Estate planning involves more than just deciding who gets your assets when you’re gone. For many New York residents, taxes can consume a significant portion of their hard-earned wealth both during life and after death.
With tax-efficient estate planning strategies, you can cut down on taxes and leave more to your loved ones. Here are five ways to save on taxes while making your estate plan.
Use annual gift tax exclusions
The IRS allows you to give up to $19,000 per person each year without paying gift tax. This strategy works well for gradually transferring money to your children or grandchildren while you’re alive.
One way to gift assets to children or grandchildren is an educational account or 529 plan. These grow tax-free when used for qualified education expenses and can reduce your taxable estate.
Additionally, you can front-load five years of annual gift exclusions into a 529 plan at once, removing up to $95,000 per beneficiary from your estate immediately.
Create an irrevocable life insurance trust
When you die, the money from your life insurance still gets substantial estate taxes. One way to get around this is with an irrevocable life insurance trust. This transfers your money outside your taxable estate. Instead of you, the trust owns your life insurance policy and pays out according to your wishes without the extra tax burden.
Consider a qualified personal residence trust
If you’re like most people, your home is your biggest taxable asset. With a qualified personal residence trust (QPRT), you can transfer home ownership to your beneficiaries at a lower gift tax value. At the same time, you still get to retain the right to live there for a set period and enjoy a reduced home value for tax purposes.
Explore charitable giving options
Charitable donations offer excellent tax advantages. At the same time, you’re supporting causes you care about. Your options include donating to:
- Charitable remainder trusts
- Donor-advised funds
- Private foundations
These structures provide income tax deductions now while reducing your taxable estate later.
Take advantage of New York’s estate tax exemption
New York’s estate tax exemption ($7.15 million in 2025) falls below the federal exemption. Strategic planning around this threshold helps avoid the “cliff” effect where estates slightly above the exemption face taxes on the entire amount, not just the excess.
Early and careful planning makes all the difference
Effective estate planning requires careful consideration of both federal and New York state tax laws. Working with experienced professionals ensures your plan addresses your unique circumstances while minimizing tax exposure.
With early and comprehensive estate planning, you not only benefit from tax savings today but also get peace of mind for tomorrow, knowing your loved ones will receive the maximum benefit from your hard-earned legacy.
