For those that have more than five million dollars, careful estate tax planning is necessary. The New York estate tax exemption is not portable, meaning that for spouses, each needs to take steps to utilize their separate exemptions.
A credit shelter trust can be set up in each spouse’s will to utilize their exemption. When the first spouse passes, some of the assets are shifted into a trust for the benefit of the survivor. The assets would be available for the survivors needs if necessary, but this properly utilizes the deceased spouse’s exemption.
For life insurance, a life insurance trust can be used to shield the proceeds of life insurance from estate taxes. It is an important tool that by transferring the policies into the trust, the death benefit is excluded from the taxable estate after three years have passed.
For those with more than 10 million dollars, additional gifting and transfer techniques are necessary to avoid or reduce estate taxes as much as possible.