In this Advisory Opinion, New York State determined that a non-resident decedent’s interest in a revocable trust that owned interests in several limited liability companies (“LLCs”) that held New York real property was not subject to New York State estate tax.

The decedent was domiciled in and a resident of Florida. Through his revocable trust, the decedent owned various minority interests in several LLCs (classified as partnerships for Federal income tax purposes) organized under the laws of New York State. The LLCs held commercial and residential property located in New York. The business purpose of the LLCs is to rent these properties to tenants for a profit. The decedent never resided in or personally owned any of the properties. The decedent never participated in the management of the LLCs (the decedent was a limited partner) and did not provide any of services to the LLCs.

In general, a non-resident decedent’s intangible property is not subject to New York State estate tax. (New York State estate tax is imposed on real or personal property owned by a non-resident decedent located in the State.) Because the LLCs are multi-member LLCs that elected to be treated as partnerships for Federal income tax purposes, the LLCs are considered to be separate from its owner. Thus, New York State concluded that the revocable trust’s interest in the LLCs constituted an intangible asset that was not subject to New York State estate tax.