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BY BERNARD A. KROOKS, CERTIFIED ELDER LAW ATTORNEY

SPECIAL GUEST CONTRIBUTOR: JOEL KROOKS, ESQ.

Does an Estate Need to File a New York Estate Tax Return?

When a person dies, one of the first tax questions an Executor or Administrator must consider is whether the estate must file an estate tax return. In New York, the answer depends on the size of the estate, the decedent’s residency, certain lifetime gifts, and whether the estate owns New York property.

Importantly, the requirement to file a New York estate tax return is separate from whether estate tax is actually owed.

The 2026 New York Estate Tax Exclusion — For individuals dying in 2026, New York’s basic estate tax exclusion amount is $7,350,000. Generally, a New York resident’s estate must file a New York State estate tax return if the decedent’s federal gross estate, plus certain includible taxable gifts, exceeds that amount. The exclusion is adjusted over time based on the decedent’s date of death. For comparison, the exclusion was $7,160,000 for deaths in 2025.

The federal gross estate generally includes all property in which the decedent had an interest at death, including real estate, bank and brokerage accounts, retirement accounts, business interests, tangible personal property, certain trust interests, and life insurance owned by the decedent or payable to the estate.

This is a gross value test. The estate must first consider the total value of assets before deductions are applied to determine whether tax is ultimately owed.

Lifetime Gifts and the Filing Threshold — New York also requires estates to consider certain taxable gifts made during the decedent’s lifetime. These gifts may need to be added back when determining whether the estate exceeds the New York filing threshold.

As a result, making large gifts shortly before death does not necessarily eliminate a New York estate tax filing requirement or potential estate tax liability.

Nonresidents Who Own New York Property — A nonresident’s estate may also be required to file a New York estate tax return if the decedent owned real property or tangible personal property located in New York and the federal gross estate, together with certain includible gifts, exceeds the New York basic exclusion amount.

For example, if a Florida resident dies owning a New York cooperative apartment, house, or other New York real property, the estate may have a New York filing obligation even though the decedent was not domiciled in New York.

What Form Is Filed and When Is It Due? 

When a New York estate tax return is required, the estate files Form ET-706, New York State Estate Tax Return. The return is generally due nine months after the decedent’s date of death, and any tax due is generally payable within that same period.

An estate may request an extension of time to file and/or pay when additional time is needed. However, interest may apply if tax is paid late.

When Is New York Estate Tax Actually Owed?

Whether estate tax is actually owed depends on the taxable estate after allowable deductions and credits are applied. Common deductions may include funeral and administration expenses, debts, mortgages, certain charitable transfers, and the marital deduction for qualifying transfers to a surviving spouse.

Therefore, an estate may be large enough to require a New York estate tax filing but still owe no New York estate tax after deductions are applied.

The New York Estate Tax “Cliff” — One of the most important features of New York’s estate tax is the so-called “cliff.” If the taxable estate is at or below the basic exclusion amount, no New York estate tax is owed. If the taxable estate is slightly above the exclusion amount, some tax may be owed. However, once the taxable estate exceeds 105 percent of the basic exclusion amount, the estate loses the benefit of the New York exclusion entirely.

For 2026, 105 percent of the $7,350,000 exclusion is $7,717,500. Once the taxable estate exceeds that amount, the estate may be taxed from the first dollar rather than only on the amount above the exclusion.

This rule can produce a significant tax liability from a relatively modest increase in the taxable estate. Careful planning is particularly important for New York residents whose estates are near or above the exclusion amount.

Estate Tax Rates and Portability — New York’s graduated estate tax rates can reach 16 percent. New York also does not provide portability between spouses. This means that if the first spouse to die does not use his or her New York estate tax exclusion through proper planning, the unused exclusion is not automatically transferred to the surviving spouse.

This is an important consideration for married couples whose combined estates may exceed the New York exemption amount.

Form 706 vs. Form 1041 — Executors and beneficiaries often confuse Form 706 and Form 1041, but they address different taxes.

Form 706 is an estate tax return. It reports the value of the decedent’s assets at death, applies allowable deductions, and determines whether estate tax is owed. For New York estate tax purposes, Form ET-706 serves a similar function.

Form 1041, by contrast, is an income tax return for an estate or trust. It reports income earned after death during the administration of the estate, such as interest, dividends, capital gains, rental income, or other taxable income.

For example, a brokerage account may be reported on Form 706 at its date-of-death value, while dividends or capital gains earned by that account after death may later be reported on Form 1041.

An estate may need one form but not the other. A smaller estate may have no estate tax filing obligation but may still need to file Form 1041 if it earns sufficient income during administration. Conversely, a larger estate may need to file Form 706 or New York Form ET-706 even if it earns little or no post-death income.

Conclusion — Determining whether a New York estate tax return is required can be complex. Each estate must be reviewed based on its assets, debts, deductions, residency, New York property, lifetime gifts, and post-death income.

Proper estate planning may help individuals and married couples reduce or avoid unnecessary estate tax, preserve available exemptions, and simplify administration. Executors and Administrators should work with an experienced estate attorney and coordinate with the estate’s accountant to determine which filings are required, identify available deductions, meet deadlines, and address probate, creditor claims, taxes, and distributions.

Because relying on general assumptions can lead to costly mistakes, professional guidance can help ensure that the proper filings are made and the estate is administered as efficiently and properly as possible.

Bernard A. Krooks, Esq., is a founding partner of Littman Krooks LLP. He was named the 2021 “Lawyer of the Year” by Best Lawyers in America® for excellence in Elder Law and has been honored as one of the “Best Lawyers” in America since 2008. He was elected to the Estate Planning Hall of Fame by the National Association of Estate Planners & Councils (NAEPC) and is past Chair of the Elder Law Committee of the American College of Trust and Estate Counsel (ACTEC). Krooks may be reached at 914-684-2100 or through the firm’s website at www.littmankrooks.com.