New Jersey imposes inheritance taxes on decedent estates at the time of death. Depending on the person’s relationship to the decedent, the amount of taxes owed will vary. This article explains in depth how the inheritance tax may affect you when you inherit from a loved one who dies.
In short, no. The inheritance and estate taxes are two separate issues. The state estate tax exemption in New Jersey is $2,000,000. If an estate exceeds $2,000,000 in 2017, the tax is calculated on the excess amount. However, the New Jersey Legislature eliminated the estate tax for anyone who dies after January 1, 2018.
The inheritance tax is a tax on a beneficiary’s right to receive property from a decedent. Any property, or income from property, that a decedent transfers to a recipient or that a beneficiary uses are subject to the New Jersey Inheritance Taxi. The inheritance tax is calculated by the value of the asset transferred, less any available deductions or exemptions; and the relationship between the decedent and the beneficiary. The inheritance tax is imposed on a beneficiary that receives property valued at $500 or more. Therefore, if you receive something worth $499, you will not be required to pay any inheritance taxes. Life insurance is also exempt.
New Jersey inheritance taxes apply to residents of New Jersey. It also applies to non-residents of New Jersey who own real or personal tangible property located in New Jersey. Real property includes real estate: shore homes, rental properties, etc. Personal property refers to any movable property. This article mentions that the decedent has to be a resident of New Jersey. So, the person who’s estate is subject to the tax must be considered domiciled in the state of New Jersey at the time of his or her death.
Domicile is about intent. It requires physical presence or contact with New Jersey, or an intent to return to New Jersey after leaving it. The courts have long held that a person is presumed to be domiciled in one state until another domicile is established in another. In New Jersey, you are considered a resident if you live there, or if you do not have a permanent home in the state that you spend no more than 30 days in New Jersey; or if you own a residence in New Jersey and spend more than 183 days in New Jersey. However, a taxpayer will not avoid New Jersey inheritance taxes if that person is out of the state for 183 days or more.
This is a huge factor in determining how much you will owe, if anything, in inheritance taxes. New Jersey classifies beneficiaries by Class:
Unless you fall under a Class A beneficiary, the responsibility falls on the estate’s Personal Representative to file the appropriate tax return and pay the tax. Payment accompanies the return.
If you have any questions about New Jersey Inheritance tax or any other estate planning topics, feel free to contact us to schedule a free consultation.
For more than two decades Klenk Law has focused only on Estate Law. We’ve seen it all, and this experience allows us to explain complex estate planning techniques clearly and concisely. We make it easy for you to understand estate planning so you can make the best decisions for yourself and your family.
Peter Klenk is the founding member of Klenk Law, a seven attorney boutique estate planning law firm. We serve clients in Pennsylvania, New Jersey, New York, Minnesota and Florida. Peter Klenk received his Masters in Taxation LL.M. from NYU Law School and his J.D. from the University of Minnesota Law School. He served his country in the Navy JAGC during Desert Storm. Easy to talk to, feel free to call Peter for an appointment. We will make the process as easy as possible!
"I worked for Peter Klenk for 4 wonderful years. I can’t speak highly enough of everyone at the firm. Everyone truly cares about their clients and has a strong sense of responsibility to get things done right. I would highly recommend Klenk Law!"
Flora Novick
Peter and his staff are very responsive and always willing to help my clients and in a cost efficient manner.
Answered my question quickly and referred me to a colleague that could handle my problem
Peter has done a great job with the estate planning for my father. He is very thorough and patient as we, the family need to make decisions.
Great firm. Great people. Happy to refer folks in need to estate planning to Peter and his team. They do great work.
I met Peter soon after he started his practice in Philadelphia, PA. He and his team have always been there for me and my various inquiries throughout my life-changing events, corporate relocations. I have lived in various cities throughout the nation, I have never had a problem in contacting Peter or a member of his team. He and his office responds quickly and returns calls to me to fulfill my requests for information or to revise my estate needs while posing relevant thought-provoking questions that I need to consider to secure my future. One of Peter's best qualities is his ability to answer clients complicated questions in a simple way to ensure comprehension.
Let us put our expertise to work for you.
Free consultation within 24 hours.