Understanding Estate Value
After a New York decedent passes away, the executor or personal representative of the estate must determine the value of the estate in order to pay creditor’s claims, distribute assets to the decedent’s heirs and pay any estate taxes. To accomplish this task, the personal representative must locate the decedent’s assets. Assets may be contained in the decedent’s safe deposit box, file cabinet, with other family members or with the decedent’s attorney. An investigative agency may need to be hired to find assets. Certain assets may need to be appraised such as real estate, artwork or other collectibles.
Assets may be cash, real estate, personal property such as jewelry, art, antiques, other collectibles, bank accounts, other financial accounts, bonds, stocks, life insurance, vehicles, other vessels and other personal items such as furniture and furnishings. The decedent’s bills must be paid first out of the estate assets, including burial and funeral expenses, medical bills, credit cards, other bills and estate taxes must be paid before the assets can be distributed to the heirs and the estate wound up and closed.
Counted Assets and Exempt Assets
Assets transferred to a trust, held jointly or which have a named beneficiary are exempt from probate and are not counted as part of the estate value. Assets held in the sole name of the decedent at the time of death are the only gross assets included in the estate value. The personal representative must prepare an accounting of those assets, any debts and liabilities to be submitted to the heirs and the New York Surrogate’s Court.
The personal representative or the estate attorney must file the appropriate estate tax forms and advise the Court whether a Federal Form 706 Federal Estate Tax Return is due, the filing date and whether a New York State Estate Tax return Form Tt-385 or ET-90 must be filed.
The personal representative and attorney are also allowed to ask the Court for commissions or legal fees for their services provided they submit the estate tax information to the Court.
Estate Gift Tax and Estate Tax Exemptions, Portability Rules for Married Couples
Estates with values up to $5.34 million are exempt from owing any estate taxes. Spouses can also take advantage of portability rules. The first spouse can leave all the assets to the surviving spouse since assets left to a spouse are exempt from estate tax. Therefore, only the assets owned by the surviving spouse held in the surviving spouse’s sole name at time of the surviving spouse’s death are counted. Technically, a married couple could have an estate valued at over $10 million and not have to pay any estate taxes when they die.
Since probate and estate matters in New York are complicated, the personal representative will generally hire a New York probate and estate attorney to assist with the probate and estate administration.