There is a growing trend in the United States/New York for older generations to form significant trust structures for their children and future generations. Importantly, clients are forming unregulated private trust companies in New Hampshire and other states in order to further their estate planning goals as well as to ensure their governance views for the coming generations. There is also a trend in the United States/New York for younger generations to forego traditional career paths and work for the family office and manage the family’s wealth.

In New York there are several areas of wealth that influence planning strategies. There are historic families with wealth along with individuals who have concentrations in finance and real estate. There are also non-US people who need planning for their US intangible and New York real estate assets.

The United States and New York impose an estate tax on US persons on their worldwide property. For non-US persons, estate tax is inflicted on property with US or New York situs.

Any person over the age of majority may make a will. The will may cover worldwide assets or only the assets in a specific jurisdiction, such as the US or a particular state in the US.

In New York, residence within the State of New York is an element of the cause of action for divorce. The residence requirement is set forth in the New York Domestic Relations Law and there is extensive case law regarding the residence requirement.

The United States and New York impose an annual income tax on resident individuals, trusts and estates. For US federal tax purposes, an individual’s residence is based on citizenship, holding a “Green Card” or pure day count. For New York purposes, residence is generally determined based on an individual’s domicile/permanent abode. An estate is a New York resident if the decedent was domiciled in New York at the time of death. A trust is generally deemed to be a New York resident trust if the trust consists of property of a person domiciled in New York at the time of transfer, or if the creator of the trust was domiciled in New York at the time the trust became irrevocable, or when a trust in a last will and testament was created by a person who was domiciled in New York at the time of death. US and New York residents are taxed on worldwide income. Non-resident individuals, trusts and estates are taxed on New York-sourced income only. Importantly, a resident trust may not be subject to New York income tax if:

• all trustees are domiciled outside of New York;
• all the trust corpus is located outside of New York; and
• there is no New York-sourced income.

An individual who is a resident of New York at the individual’s death is subject to New York estate tax. While New York does not impose a gift tax on lifetime gifts, it does add back to the gross estate the aggregate amount of taxable gifts (as defined under the federal internal revenue code) made three years prior to the decedent’s death to the extent such gifts are not included in the individual’s federal gross estate. Certain gifts may not be added back to the gross estate, including gifts made while the decedent was a non-resident, or gifts of real or tangible personal property located outside of New York when the gift was made.

A non-resident decedent may be subject to estate tax on real or tangible personal property located in New York.

If a decedent dies without a will and is married without children, 100% of the decedent’s probate estate passes by intestacy law to the surviving spouse. If a decedent dies without a will and with children, 50% of the decedent’s probate estate passes to the surviving spouse by intestacy and the other 50% of the probate estate passes by intestacy law to the decedent’s children.

By an acknowledged agreement of both parties, New York permits a waiver of estate and inheritance rights. It is common in New York for parties to enter into pre-nuptial or post-nuptial agreements (or spousal elective share waiver) to modify or waive a party’s estate and inheritance rights.

While New York does not have forced heirship rules per se, a decedent married at the time of such decedent’s death cannot disinherit the surviving spouse, in the absence of an agreement otherwise. If a decedent dies with a will, the surviving spouse has an elective share to receive one-third of the deceased spouse’s net estate (generally, gross estate less debts and administration expenses). The surviving spouse has the right to assert the spouse’s elective share, in lieu of taking under the deceased spouse’s will. The elective share is an outright pecuniary amount, and various testamentary substitutes passing outright to the surviving spouse, such as property held with rights of survivorship, count towards satisfying the elective share. Importantly, if a spouse asserts the elective share, such spouse does not take under the decedent’s will.

In general, marital property is property acquired during marriage and prior to the filing of divorce that is not “separate property”. In general, separate property is property owned prior to marriage and property acquired by a party during marriage by inheritance, a gift from third parties or distribution from a trust. There is extensive guidance under New York divorce law regarding marital property and separate property, and the active and passive nature of each, and the equitable distribution of marital property on divorce.

Unlike divorce laws in the State of New York, inheritance laws do not differentiate between marital property and separate property, and the surviving spouse’s inheritance rights generally apply to all property owned by the deceased spouse. It is common for individuals to enter into a pre-nuptial or post-nuptial agreement (or spousal elective share waiver) to define a surviving spouse’s rights on death.

New York permits parties to enter into a pre-nuptial or post-nuptial agreement to define financial rights in the event of death or divorce. There is extensive case law regarding the validity of pre-nuptial and post-nuptial agreements and it is often a fact-specific analysis. The court may give stricter scrutiny to spousal maintenance provisions included in a pre-nuptial or post-nuptial agreement.

New York has strict execution requirements for a pre-nuptial or post-nuptial agreement that individuals should discuss with an attorney prior to entering into such an agreement, and failure to meet such requirement may render the agreement invalid.

For any lifetime transfer of property, either outright or in trust, the recipient receives the property with “carry-over” basis, which is significantly different from the rules that govern transfers at death. When there is a gift transfer, property passes for less than full and adequate consideration and the recipient receives the donor’s basis. This includes transfers of:

• cash;
• securities;
• real estate;
• tangible assets; and
• forgiveness of debts.

In the US, the gift tax is imposed on the donor, not the recipient.

Under the Internal Revenue Code, Section 2503, a donor may give up to the annual exclusion amount to an individual each year. This amount is currently USD19,000 annually and indexed for inflation. The annual exclusion amount is per donor, per recipient, so a married couple can give an individual twice the amount, or up to USD38,000, each year under the annual exclusion rules.

Additionally, each person has a unified gift and estate tax exemption that can be used either during life, or at death. Effective as of 1 January 2026, the “One Big Beautiful Bill Act” set the gift and estate tax exemption at USD15 million per person, or USD30 million for a married couple. This exemption amount will be indexed for inflation in future years. For amounts transferred in that exceed the exemption, there is a federal tax at 40%. There is no state-level gift tax imposed except in Connecticut.

In the US, including New York, transfers at death are governed by a combination of federal income tax rules, federal estate tax rules, and state estate tax rules. Under the Internal Revenue Code, Section 1014, most assets included in a decedent’s gross estate receive a “step-up” in income tax basis to their fair market value on the date of death. This basis step-up effectively eliminates capital gain taxes for income tax purposes. Once the assets are inherited by a beneficiary, the beneficiary receives the assets with the date of death value, and subsequent capital gains taxes are measured from that new basis.

There are various gift and estate planning techniques to ameliorate the impact of US and NY gift and estate tax. Some of the more common techniques include an insurance trust, grantor retained annuity trust, an intentionally defective grantor trust or spousal lifetime access trust.

Generally, all planning options are influenced by federal laws in the US and governed by the Internal Revenue Code and Regulations. However, there are state income tax rules that can change the treatment of some planning options on a state level. One of the most common planning options that is treated differently under some state laws is a strategy that can allow trust income to avoid state income taxes by using an incomplete trust in a state that does not tax trust income such as Delaware (a DING trust), Nevada (a NING trust), or Wyoming (a WING trust). States such as New York and California have enacted laws that such trusts are treated as grantor trusts for state income tax purposes effectively rendering the planning useless for residents in New York and California.

Due to the increasing problem of accessing digital assets after death, 45 US states have adopted the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA). The RUFADAA creates three tiers for determining how a fiduciary can access digital assets.

1. Online tools – many platforms such as Google and Facebook provide for an individual to grant access to their account after death by an election within the platform. If an individual has chosen an individual to have access, this choice will override all other legal documents, such as a will, trust or power of attorney.

2. Legal documents – for platforms without online tools, very detailed express wishes in a will, trust or power of attorney will permit access by a fiduciary.

3. Terms of Service – absent any online tool, or detailed and express wishes in estate planning documents, the provider’s Terms of Service will dictate access.

For individuals with digital assets, it is important to discuss access and transferability in the event of incapacity and death. The creation of a digital assets inventory can be invaluable to a fiduciary and family members. Such an inventory should not only list assets, but access methods and storage locations. Password managers with secure sharing options for fiduciaries may also be considered. It may also be helpful to have specific digital asset information stored separately from standard estate planning documents which may become public or widely used.

There are a number of techniques for family businesses that can assist the transfer of wealth to the next generation. One technique is the use of discounts for gift and estate tax planning. Generally, a professional valuation specialist must be engaged. Other options include family limited partnerships and buy–sell agreements.

Federal US laws heavily influence business succession planning. However, New York has a separate estate tax with a lower exemption. Additionally, New York, unlike the federal rules, does not have a separate gift tax so certain planning options may make more sense during life.

There are various gift and estate planning techniques to ameliorate the impact of US and NY gift and estate tax. Some of the more common techniques include an insurance trust, grantor retained annuity trust, an intentionally defective grantor trust or spousal lifetime access trust.

The most significant recent change in planning opportunities was the increased estate and gift tax exemption of the One Big Beautiful Bill Act. The increased lifetime and testamentary gift and estate tax exemption permits individuals to move significantly more assets to trusts or lower generational family members without tax.

Another less known planning opportunity in the One Big Beautiful Bill Act is an increase in amount of tax deductive for state and local taxes (SALT). Previously, individuals were capped at USD10,000 but that has now been increased to USD40,000. This opens up planning opportunities for real estate with expensive property taxes by using multiple non-grantor trusts to own the real estate and allowing each trust to claim a separate SALT deduction of up to USD40,000. Planners should be aware that this may be considered an aggressive planning strategy and may be subject to increased scrutiny by the IRS and state taxing authorities.

In New York the regulation of trustees depends on whether the fiduciary is an individual or a corporate and professional trustee. New York has a strict regulatory scheme for institutional trustees, but it does not regulate individual trustees. Regulation of fiduciary companies is found under the New York Banking Law. The only entities that are permitted to serve as corporate fiduciaries in New York are:

• New York chartered public trust companies;
• banks with fiduciary powers such that they are governed by the New York State Department of Financial Services; or
• foreign banks authorised to exercise trust power in New York.

New York does not permit the creation of private trust companies that are permitted in other US states. Some of the most common jurisdictions for private trust companies are South Dakota, New Hampshire, Nevada, Wyoming, and Tennessee.

Trusts are taxed in New York if they have New York situs income, or they are New York resident trusts. A trust is a New York resident trust if it is:

• created by the will of an individual who was resident in New York at the time of his or her death; or
• created while the grantor was domiciled in New York at the time the trust became irrevocable.

A New York resident trust is taxed on its worldwide income, regardless of where the assets or beneficiaries are located. However, a resident trust may meet the Exempt Resident Trust exemption if it fulfils a three-part test.

1. All the trustees are domiciled outside of New York.

2. All of the trust property is located outside of New York.

3. All of the trust income and gains are generated by property outside of New York.

If a trust is an Exempt Resident Trust, then it still files a New York information tax return, but does not pay any state income taxes.

Generally, a non-marital child is the child of his or her mother, and a non-marital child is the child of his or her father if a court during the father’s lifetime makes an order of filiation or the father has signed an instrument acknowledging paternity. A non-marital child may also be deemed a child of the father if parentage is shown by clear and convincing evidence, such as openly acknowledging the child as his own.

New York law generally provides broad equality in succession rights across different family structures, but the rules differ depending on the relationship category. The governing statutes primarily arise from the New York Estates, Powers and Trusts Law (EPTL) and New York’s estate tax statutes.

New York and the federal government recognise same-sex marriage. New York law does not provide inheritance rights to unmarried partners.

New York law provides broad inheritance rights for non-marital children, but proof of parentage may be required. Adopted children inherit the same as biological children in New York.

New York significantly modernised its law on surrogacy by passing the Child‑Parent Security Act, which took effect in 2021. The Act ensures parents in surrogacy or assisted reproduction are legal parents from birth. The Act eliminated the need for second-parent adoption, enabling non-biological parents to be listed on birth certificates and qualify for intestate succession.

Posthumously conceived children have conditional inheritance rights. For such a posthumously conceived child to inherit, several conditions as set forth in the New York EPTL, Section 4-1.3 must be satisfied.

• The deceased parent consented in writing to posthumous reproduction.
• The parent authorised the use of genetic material after death.
• The child must be in utero within a specified time period after death (generally within 24 months).
• Notice must be provided to the estate representative.

If these requirements are met, the child may inherit as a descendant of the deceased parent.

Family relationships are governed under state law and not federal law. However, conflicts may arise if there are separate states involved with differing rules. This is seen in estates that may have property in different states and where there are different definitions of children or descendants for adopted children, stepchildren, and posthumously conceived children. Conflicts are often addressed on a state-by-state basis based on the location of physical property, domicile of a decedent in an estate, or the governing law of a trust.

Succession planning for families with multi-state or international assets raises complex issues under both US federal tax law and New York state tax law. The US taxes wealth transfers on citizenship, domicile, and asset location, therefore, consideration must be made as to how these rules intersect when individuals, beneficiaries, and property span multiple jurisdictions.

Unlike many countries, the US taxes the estates of US citizens and domiciliaries on their worldwide assets.

A person who is not a US resident or a US citizen is subject to US estate tax only on US-situs assets, such as:

• US real estate;
• shares of US corporations; and
• tangible property located in the United States.

A non-citizen who is non-resident in the US receives a much smaller estate tax exemption amount of only USD60,000.

Non-US persons may consider using foreign holding companies, offshore trusts and debt instruments to hold US assets.

The US has entered into estate tax treaties with several countries, reducing the possibility of double taxation for their citizens. The treaties also often clarify situs rules, set forth credits for foreign death taxes, and provide for expanded exemptions for non-resident decedents with US property.