inherits rather than how much is left. Transfers to a spouse, civil union or domestic partner, children, grandchildren, parents, and grandparents are exempt. Transfers to siblings, sons- and daughters-in-law, and more distant relatives or unrelated individuals are taxed at graduated rates. New Jersey inheritance tax planning therefore focuses on who receives what.
The Tools
Gifts
Annual exclusion gifts to children and grandchildren, direct payments of tuition and medical expenses, and larger gifts that use lifetime exemption remove assets and their future growth from the estate. The trade-off is the loss of the step-up in basis on appreciated property, which is why we give cash and high-basis assets and keep low-basis assets, and why gifting matters more in New York and Connecticut than in New Jersey. The comparison must account for both capital gains and the step-up in basis.
Trusts for a spouse
A credit shelter or bypass trust at the first death uses the first spouse’s New York exclusion, which would otherwise be lost, while giving the survivor income and access. A spousal lifetime access trust does similar work during life, moving assets out of the donor’s estate while the other spouse keeps access. Marital trusts qualify for the marital deduction and let the first spouse control where assets ultimately go, an important consideration in estate planning for blended families and second marriages.
Trusts that shift appreciation
A grantor retained annuity trust and a sale to an intentionally defective grantor trust move the future growth of a business interest, real estate, or investment portfolio to the next generation while you keep the current value or a note. A qualified personal residence trust does the same for a home. Each has a mortality or performance risk that we model before recommending it.
Life insurance
An irrevocable life insurance trust keeps a death benefit out of the taxable estate and gives the executor cash to pay the tax without selling a business or property. It is frequently the answer for a New York estate that is illiquid and near the cliff.
Charitable planning
A charitable remainder trust removes an appreciated asset from the estate, defers the capital gain, and produces income and a deduction. For New York estates hovering near the cliff, a formula bequest to charity can be drafted to give away just enough at death to bring the estate under the threshold, leaving heirs with more than they would receive if the full estate were taxed.
Multigenerational trusts
A dynasty trust funded with generation-skipping exemption keeps assets out of the transfer tax system for as long as state law allows, helps protect beneficiaries from creditors and divorce, and is the destination for most of the techniques above.
Valuation and entities
Interests in family limited partnerships and limited liability companies, and non-voting interests in an operating business, are often valued at a discount for lack of control and marketability. Combined with the trusts above, that discount increases the value that can be transferred for a given amount of exemption. These structures can support business succession planning and transfers of interests in real estate syndications and limited partnerships; when a sale is the exit, an installment sale to a trust may spread the resulting capital gains tax.
Domicile
A New York or Connecticut resident who spends much of the year elsewhere may be able to establish domicile in a state without an estate tax. That is a factual question the taxing authorities examine closely, and it must be done in fact, not on paper. Where a client has homes in more than one state, cross-border estate planning also addresses the laws that apply to property in different jurisdictions.
Coordinating Taxes, Liquidity, and Family Needs
An estate tax plan that ignores income tax can cost more than it saves. Assets given to trusts lose their basis step-up unless swap powers or inclusion drafting recover it. Retirement accounts carry income tax to beneficiaries regardless of estate tax. A plan that ignores liquidity can force the sale of a business or a home to pay the tax nine months after death. A plan that ignores the family can leave a surviving spouse without access or children in conflict. We evaluate estate taxes, income taxes, cash flow, and family goals together, and we revisit the plan when the law or the family changes, through our Client Care Program.
When Estate Tax Planning Is Not the Priority
If your estate, including life insurance and retirement accounts, is comfortably below the New York, Connecticut, and federal thresholds, and you live in New Jersey or will leave your estate to exempt heirs, estate tax techniques will cost you a step-up in basis and simplicity for no benefit. Your plan should focus instead on estate planning for incapacity, probate avoidance, and protection of beneficiaries, together with Medicaid planning for long-term care.
What Our Estate Tax Planning Service Includes
- A projection of federal and state estate tax under your current plan, including the New York cliff, prepared with your CPA and financial adviser.
- Recommendations that weigh estate tax against income tax, liquidity, access, and family goals.
- Drafting of wills, revocable trusts, and the irrevocable trusts the plan calls for, with formula clauses that adapt to changes in the exemption.
- Gift tax returns, portability elections, and generation-skipping allocations.
- Coordination of business agreements, real estate ownership, life insurance, and beneficiary designations with the plan.
- Ongoing review as exemptions change, assets grow, and family circumstances shift.
Schedule an Estate Tax Planning Consultation
If your estate approaches the New York, Connecticut, or federal thresholds, or you are unsure whether it does once life insurance and retirement accounts are counted, a projection is the place to start. Our attorneys practice in New York, New Jersey, and Connecticut. Contact Milvidskiy Law Group P.C. to schedule a consultation.
This page is provided for general informational purposes only and does not constitute legal advice. Laws differ by state and change over time. Tax figures are for the year shown and change annually. For advice about your situation, consult a qualified attorney.
Frequently Asked Questions
What is the federal estate tax exemption for 2026?
The Internal Revenue Service lists the basic exclusion amount at $15,000,000 per person for 2026. The exemption is shared between lifetime taxable gifts and transfers at death and is indexed for inflation. A separate exemption of the same amount applies to the generation-skipping transfer tax. The figure is adjusted each year.
What is the New York estate tax cliff?
New York’s estate tax exclusion is $7,350,000 for deaths in 2026, but it operates as a credit that phases out. Under the statute, no credit is allowed once the New York taxable estate exceeds 105 percent of the exclusion, so an estate a few hundred thousand dollars over the line is taxed on its entire value rather than on the excess. Planning for New York estates near the threshold focuses on staying under it.
Does New York have a gift tax?
No, but taxable gifts made within three years of death are added back to the New York taxable estate. Gifts made more than three years before death are outside the New York estate entirely, which makes lifetime giving a powerful tool for New York residents whose estates are near the exclusion or the cliff.
How does Connecticut's estate tax work?
Connecticut imposes an estate tax and a gift tax. Under the statute, the exemption equals the federal basic exclusion amount, which is $15,000,000 for 2026, and the tax on the excess is a flat 12%, with total Connecticut estate and gift tax capped at $15 million. Because Connecticut taxes lifetime gifts, giving assets away does not avoid the Connecticut tax the way it can in New York.
Does New Jersey have an estate tax?
Not for deaths on or after January 1, 2018, when the New Jersey estate tax was repealed. New Jersey does impose a transfer inheritance tax on property passing to certain beneficiaries, such as siblings, in-laws, and unrelated individuals. Transfers to a spouse, children, grandchildren, and parents are exempt from that tax.
What is portability and does it apply in New York?
Federal portability lets a surviving spouse add a deceased spouse’s unused federal exemption to their own, if a federal estate tax return is filed on time after the first death. New York does not offer portability of its state exclusion, so a New York couple must use the first spouse’s exclusion at the first death, typically through a credit shelter trust, or lose it.
Should I give away assets now to reduce estate tax?
Only after comparing the estate tax saved with the income tax step-up in basis forfeited. Gifted assets keep your basis; assets held until death receive a new basis at their date-of-death value. For estates below the thresholds, gifting appreciated property often costs more than it saves. For larger estates in New York and Connecticut, gifts of cash, high-basis assets, and assets expected to appreciate are usually the right approach.
How does life insurance affect estate tax?
Life insurance you own is included in your taxable estate at its full death benefit, which can push an estate over the New York exclusion or into federal tax. An irrevocable life insurance trust that owns the policy keeps the proceeds out of the estate and provides cash to pay any tax due without selling assets.
Can I avoid New York or Connecticut estate tax by moving?
Changing domicile to a state without an estate tax can eliminate the state tax, but domicile is a question of fact that the taxing authorities examine closely: where you actually live, where your home, family, and affairs are centered, and how much time you spend in each state. It must be done genuinely, and property left in New York or Connecticut may still be taxed there.
When is estate tax due?
Federal and New York estate tax returns and payments are due nine months after death, and an extension to file does not automatically extend the time to pay. Because the deadline arrives before many estates are liquid, planning for the cash to pay the tax, through insurance, liquid reserves, or trust loans, is part of every estate tax plan. Our attorneys confirm the current deadlines when an estate is administered.
