After Ed Koch served three terms as mayor of New York City he went on to be a successful author, radio host, and television personality. Though he barely had assets into the six figures when he left the mayor’s office, he passed away in February in possession of resources that exceeded $10 million according to reports.
Because of the size of the estate the estate tax is a factor. It is a factor not just on the federal level, but on the state level as well.
The federal estate tax is applicable in all of the states, and the exclusion is $5.25 million. So the portion of the estate that exceeds this amount is subject to the federal death levy that carries a 40% top rate in 2013.
New York has a $1 million state estate tax exemption and a 16% maximum rate. An expert who is quoted in a Forbes article about the matter says that the overall estate tax responsibility when you combine both the federal tax and the New York estate tax will be around $2.55 million if the estate is valued at $10.5 million.
This represents an effective 24% tax rate on the entirety of the estate.
Those who do not have assets into the seven figures may feel as though the remainder should be sufficient for Koch’s heirs. However, $2.55 million is a lot of money any way you slice it. Having to part with this much has to be a little difficult to swallow, especially considering the fact that Koch obviously paid considerable taxes throughout his lifetime.