Bulletin: NY000103

Dear Associates:

A bulletin entitled Estate and Gift Tax (TSB-M-95(9)M) is available through our New York City and White Plains offices. This bulletin outlines the procedures necessary to take the new estate tax deduction for the net value of the individual's principal residence up to $250,000. This applies for estates of decedents whose date of death is on or after June 8, 1995.

NYS Land Title Association Recommended Practice E-5 (5/95) allows for passing on the question of New York State estate taxes, on the basis of a satisfactory affidavit establishing that the gross estate, "including the subject property", is not more than the applicable $108,333.00 or $115,000.00. The recommended practice is based on the unified credit against New York State estate tax of $2,950.00. This works out to a total exemption from estate tax for an estate valued up to $115,000.00 for decedents whose date of death is on or after June 8, 1994 (see Tax Law 952(b)(1)). Previously (since July 1, 1978), the New York unified credit worked out to a total exemption from tax for estates up to $108,333.00. The recommended practice has not yet been amended to cover the new principal residence deduction.

At this time, this Company's underwriting position is that we will be willing to pass on the question of New York estate taxes for decedents whose date of death is on or after June 8, 1995, based on a affidavit in form satisfactory to the Company, which establishes that the amount of the decedent's New York gross estate, minus the net value of the decedent's principal residence which was included in the computation of the New York gross estate, does not exceed $115,000.00. The affidavit must also provide that the net value of the principal residence does not include marital or charitable bequests, mortgages or other indebtedness, or expenses or casualty losses attributed to the principal residence. Drafts of acceptable affidavits, for each period based on date of death, are available through the reference section at the end of this bulletin.