Filing a New York Estate Tax Return for a Loved One

Losing a family member is hard enough without having to figure out tax paperwork. But if your loved one lived in New York or owned property here, you may be legally required to file an estate tax return with the state. Missing that filing or getting it wrong can lead to penalties, interest, and delays in distributing assets to the people who inherit them. Understanding how this process works protects both you and the estate.

What is a New York estate tax return?

A New York estate tax return is a state tax filing required after someone dies if their estate exceeds a certain value. This is different from a federal estate tax return filed with the IRS. The New York return is filed with the New York State Department of Taxation and Finance. The tax is based on the total value of the deceased person's estate—everything they owned or had an interest in at the time of death.

Many people confuse estate tax with inheritance tax. The estate tax is paid by the estate itself before assets are distributed. An inheritance tax, on the other hand, would be paid by the person receiving the assets. New York does not have an inheritance tax, but it does impose an estate tax. If you're unsure about the distinction, this breakdown of the differences between estate tax and inheritance tax can help clarify things.

Who actually needs to file?

Not every estate owes tax, but filing requirements can still apply. You generally need to file a New York estate tax return if the decedent was a New York resident and the total gross estate exceeds the state's filing threshold. For deaths occurring in 2024, that threshold is $6.94 million. The exact amount changes periodically, so it's worth checking the current New York estate tax threshold before assuming your situation doesn't apply.

Non-residents who owned real estate or tangible personal property in New York may also need to file. The gross estate includes bank accounts, real estate, retirement accounts, life insurance payable to the estate, investments, business interests, and personal property like vehicles or jewelry.

What counts toward the gross estate value?

Real property (homes, land, commercial buildings)
Bank accounts and cash
Stocks, bonds, and other investments
Retirement accounts (IRAs, 401(k)s)
Life insurance proceeds paid to the estate
Business ownership interests
Cars, boats, jewelry, art, and collectibles
Assets held in certain trusts

The key number is the gross estate, which means the total value before subtracting debts. Deductions and exemptions are applied later to determine whether tax is actually owed.

When is the New York estate tax return due?

The return is due nine months after the date of death. You can request a six-month extension by filing Form ET-133 and paying any estimated tax due. But the extension is only for filing the return—interest on any unpaid tax starts accruing from the original nine-month deadline.

If you miss the deadline without requesting an extension, penalties and interest can pile up quickly. This is one reason the executor or administrator should begin gathering estate information as soon as possible. Knowing how long the inheritance paperwork process typically takes in New York can help you plan and stay ahead of deadlines.

Step-by-step: How do you file the return?

Step 1: Get appointed as executor or administrator

Before you can file anything, you need legal authority over the estate. If the deceased had a will, the named executor petitions the New York Surrogate's Court in the county where the person lived. If there's no will, the court appoints an administrator. You'll need the court-issued letters testamentary or letters of administration to act on behalf of the estate. The Surrogate's Court probate forms you'll need to complete are specific to each county, so check with the court clerk.

Step 2: Inventory and value all estate assets

You need a complete list of everything the deceased owned, valued as of the date of death. For financial accounts, get statements from the date of death. For real estate, get an appraisal. For personal property like jewelry or art, you may need a professional valuation. This step takes time, so start it early.

Step 3: File federal Form 706 if required

If the estate exceeds the federal exemption ($13.61 million in 2024), you must file a federal estate tax return (IRS Form 706). Even if you're filing both federal and state returns, they are separate filings with different agencies. Some deductions that appear on the federal return may also apply to the New York return, but the calculations are not identical.

Step 4: Complete Form ET-706

The main New York estate tax return is Form ET-706. This is the form where you report the gross estate, claim allowable deductions, and calculate the tax. You'll need to include:

An itemized list of all assets with date-of-death values
Deductions (funeral expenses, debts, administrative costs, marital deductions, charitable gifts)
Prior taxable gifts made by the decedent
Credit for estate taxes paid to other states, if applicable

Step 5: Submit the return and pay any tax due

File Form ET-706 with the New York State Department of Taxation and Finance. You can file by mail. Payment is due at the time of filing. If the estate doesn't have enough liquid cash to pay the tax, the executor may need to sell assets or arrange a payment plan with the state.

What deductions can reduce the estate tax?

Several deductions can lower the taxable value of the estate:

Funeral expenses — burial costs, cremation, memorial services
Debts of the decedent — mortgages, credit cards, medical bills, loans
Administrative expenses — executor fees, attorney fees, accounting costs, appraisal fees
Marital deduction — assets passing to a surviving spouse (must meet specific requirements)
Charitable deduction — property left to qualified charities

The New York estate tax also has a concept called the "estate tax cliff." If the taxable estate is between 100% and 105% of the basic exclusion amount, a partial exemption applies. If it exceeds 105% of the threshold, the entire estate is taxed—not just the amount over the threshold. This is a common source of surprise for families.

Common mistakes people make when filing

Filing an estate tax return involves a lot of detail, and errors can be costly. Here are mistakes to watch for:

Underreporting asset values — using outdated or inaccurate appraisals. Use date-of-death values, not current market values.
Missing the filing deadline — even if you think no tax is owed, some estates still need to file to claim portability or deductions.
Forgetting about prior taxable gifts — gifts the decedent made during their lifetime may need to be added back into the gross estate calculation.
Not including life insurance — life insurance proceeds paid to the estate (or over which the decedent held incidents of ownership) are part of the gross estate.
Confusing the estate tax with probate — estate tax and probate are related but separate processes. The estate tax return goes to the state tax department; probate goes through Surrogate's Court.
Trying to do it all alone — estates near or above the filing threshold almost always benefit from a CPA or estate attorney. The cost of professional help usually saves more in taxes and penalties than it costs.

Do you need a tax professional?

If the estate is straightforward and well below the filing threshold, you may not need to file at all. But if the estate is close to or above the threshold, hiring a CPA or estate attorney is strongly recommended. They can identify deductions you might miss, calculate the estate tax cliff correctly, and make sure the return is filed properly and on time.

The executor is personally liable for ensuring the estate tax is paid. If tax goes unpaid, the IRS and New York State can pursue the executor for the amount owed—even out of their own funds in some cases. This isn't something to guess at.

Practical next-step checklist

Obtain certified copies of the death certificate (you'll need multiple originals).
Petition Surrogate's Court for letters testamentary or letters of administration.
Open an estate bank account to manage estate funds.
Inventory every asset and get date-of-death valuations (appraisals for real estate and valuables).
Collect all debts, bills, and financial statements for the decedent.
Determine whether the gross estate exceeds the current New York filing threshold.
Consult with an estate attorney or CPA if the estate is near or above the threshold.
File Form ET-706 within nine months of the date of death (or request an extension).
Pay any tax due at the time of filing.
Keep copies of everything filed for at least seven years.

Starting early and staying organized makes the entire process smoother. If you're unsure whether the estate meets the filing threshold or which forms apply, a short consultation with a tax professional can save you significant time and stress down the road.