Kevin Matz Quoted on State Estate Tax Risks and Domicile Planning

The article examines how state estate tax regimes can create significant planning challenges even when clients are below the federal estate tax exemption amount. Attention is given to states such as New York, where estate tax rules and domicile determinations can have substantial tax consequences for individuals who own property or maintain residences in multiple jurisdictions.

Discussing New York’s estate tax framework, Kevin explained that tax exposure is not limited to individuals who are clearly domiciled in the state. 

Kevin emphasized that New York’s tax authorities might try to charge state estate taxes if a person had a permanent abode in New York, even without being domiciled in New York for more than a certain number of days.

He highlighted the uncertainty that can arise when estate plans assume a surviving spouse will relocate to a lower-tax state after the death of a spouse. He said, “If one were to know with certainty that if one spouse died, the other spouse would have a long runway to survive and then could plan to move out of state and thereby avoid New York state estate tax, that would allow [clients and advisors] to plan with certainty, but we don’t have certainty. We have probabilities and possibilities.”

Adding that, “If one were to plan to move out of state but were to die before actually moving, New York state estate tax would then apply to that surviving spouse.”

The article further emphasizes the importance of advisors understanding state-specific tax rules affecting their clients. 

Kevin said, “If you service clients in a particular state, you should be aware of the state estate tax that applies to them, both based on residence and also where their property is.”

He continued, “Sometimes even if they don’t live in a state, if someone who was a Floridian had real estate and tangible property - think in terms of gold bullion or jewelry or artwork- in New York worth more than $7,350,000, even though they’re a Floridan, they’d still be subject to New York state estate tax.”

The article underscores the need for proactive estate planning, careful attention to domicile issues, and ongoing review of state-level tax rules that may affect clients with multistate residences or property holdings.

Read the full article here. (Subscription required)

This article was also republished in American Banker.