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Legal Memorandum: Apportionment of State Taxes in NY

Issue: What is the law governing apportionment of state taxes as it relates to QTIP trusts in New York state?

Area of Law: Estate Planning & Probate, Tax Law
Keywords: QTIP trusts; Apportionment of State Taxes
Jurisdiction: New York
Cited Cases: 278 N.Y.S. 2d 745
Cited Statutes: None
Date: 03/01/2010

Estate of Casey, 53 Misc. 2d 399, 278 N.Y.S. 2d 745 (1967) holds that, in apportioning state taxes, the tax is first computed as if the whole of the net estate were taxable and no exemptions were available to any party. The benefit each party receives determines his share of the tax; however, this amount is then reduced by each party’s proportionate share of the total aggregate exemptions.  The formulae are for the apportionment are:

Benefit received

Percentage of

State:

—————-

=

Estate before exemption

Fictitious Tax

Benefit received

Percentage of

Federal:

—————-

=

Amount before specific exemption

Actual Tax

Amount of individual exemption

Total Exempt

Individual

——————————

x

=

Total exempt amount

[…]

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