USA – NEW YORK Law and Practice Contributed by: John M. Teitler, Nancy A. Murphy and Constance E. Shields, Teitler & Teitler, LLP
Teitler & Teitler, LLP 230 Park Avenue Suite 2200 New York New York 10169 USA Tel: +1 212 997 4400 Fax: +1 212 997 4949 Email: jmteitler@teitler.com Web: www.teitler.com
1. Contemporary Cultural Considerations in Succession Planning 1.1 Social and Cultural Attitudes There is a growing trend in the United States/New York for older generations to form significant trust structures for their children and future generations. Importantly, clients are forming unregulated private trust companies in New Hampshire and other states in order to further their estate planning goals as well as to ensure their governance views for the coming generations. There is also a trend in the United States/ New York for younger generations to forego traditional career paths and work for the family office and man- age the family’s wealth. 1.2 Wealth Profiles and Industry Influences In New York there are several areas of wealth that influence planning strategies. There are historic fami- lies with wealth along with individuals who have con- centrations in finance and real estate. There are also non-US people who need planning for their US intan- gible and New York real estate assets.
Any person over the age of majority may make a will. The will may cover worldwide assets or only the assets in a specific jurisdiction, such as the US or a particular state in the US. In New York, residence within the State of New York is an element of the cause of action for divorce. The residence requirement is set forth in the New York Domestic Relations Law and there is extensive case law regarding the residence requirement. 2.2 Income Tax Residency The United States and New York impose an annual income tax on resident individuals, trusts and estates. For US federal tax purposes, an individual’s residence is based on citizenship, holding a “Green Card” or pure day count. For New York purposes, residence is generally determined based on an individual’s domi- cile/permanent abode. An estate is a New York resi- dent if the decedent was domiciled in New York at the time of death. A trust is generally deemed to be a New York resident trust if the trust consists of prop- erty of a person domiciled in New York at the time of transfer, or if the creator of the trust was domiciled in New York at the time the trust became irrevocable, or when a trust in a last will and testament was created by a person who was domiciled in New York at the time of death. US and New York residents are taxed on worldwide income. Non-resident individuals, trusts and estates are taxed on New York-sourced income only. Importantly, a resident trust may not be subject to New York income tax if: • all trustees are domiciled outside of New York;
2. Residency and Domicile for Purposes of Wealth and Estate Planning 2.1 Determining Domicile
The United States and New York impose an estate tax on US persons on their worldwide property. For non- US persons, estate tax is inflicted on property with US or New York situs.
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