Bulletin: NY000156

Dear Associates:

The New York Estate and Gift Tax Law has undergone a major revision as a result of the enactment of Chapter 389 of the laws of 1997, which was signed into law by Governor Pataki on August 7, 1997. A detailed summary of the changes brought about by Chapter 389 are contained in Technical Services Bureau Memo TSB-M-97(8) M, dated December 31, 1997, distributed by the New York State Department of Taxation and Finance, a copy of which is available from the New York City office. This bulletin is intended to give you some of the highlights of this new legislation which impact the title industry.

1. The unified credit applicable to the estates of individuals dying on or after October 1, 1998 and before February 1, 2000, has been increased from $2950.00 to $10,000.00 As a result, where the New York adjusted gross estate and adjusted taxable gifts total less than $300,000.00, there is no requirement to file a New York Estate Tax Return and no tax is payable.

2. Effective January 1, 2000, the New York State Gift Tax is repealed for gifts made on or after that date.

3. Effective February 1, 2000, the requirements for filing a New York Estate Tax Return will be, in essence, the same as those for filing a Federal Return. On that date, the threshold for filing the Federal and the New York Estate Tax Returns will be $675,000.00. If no federal return is required, then a New York return will not be required either. Of course, no tax will be due on any estate under the threshold amount. The filing threshold will increase gradually until 2006, when the size of an estate requiring the filing of a return must exceed $1,000,000.00 As a practical matter, there will be no New York Estate Tax on the estates of most individuals dying on or after the year 2006.

New underwriting guidelines reflecting these changes have either already been issued or will be distributed to you in the very near future.

The Technical Services Memo, also available from our New York City office, contains other information that may be useful to attorneys who do estate work. For example, effective October 1, 1998, the due date for payment of the estate tax will increase from six to seven months. The amount of New York estate Tax due on an estate will be limited to the maximum amount allowable as a credit for death taxes on the Federal return. The filing fee and the requirement that a copy of the New York Estate Tax return be filed with the Surrogate's Court has been repealed for individuals dying on and after February 1, 2000. In addition, on and after February 1, 2000, assets held by a bank, trust company, brokerage house or other party in possession may be transferred to an executor or a joint tenant without notifying the Department of Taxation & Finance, and without first obtaining tax waivers or retaining a portion of the assets to pay any estate tax that may be due.

Should you have any questions regarding this matter, please contact Company Counsel.