When an individual passes away, leaving an estate, it is important to be aware of the tax consequences that are associated with the assets the decedent owned at the time of death. It is important to be aware that estate taxes are different than inheritance taxes. Often, when an individual is planning their estate, they work closely with an attorney to see how they can diminish the consequences of such taxes.
Who must file an estate tax return in New Jersey?
At the beginning of 2017, New Jersey’s estate tax laws changed so that for that year the exemption from estate taxes was $2 million and effective January 1, 2018, the estate tax was eliminated entirely. Previously, anyone who passed away before 2017 had to pay estate taxes if the estate was valued at greater than $675,000. Now, New Jersey residents will only be required to pay Federal estate taxes and that is only if their estate is worth more than $5.49 million and double that for a couple.
What about the inheritance tax?
The inheritance tax has remained in place, despite the other changes in the law. This tax is separate from the estate tax and is determined based upon the status and relationship of the beneficiary. For Class A beneficiaries (spouse, parents, children, and grandchildren) there is no inheritance tax, however, for Class C (siblings and spouse of child or surviving spouse of deceased child) and D beneficiaries (everyone else, except charities) there is still an inheritance tax. Charitable bequests, Class E, are always exempt from both estate and inheritance taxes.
What is considered in placing a value to an estate?
Of course, one may wonder what exactly the value of the estate consists of. Some of the assets that are considered include the value of all bank accounts, retirement accounts, life insurance proceeds (in certain circumstances), investment accounts, real estate owned, vehicles owned, businesses owned, and the values of all other personal property.
If you are planning your estate, is important to consider the Federal estate tax consequences. Contact our firm today for quality legal guidance regarding your estate.
The planning and administration of an estate requires experienced legal guidance. If you need an effective attorney to assist you with matters of wills, trusts, and estates, or the taxes associated with them, contact Margaret M. Mahon, Esq. LLC today to schedule a consultation.