(For additional information about the Practice Area - Estate Planning - please visit that page by clicking here.)
NJ Estate Tax Information
New Jersey Estate tax is a tax imposed upon the transfer of property by New Jersey resident decedents. The estate tax effects every resident decedent after December 31, 2001, if the gross estate, as determined by the Internal Revenue Code in effect on December 31, 2001, exceeds $675,000. N.J. Admin. Code Sec. 18:26-3A.1.
[New York State's limit is $1,000,000.00]
In these cases, the executor, administrator, trustee or other person or corporation liable for the estate's tax payment must prepare and file a New Jersey Resident Decedent Estate Tax Return, Form IT-ESTATE. N.J. Admin. Code Sec. 18:26-3A.8(c). No estate tax is imposed upon the estates of nonresident decedents.
A New Jersey Decedent Estate Tax Return must be filed if the value of the gross estate equals or exceeds $675,000 even if no tax is due because of the availability of the unlimited marital deduction or charitable deduction. If the return is not filed, the estate will not be issued tax waivers and estate assets will remain subject to the lien of New Jersey estate tax.
How is the value of the estate calculated?
The value is calculated by including an appraisal of the "clear market value" of all of the decedent's real and personal property (both tangible and intangible) that is subject to the New Jersey estate tax on the date of the decedent's death. N.J. Admin. Code Sec. 18:26-3A.3. Deductions are allowed and should be claimed on Schedule E-2 and Line 5 of the Form IT-ESTATE. NJS 54:34-5 lists the permitted deductions.
Federal estate taxes due or paid to the United States government will not be considered an administrative expense and will not be allowed as a deduction. NJS 54:34-5.
If No Federal Tax Return is Filed:
New Jersey estate tax proceedings can be filed in two different manners: either the simplified tax system method or Form 706(2001) method. You should discuss with your attorney which method is appropriate for your situation.
Did you know? About - SAFE DEPOSIT BOXES
Safe deposit boxes are no longer inventoried by the New Jersey Division of Taxation. On September 30, 1992, the Division issued a blanket release in the form of a letter from the Director, Division of Taxation, to all banking institutions, safe deposit companies, trust companies, and other institutions which serve as custodians of safe deposit boxes. The contents of the boxes may be released without inspection by the Division.
WHEN TAX RETURNS ARE DUE:
A Transfer Inheritance Tax Return must be filed and the tax paid on the transfer of real and personal property within eight months after the death of either:
A RESIDENT decedent for the transfer of real or tangible personal property located in New Jersey or intangible personal property wherever situated, or
A NONRESIDENT decedent for the transfer of real or tangible personal property located in New Jersey. No tax is imposed on nonresident decedents for real property located outside of New Jersey and intangible personal property wherever situated.The return must be filed whenever any tax is due or a waiver is needed. The tax is a lien on all property for fifteen years unless paid sooner or secured by an acceptable bond. Interest accrues on unpaid taxes at the rate of 10% per annum.
WAIVERS
Bank accounts, certificates of deposit, etc., in the name of, or belonging to a resident decedent in New Jersey financial institutions cannot be transferred without the written consent of the Division of Taxation. This consent is referred to as a waiver.
This is true also for stocks, bonds, etc., of corporations organized under the laws of NJ.
EXCEPTIONS:
- Real property located in New Jersey, in the name of, or belonging to a resident or a non-resident decedent is subject to the same waiver requirements except if the real property was held by a husband and wife/civil union couple as "tenants by the entirety". This does not need to be reported regardless of the date of death and waivers are not required.
- Waivers are additionally not required for automobiles, household goods, personal effects, accrued wages or mortgages, but these items must be reported in the return filed.
Notwithstanding the waiver provisions stated above, any financial institution may release up to 50% of any bank account, certificate of deposit, etc. to the survivor, in the case of a joint account, the executor, administrator, or other legal representative of a resident decedent's estate. This procedure is known as a blanket waiver. It is not available for transfers of stocks and bonds. N.J.A.C. 18:26-11.16.
A self executing waiver, what is known as a Form L-8, has been created for Class "A" beneficiaries in the estates of resident decedents.
Class A beneficiaries are described as - father, mother, grandparents, spouse/civil union partner (after 2/19/07), domestic partner (after 7/10/04), child or children of the decedent, adopted child or children of the decedent, issue of any child or legally adopted child of the decedent, and step-child of the decedent.
Use of the Form L-8 may eliminate the need to file a formal Inheritance Tax return.
