2024 Year-End Estate Planning: New York Updates

In 2024, there was much legislative activity in New York that affected the Private Wealth realm. A brief summary of the 2024 changes follows.

State Estate Taxation

For individuals dying on or after January 1, 2025, the basic exclusion amount will be equal to the federal basic exclusion amount indexed annually, but without regard to the passage of the Tax Cuts and Jobs Act (TCJA) of 2017.

New York Limited Liability Company Transparency Act

On March 1, 2024, New York Governor Kathy Hochul signed into law the amended New York Limited Liability Company Transparency Act (NYLTA). The New York LLC Transparency Act requires limited liability companies (LLCs) formed under the New York LLC Act or doing business in New York State to provide certain informational filings to the New York State Secretary of State relating to the beneficial owners of such entity. The NYLTA is a state corollary to the Corporate Transparency Act (CTA) which is discussed in greater detail above in this advisory and incorporates many of the CTA”s provisions. The requirements of the NYLTA are to take effect on January 1, 2026.

The NYLTA originally included the creation of a publicly accessible online database where the full legal name and business address of each beneficial owner would be available. However, as part of the compromise between Governor Hochul and the New York State legislators championing the NYLTA, the provisions allowing for a publicly accessible database were removed, and the beneficial ownership information collected will now only be available to certain government and law enforcement agencies.

Any LLC formed or authorized to do business in the state of New York on or after January 1, 2026, will be required to provide the informational filing within 30 days of formation or authorization to do business in New York. All pre-existing entities would be required to file such information with New York State by January 1, 2027, or otherwise upon any amendment to the LLC’s filed organizational documents. Unlike the CTA, the NYLTA requires all reporting companies to file annual statements either confirming or updating their beneficial ownership information. Additionally, while the categories of entities that are exempt from reporting under the New York LLC Transparency Act are the same as those under the CTA, the NYLTA requires potentially exempt entities to file an attestation of exemption.

Under the NYLTA, the Attorney General is authorized to investigate any LLC that does not provide its informational filing by the required date and may impose penalties of up to $500 for each day that the filing is late.

Transfer on Death Deeds

As part of the 2024-2025 Executive Budget, New York enacted a new law allowing for the use of transfer on death (TOD) deeds. A TOD deed allows the owner of real property to designate a beneficiary who will automatically inherit the property on their death, rather than having to receive such property as part of the probate process. The Transfer on Death Deed Law took effect on July 19, 2024, and is codified as Section 424 of the New York Real Property Law.

To effectively utilize a TOD deed, the deed stating that the transfer to the designated beneficiary is to occur at the current property owner’s death must be notarized and signed by two witnesses who were present at the same time and witnessed the property owner’s signing of the deed. The TOD deed must also be recorded during the owner’s lifetime in the county where the property is located.

The utilization of a TOD deed allows the transfer of the property to happen outside of the often-drawn-out probate process without the transferor giving up current ownership and control. However, it allows for less flexibility in the administration of an estate where the real property may be needed to effectively execute other estate planning strategies and will not be appropriate in many more complex planning structures.

Multi-Person Bank Accounts

A new law has been proposed that aims to remedy the present issues regarding the treatment of multi-person bank accounts in New York. Currently, New York Banking Law (NYBL) Section 675 dictates that a deposit made into a joint account is considered to be owned in equal proportions by the account holders and, when the first of the account holders dies, the surviving account holder is considered to be the owner of the entire account. However, many joint accounts are opened merely for convenience purposes. A common example of a joint account used only for convenience is when an elderly parent and their adult child hold an account together so that the adult child can assist their parent in paying bills and generally managing the parent’s funds. In this kind of situation, the intent is not for the parent to make a gift of one-half of the joint funds when deposited into the account or for the joint funds all to be left to the child upon their death, however, these are the presumed results under NYBL Section 675.

The only exception to this is NYBL Section 678, which was created in recognition of these “convenience accounts.” Under NYBL Section 678, upon creation, a second account holder can be added to an account with the designation of only being an account holder “for the convenience of” the person who actually deposits the funds into the account. If this designation is made, then there is no presumption of survivorship rights when the first account holder dies, and the funds are only considered to belong to the individual who deposited the funds into the account. Convenience accounts under NYBL Section 678, however, have never become widely used, mainly due to the fact that most individuals do not realize that this is a designation that must be made when creating a joint account for convenience purposes.

The new law, NYBL Section 678-a, would replace the current NYBL Section 678, and NYBL Section 675 would only apply to those accounts created before the effective date of the law that are not modified to comply with NYBL Section 678-a after it becomes effective. Under NYBL Section 678-a, upon creation of a joint account, banks must require the account holders to complete a signature card that specifically establishes whether the account holders have survivorship rights or whether the account is for convenience only. NYBL Section 678-a also generally reverses the presumption of survivorship rights, so that an account created after the new law becomes effective will be presumed to be for convenience unless survivorship rights are designated on the signature card. Additionally, even if survivorship rights are designated, if there is clear and convincing evidence that survivorship was not actually intended, the account funds will still be allowed to pass under the decedent’s estate.

The bill (A.9230-B/S.9383A) has been passed in both houses of the New York State legislature and is awaiting delivery to Gov. Hochul. If signed, the new law will be effective starting July 1, 2025, and banks will be required to notify existing joint account holders of the new signature card requirement within six months of the effective date.

Reduction in Recordkeeping Requirement for Notaries

On January 31, 2023, a law went into effect permanently authorizing remote electronic notarization for certain documents and making the requirement to keep a detailed log of all notarizations performed for 10 years apply to all notaries, regardless of whether the notarial act was done remotely or in person. The extension of the recordkeeping requirement received backlash for being excessively time-consuming and burdensome. Additionally, attorneys who perform notarizations for their clients also raised concerns about the potential attorney-client privilege and confidentiality issues that could arise from keeping such records. As a result, a bill (A.7241/S.8663) has been proposed that exempts those notaries performing non-remote electronic notarizations from the new recordkeeping requirements. The bill has passed both houses but has not yet been delivered to Gov. Hochul for signature.

Removal of Notary Requirement for Affidavits in Civil Matters

An amendment to the New York Civil Practice Law and Rules went into effect on January 1, 2024, removing the requirement for notarized affidavits in civil matters, which includes those in the Surrogate’s Court. Previously, only attorneys, physicians, osteopaths, dentists and persons located outside of the United States were authorized to submit affirmations in lieu of affidavits. Now, however, any person who wishes to file sworn statements in a civil proceeding may do so, so long as the person affirms the truth of their statement under the penalty of perjury. This greatly eases the burden of submitting a statement to the court, especially for those involved in time-sensitive proceedings.

Remote Witnessing for Health Care Proxies

In yet another move to reduce procedural burdens, New York Public Health Law Section 29812-a was enacted to allow for Health Care Proxies to be witnessed remotely. In order to properly conduct a remote witnessing for a Health Care Proxy, the law specifies that (i) if the witness does not personally know the principal, they must be shown a valid photo ID; (ii) the execution of the document must be done using audio-visual conferencing technology that allows for direct interaction between the principal and any remote witness; (iii) a legible copy of the document must be transmitted to any remote witness within 24 hours of the execution; and (iv) any remote witness must sign the transmitted copy and return it to the principal.