The State of New Jersey has long been known for having a state as well as a federal tax on estates, making estate planning more complex than ever for individuals who want to leave their assets to their loved ones rather than the government. The New Year, however, brings some great news with the death of the NJ estate tax.
As of January 1, 2017, the credit against the New Jersey estate tax increases from $675,000 up to $2 million, making anyone with an estate of less than $2 million exempt from this estate tax. On 1 January 2018, this tax will be completely eliminated.
What does this mean for inheritance tax?
In addition to estate tax, the State of New Jersey also implements an inheritance tax on the beneficiaries of decedents, which generally ranges from 11-15% of the value of the inheritance based on how closely the beneficiary is related to the decedent. Unfortunately, this tax is being kept in place by the state and will not be affected by this new legislation.
How can I reduce my exposure to federal estate tax?
Citizens of New Jersey will still be subject to federal estate tax, which is implemented on all estates valued in excess of $5,450,000. With a professionally devised estate plan, your assets will be better protected from federal taxation.
What does this mean for my current estate plan?
For many New Jersey citizens, much time and effort has been spent on developing complex estate plans that preserve assets in Wills and trusts for loved ones rather than having them subject to state taxation. With the elimination of this tax, these estate plans are immediately outdated and ineffective. It is therefore essential that, regardless of the value of your assets, a new estate plan is professionally developed by an experienced attorney in order to correctly assign your assets and plan for your future or long-term care.
New Jersey citizen? Update your estate plan today!
This state legislature has real implications for your estate plan as well as Medicaid and financial planning, so speak to New Jersey estate planning attorney Frank R. Campisano today. Whether you want to create a Last Will and Testament or are interested in updating more complex estate planning documents such as trusts and Power of Attorney documents, he can ensure that the right legal documentation is developed in order to meet your specific wishes.