What You Should Know About New Jersey Inheritance Tax
Friday, October 30, 2020
(Gloucestercitynews.net)(October 30, 2020)--New Jersey’s estate tax was repealed in 2018, but it’s still one of the few U.S. states with an inheritance tax. An inheritance tax is a state tax paid on the receipt of money or property from the estate of a deceased person. New Jersey residents should be aware of inheritance tax laws so they can better plan their estates.
Inheritance tax exemptions
You may be exempt from New Jersey’s inheritance tax if you’re either the spouse, domestic or civil union partner, parent, grandparent, child, grandchild, or great-grandchild of the deceased. Inheritances left to schools, religious organizations, or charities are also exempt. Moreover, siblings or children-in-law are labeled as “Class C” relatives, who can inherit up to $25,000 untaxed. Inheritances of over $1.7 million are taxed at a rate of 16%. Inheritances between $25,000 and $1.7 million are taxed anywhere between 11% to 16%. Aunts, uncles, nieces, and nephews are “Class D” relatives, taxed 15% on the initial $700,000 inherited. A 16% tax rate is applied to any following amounts.
Spouses and NJ inheritance law
The spouses of New Jersey residents who die intestate, with no living parents or children, will inherit their interstate property. However, if the deceased does have children or living parents, the spouse will only receive a certain percentage of the property, which is calculated depending on its exact value. The spouses of individuals who pass away with living parents and without children will receive 25% of their interstate property — as long as that amount falls between $50,000-$200,000. Another 25% of the property is given to the parents, while the spouse gets the rest.
Writing a will
Many requirements exist to make a legitimate will in New Jersey. An estate planning lawyer can help make the process of writing a will that meets all your needs as easily as possible. First, the “testator” (the person making the will) needs to be 18 years old minimum and of “sound mind”. The will must also be in writing and signed by the testator and two witnesses. Once the will is then determined valid, the probate process can begin. New Jersey has a Uniform Probate Code and is usually only required if the deceased owned any assets titled in their name alone. Other assets (“non-probate” property) can usually be given to the second owner without probate.
Understanding New Jersey’s inheritance laws play an important role in estate planning. This way you can better ease the burden on your loved ones after your death.
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