Estate Tax Lawyer in Red Bank, NJ
An estate tax is a tax paid on the estate of a person who has died and is different from the inheritance tax. Not all estates are assessed this tax depending on the value of the estate and how a will has been structured. There are many tax aspects to consider in estate planning and elder law whether you are an executor, trustee or beneficiary. If you are any of these participants in the administration of a will, you should be aware of tax ramifications and responsibilities. It is important to consult with an experienced attorney. Contact Margaret M. Mahon Esq., LLC for a consultation to discuss your legal matter.
New Jersey’s estate tax laws
A New Jersey estate tax return must be filed if the decedent’s gross estate exceeds $2 million for resident decedents dying between January 1, 2017 and December 31, 2017. It must be filed within nine months of the decedent’s death. For resident decedents dying on or after January 1, 2018, there will no longer be a New Jersey Estate Tax imposed on their estate; regardless of the amount of the estate, although the tax may come back again and there are ways of planning for this. Federal Estate taxes are only imposed on estates greater than $5.49 million. Additionally, a copy of any federal estate tax return must be submitted within 30 days of the date it is filed with the Federal Internal Revenue Service. Furthermore, a copy of any communication received from the Internal Revenue Service in relation to the probate matter must be submitted to the state within 30 of its receipt.
The inheritance tax return must be filed within 8 months of the decedent’s death.
The value of an estate is determined by adding up all of the assets owned at death, to include:
- Real estate located in New Jersey
- Bank accounts and certificates of deposit
- Investment accounts and securities
- Vehicles and other items of personal property
- Life insurance proceeds
- Retirement accounts
- Small businesses
The amount of a gross estate determines whether or not a tax return must be filed. There are various methods to determine an estate’s value. The amount of a taxable estate, which is what is left after subtracting deductions, determines whether or not there will be an estate tax. Any distributions to a spouse are exempt from estate tax so that if a person leaves all of their property to a spouse, there will be no estate tax. You may want to plan so that each spouse’s estate utilizes the exemption so that the amount sheltered from estate tax is doubled. Examples of other deductions include attorney fees funeral costs, and outstanding income tax bills. If allowed deductions reduce the value of your taxable estate below the exemption amount, there will be no state estate tax.
Any tax not paid within nine months generally incurs interest at a rate of 10% per year until paid. The Department of the Treasury may extend the time to file the return but not to pay the tax.
If a federal estate tax return has or will be filed with the Internal Revenue Service, any election made by a taxpayer to treat an asset in a particular manner for federal estate tax purposes must be treated the same for New Jersey estate tax purposes. In other words, a taxpayer generally may not make one election for federal purposes and another for state purposes. However, there are often exceptions to general rules. It is important to consult an experienced attorney to become aware of your rights and the best approach to achieve the desired outcome in your individual situation.
Contact an experienced Monmouth County Estate Tax Attorney
If you need assistance with a probate matter, contact Margaret M. Mahon, Esq., LLC. The firm offers a free 30-minute initial consultation. The Red Bank office provides free parking and flexible hours for appointments by request. If necessary, we can travel to meet with you.