What is New Jersey’s inheritance tax all about?

There are just six states in the USA that still implement inheritance tax, and New Jersey is one of them. Here’s some advice on how this tax may affect your estate, from a leading estate planning attorney in New Jersey.

What is inheritance tax? 

This is a separate tax that a beneficiary must pay after receiving assets or property from a loved one’s Last Will and Testament. It is not included in federal or New Jersey estate tax, and has to be paid by the beneficiary unless the decedent specified other payment arrangements within their will.

What does this mean for my inheritance? 

This tax is levied according to your relationship to the decedent:

  • Class A beneficiaries, which include parents, grandparents, descendants, spouses, civil union partner or domestic partner, will have to pay no inheritance tax.
  • Class C beneficiaries, which include brothers and sisters of the decedent, as well as husbands, wives, widow(ers) and civil union partners of a child of the decedent, will receive the first $25,000 free of tax and 11% tax imposed on the remaining amount.
  • Class D beneficiaries, which includes everyone not covered by Class A or Class C, are taxed between 15-16%.

Please note that legislation around these regulations and amounts is subject to change, so please speak to your NJ estate planning attorney for the most up-to-date information.

Inheritance tax exemptions in New Jersey 

Exemptions to this inheritance tax includes:

  • Sums under a total value of $500.
  • Life insurance with a named beneficiary other than the estate.
  • Charitable donations.
  • Federal civil service retirement benefits to a beneficiary other than the estate, executor or administrator.
  • Transfers for public purposes to New Jersey.
  • Annuities paid to survivors of military retirees.
  • Qualified employment annuities paid to surviving spouse, civil union partner or domestic partner.

Get the best advice for minimizing taxes on your estate from a qualified NJ estate planning attorney 

If you would like further guidance on minimizing your estate taxes, Frank R. Campisano can provide you with the necessary expert legal advice and professional insight.

In addition, he can can also assist you with all other aspects of your estate plan, from drawing up medical directives and Power of Attorney documents to Medicaid planning. For more information on setting up or changing an estate plan, please contact him at the law firm of Sedita, Campisano & Campisano, LLC in New Jersey or visit our website at https://www.scclegal.com/

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