HOW WILL YOUR ESTATE BE TAXED?

By: BENJAMIN D. ECKMAN, ESQ.
Elder Law Attorney

    Several years ago there was a commercial running with the theme “New Jersey and you – perfect together.” We in New Jersey live in a great state. We hosted the Super Bowl, have great beaches, have legal gambling in Atlantic City and so much more.

     But New Jersey and Maryland are the only two states that have both an estate tax and an inheritance tax.

NEW JERSEY ESTATE TAX

     If you are a New Jersey resident at the time of your death and have assets of more than $675,000, the State of New Jersey will impose an estate tax. Your gross estate is calculated by adding up all assets you own at death, including New Jersey real estate, bank accounts, investment accounts and securities, cars, other personal property items and life insurance proceeds. Furthermore assets are included in your gross estate regardless of whether they went through the probate process or not. Thus, real estate held in a living trust or a retirement account get applied towards the $675,000.00 threshold figure. Additionally, New Jersey also requires that all gifts made within three years of death be included in the gross estate. The New Jersey estate tax return is due nine months after death. If a tax liability exists, it must be paid at the time the return is due. If tax is unpaid, interest will accrue. IMPORTANT TO NOTE THAT EFECTIVE JANAUARY 1, 2018, NJ ELIMINATED THE ESTATE TAX.

NEW JERSEY INHERITANCE TAX

     The state of New Jersey imposes an inheritance tax when a New Jersey resident dies. This tax is based on the relationship between the decedent and the beneficiaries. If a decedent’s estate goes to a spouse, child, parent, grandchild, grandparent or stepchild, no tax is due. If a decedent leaves money to a charity, and educational institution, a hospital, a library or the State of New Jersey or its political subdivisions, there is also no tax due. If property, however, is given to other family members, such as a sibling, wife or widow of a son or husband, or husband or widower of a daughter, the first $25,000 is tax free, but the balance of the inheritance is taxed at 11% up to $1,100,000. Thereafter, the rates range from 13% to 16%. All other beneficiaries are taxed at 15% for the first $700,000, and at 16% thereafter.

     So while it is true that New Jersey is a great place to live, these two taxes can significantly eat into your estate. Please consult with me to learn strategies to minimize if not eliminate these taxes altogether.

     The rules relating to the New Jersey Estate Tax and New Jersey Inheritance Tax are very complicated. It is essential that professional tax/legal assistance be obtained before the tax return is filed. The Law Firm of Benjamin D. Eckman can help with this. Please contact us to assist with all your Estate Planning, Estate Administration and Elder Law Needs.

Benjamin D. Eckman, Esq. concentrates his practice on Elder Law & Estate Planning. Elder law is intended to broadly assist “extended living”. An elder law practitioner provides the legal information necessary for persons whose lives will extend or have already extended beyond the time when all children are usually out of the house and when regular employment ceases. After the elder law attorney and client complete their work, legal documents have been drafted, tax considerations have been analyzed, and a plan to protect the elder’s estate has been implemented.

Benjamin D. Eckman’s practice focuses on Estate Planning & Elder Law – legal issues facing senior citizens. Benjamin D. Eckman received his Bachelor’s Degree in Business/Accounting from Touro College and his law degree from Seton Hall University School of Law. He is a member of the New York State Bar Association, the New Jersey State Bar Association, the National Academy of Elder Law Attorneys, the Elder Law Section and Real Property, Probate and Trust Section of the New Jersey State Bar Association, the Union County Bar Association, Passaic County Bar Association and the Bergen County Bar Association. He can be reached at (973) 709-0909, (908) 224-4357 or (201) 263-9161.