New Jersey is one of only two states that collect both an inheritance tax and estate tax at the time of the transfer of assets upon an individual’s passing. However, on October 14, 2016, Governor Christie signed a bill increasing the exemption amount for payment of estate tax for one year and thereafter, for a total elimination of the estate tax.
Currently, New Jersey imposes the estate tax on estates with a value of $675,000.00 or more. The newly signed bill increases the $675,000.00 exemption to a $2,000,000.00 exemption commencing on January 1, 2017. The estate tax will be completely eliminated as of January 1, 2018.
The Collection of New Jersey Inheritance Tax Continues
However, New Jersey will continue to collect the inheritance tax. This tax amount is determined by the relationship of the individual who passed (the “decedent”) and the person receiving the inheritance.
For example, spouses, children, parents or grandchildren of the decedent would not have to pay any New Jersey inheritance tax because they are “Class A beneficiaries.” However, a brother or sister of the decedent would have to pay a certain percentage of New Jersey inheritance tax because they are considered “Class C beneficiaries.”
The repeal of the New Jersey estate tax is an extremely beneficial savings to those passing and receiving large inheritances. However, it is still imperative that you consider the tax implications of passing assets to certain beneficiaries when preparing your estate plan.
The attorneys at Gruber, Colabella, Liuzza and Thompson can assist you in creating the estate plan that will meet your individual needs. In addition, we can help you regarding issues dealing with Wills and Estate Law. Contact us for your free consultation.