2026 Estate Planning: A New Tax Landscape for New Yorkers

The start of 2026 brings monumental changes to wealth-transfer laws, creating both historic opportunities and new planning challenges—particularly for New Yorkers. Recent federal legislative action has solidified a massive exemption, while New York’s distinct tax system continues to pose a unique risk with its notorious “cliff.”

Now is the moment to ensure your plan is compliant, strategic, and fully optimized for these new realities. Here’s what every New Yorker should understand as we head into 2026.

Major federal estate-tax changes are now permanent.

The federal lifetime estate, gift, and generation-skipping transfer (GST) tax exemption has been significantly increased and permanently extended, preventing the previously scheduled "sunset" reduction.

$15 million per individual
$30 million per married couple (indexed for inflation)

But for many families, this opportunity changes what planning should focus on. This historically high exemption creates an extraordinary opportunity to transfer wealth tax-efficiently. Even if your current net worth is below these thresholds, having a proactive plan in place allows you to preserve options as your wealth grows.

A Strategic Shift for Many Families: Beyond Estate Taxes

For many New Yorkers, these historically high federal estate tax exemptions change the focus of estate planning.

If your total estate falls below the federal and New York estate tax exemptions, planning is often less about avoiding estate taxes—and more about preserving wealth in other ways.

In particular, today’s tax landscape allows many families to shift their attention to capital gains tax planning.

Assets included in your taxable estate typically receive a step-up in cost basis at death, eliminating capital gains tax on appreciation. For families comfortably under the estate tax thresholds, overly aggressive lifetime gifting can actually increase tax exposure by forfeiting that step-up. Strategic planning now focuses on when assets should be gifted—and when they should be held to preserve tax benefits.

For clients not facing estate tax exposure, long-term care planning often becomes the more pressing financial risk. Nursing home and assisted-living costs can quickly erode a lifetime of savings if planning is delayed. Proactive Medicaid and asset-protection strategies are frequently far more impactful than estate tax planning alone.

This shift underscores a critical point: Estate planning is no longer one-size-fits-all. The right strategy depends on whether your estate is likely to be taxable—and where your real financial risks lie.

New York’s estate-tax "cliff" still poses a critical risk.

Unlike the federal system, New York State maintains its own, much lower estate tax exemption, which creates a critical planning hurdle for many families.

New York Estate Tax Exemption (2026 estimate): $7,350,000 per individual (indexed annually).

The most dangerous feature of New York law is the "Estate Tax Cliff."

If your NY taxable estate exceeds the exemption by more than 5%, you lose the entire exemption.

5% above $7,350,000 = $7,717,500

Meaning: If your estate is even one dollar above $7,717,500, the full value of your estate—not just the excess—is subject to NY estate tax.

Compounding this challenge, New York does not allow “portability,” meaning married couples must use planning tools (such as credit shelter trusts) to secure both spouses’ exemptions.

A Note About New York’s New Transfer-on-Death (TOD) Deeds

A new law effective July 2024 allows New Yorkers to transfer residential real property using a Transfer-on-Death (TOD) deed. While this legislation offers the promise of probate avoidance, it also introduces significant known—and unknown—drawbacks.

Why We Are Cautious About TOD Deeds Right Now

Because TOD deeds are new, the long-term legal and administrative issues have not been tested. Several concerns have already emerged, including title insurance problems. More specifically, title companies are currently refusing to issue clear title if the property is sold within 18 months of the owner’s death.

Why? Under the statute, the decedent’s creditors may still collect against the property during this 18-month period—making the title uninsurable in many cases.

Unknown Risks Due to New Legislation

Because TOD deeds have no legal history in New York, additional complications may surface regarding:

Medicaid estate recovery
Creditor claims
Disputes among beneficiaries
Conflicts with existing estate plans

A Better Approach Exists.

The objectives TOD deeds promise—avoiding probate, simplifying transfers, retaining lifetime control—can all be achieved through more reliable, time-tested planning tools such as:

Revocable living trusts
Carefully structured real-estate ownership
Coordinated beneficiary and title planning

Our attorneys regularly design strategies that achieve the same benefits of TOD deeds while avoiding their risks and limitations.

Beyond Taxes: Core planning essentials remain critical.

While tax exemptions often dominate the conversation, many families today benefit most from planning that prioritizes capital gains efficiency, long-term care protection, and control—not just estate taxes. A review now ensures your plan reflects today’s risks, not yesterday’s assumptions.

An updated, comprehensive plan ensures you have:

Wills – for guardianship and instructions.
Powers of Attorney – for financial decision-making.
Health Care Proxies & Living Wills – for medical decisions.
Trusts – to protect beneficiaries, streamline transfers, or support charitable goals.
Digital-asset planning – access and control of online accounts.
Long-term care planning – protecting assets and preparing for Medicaid eligibility, if needed.

Schedule your constulation

Start the New Year With Peace of Mind

With:

the permanent $15M federal exemption,
the much lower $7.35M NY exemption,
the punishing NY estate tax cliff, and
new, untested TOD deed legislation.

Any estate plan drafted before mid-2024 is almost certainly outdated.

Regardless of your net worth, 2026 is the year to review your plan—before outdated assumptions create unnecessary tax or care exposure.

Reasons to Schedule Your Review Now

Life Events

Marriage or divorce
Birth/adoption of children
Inheritance or major financial changes

Financial & Legal Triggers

Estate approaching the $7.35M NY exemption
Outdated documents (5+ years old or no longer accurate)
Move to or from New York
Need for long-term care or Medicaid planning
Desire to simplify your estate and avoid probate
Questions about whether TOD deeds are appropriate (or safer alternatives)

Why work with BS&B?

The nuances of New York's estate tax laws require technical expertise and local knowledge. Our attorneys bring decades of experience in the specific, interwoven areas that protect your legacy in the Hudson Valley: