USA – NEW YORK Trends and Developments Contributed by: John M. Teitler, Nancy A. Murphy and Constance E. Shields, Teitler & Teitler, LLP
estate is effectively subject to New York estate tax. New York does not allow spousal portability of unused New York estate tax exemption. The New York estate tax rate is graduated and ranges from approximately 3% to 12%. While New York does not impose a gift tax on lifetime gifts, it does add back to the gross estate the aggregate amount of taxable gifts (as defined under the federal internal revenue code) made three years prior to the decedent’s death to the extent such gifts are not included in the individual’s federal gross estate. Certain gifts may not be added back to the gross estate, including gifts made while the decedent was a non-resident, or gifts of real or tangible personal property located outside of New York when the gift was made. Gift and estate planning While the US and NY tax rates and exemptions are somewhat stable, these rates and exemptions may change depending on the fiscal philosophy of cur- rent and future administrations. Many high-net-worth individuals may wish to take advantage of the current gift tax exemption by making gifts outright or in trust. There are various gift and estate planning techniques to ameliorate the impact of US and NY gift and estate tax. Some of the more common techniques include the use of insurance trusts, grantor retained annuity trusts, intentionally defective grantor trusts or spousal lifetime access trusts. It should be noted that while there is a federal gift tax, the only US state that imposes a gift tax is Con- necticut. Digital Assets in Estate Planning Increasingly clients are diversifying their assets into new types such as cryptocurrency, non-fungible tokens (NFTs), digital accounts, and digital media. As these new asset types become more common and valuable they create novel legal, practical and ethi- cal challenges that traditional estate planning docu- ments may not address. Digital assets are no longer fringe components of modern estates. Rather, they are central to effective planning for many individu- als and families. The legal, technological, and ethical landscapes are evolving rapidly, but thoughtful plan- ning, clear documentation, and careful integration of digital assets into traditional estate frameworks can
reduce risk and ensure that these valuable assets pass according to the client’s intentions. What are digital assets? Digital assets are a newer range of assets that exist primarily in digital form. Some of the most common examples are: • cryptocurrencies, such as Bitcoin or Ethereum; • NFTs representing art, or collectibles; • digital accounts, such as email, and social media; and • digital media, such as digital licences and cloud storage. As individuals increasingly hold significant alternative assets, estate planners must take into account that these assets can have substantial economic value and, unlike traditional assets such as bank accounts and real estate, digital assets, are often secured by private keys or login credentials that can be lost, inaccessible or unrecoverable without proper plan- ning. Additionally, many digital assets are governed by separate Terms of Service agreements that may pre-empt estate planning documents. One of the key problems when incorporating digi- tal assets into an estate plan is the inherent tension between security and fiduciary access. Most digital assets are designed to be accessible only with pri- vate passwords and two-factor authentication. This security is highly desirable by the owner during life because it protects the owner and the asset during life. However, this security will also lock out the fiduci- ary after the owner’s death. Accessing digital assets after death Due to the increasing problem of accessing digital assets after death, 45 US states have adopted the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA). The RUFADAA creates three tiers for determining how a fiduciary can access digital assets. 1.Online tools – many platforms such as Google and Facebook provide for an individual to grant access to their account after death by an election within the platform. If an individual has chosen an individual to have access, this choice will override
256 CHAMBERS.COM
Powered by FlippingBook