You may have an estate tax problem before you ever think of yourself as someone wealthy enough to have an issue. This can be especially relevant in New York.
I think this is one of the things we don’t talk about enough as people become more successful. We focus on the federal estate tax and may have that on our radar, but state estate taxes can sometimes be overlooked.
For 2026, the federal basic estate tax exclusion amount is $15 million, while New York’s basic estate tax exclusion amount is $7.35 million.
We tend to imagine $7 million of wealth as someone sitting on $7 million in cash. That’s rarely what it looks like.
It can be a business you’ve spent 20 years building, a house that is worth considerably more than you paid for it, retirement accounts you’ve consistently funded, investments that have grown over time, and life insurance you bought years ago.
It happens little by little. Then, all of a sudden, your financial life may require a very different level of planning than it did five or ten years ago—without there ever being some big moment when you suddenly felt “wealthy.”
New York’s estate tax rules also work differently from the federal rules. Once a New York taxable estate exceeds the basic exclusion amount, the benefit of the applicable credit begins to phase out. That makes it important to understand how the rules may apply to your individual circumstances.
I have spent enough years in financial planning to see how easily planning can fall behind changes in someone’s financial life.
Estate documents were completed years ago. A business became significantly more valuable. Investments continued to grow. Insurance was added. Life changed—and the planning stayed the same.
That is the bigger conversation here.
As your wealth grows, you may encounter financial thresholds where the rules and planning considerations change.
This is also why I don’t believe good financial planning is simply about accumulating more money. At some point, the questions become different:
How much is enough?
What do you want this wealth to do?
What are you trying to protect?
What would you like your family—or the people and causes important to you—to receive?
How could applicable taxes affect those plans?
You don’t have to feel wealthy for estate-planning considerations to become relevant. I prefer conversations about the options available rather than unexpected surprises later.
If this might be you in the future, it may be worth starting the conversation today.
Sources:
Internal Revenue Service, Instructions for Form 706 (Rev. July 2026), United States Estate (and Generation-Skipping Transfer) Tax Return, July 2026.
New York State Department of Taxation and Finance, Estate tax — Basic exclusion amount, accessed September 2026.
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