Estate planning in New York is always evolving and 2024–2025 brought several important changes and updates that residents, heirs, and planners need to pay attention to. Whether you already have a plan or you’re just starting, being aware of these developments can help you protect your assets and your loved ones more effectively.
Transfer-on-Death (TOD) Deeds Now Permitted in New York
One of the most significant legislative updates is the introduction of Transfer on Death (TOD) deeds. New York’s 2024-2025 executive budget legislation now authorizes TOD deeds for real property. A TOD deed allows homeowner to designate, in advance, who inherits real property automatically at death—without requiring probate. This can simplify transfers, reduce costs, and speed up the process for heirs.
However, TOD deeds must be executed with care. They don’t serve the same functions as a will or trust, and they don’t substitute for safeguards like incapacity planning. Drafting it correctly under New York law is essential.
Federal Estate & Gift Tax Law Changes (OBBBA 2025)
At the federal level, the “One Big Beautiful Bill Act” (OBBBA) made permanent changes to estate and gift tax exemptions that were previously set to expire at the end of 2025. The exemption per person is now approximately $13.99 million (as of 2025), and married couples can combine their exemptions. This higher threshold gives many estates more breathing room on the federal side.
But here’s where New York planners must stay alert: while many estates may escape federal taxation, the state estate tax rules remain separate and more restrictive.
New York’s State Estate Tax & the “Cliff” Rule
New York continues to impose its own estate tax with an exemption currently at about $7.16 million (for 2025). That means estates falling between $7.16 million and the federal threshold might avoid federal taxes but still owe substantial state tax. Moreover, New York has a notoriously harsh “cliff” rule: if your estate exceeds the exemption by just 5%, the entire estate can become taxable—not just the excess.
Furthermore, New York does not permit portability of unused spousal exemptions (unlike federal law). So when one spouse dies, any unused NY exemption is lost unless careful planning is in place.
Three-Year Callbacks on Gifts
Another critical shift to watch is the three-year callback rule in New York. Gifts made within three years prior to death may be pulled back into your estate for New York state tax calculations, even though there is no state gift tax. That means strategic gifting must be done well in advance and with foresight.
Why Updating Your Estate Plan Is Now More Important
With these changes, many estate plans drafted before the new federal rules or before TOD deeds became available may no longer be optimal. Documents like wills, trusts, and gifting strategies should be reviewed and revised where needed.
Personal changes (marriage, divorce, births, new assets) also trigger updates—plus the growing importance of digital assets means your plan should specifically address cryptocurrency, online accounts, and other virtual property.
Your Next Step: Get Expert Guidance
Estate planning in New York has become more complex—and the stakes are higher than ever. Tactical use of TOD deeds, smart alignment with the new federal tax thresholds, and designing your plan to avoid the state “cliff” all require legal expertise.
If you want to review, update, or build an estate plan suited for these changes, Michael F. Kanzer and Associates is ready to help. Visit us now to schedule a consultation and make sure your plan is current and robust.