Inheritance Tax Attorney in Red Bank, NJ
There are many tax aspects to consider in estate planning and elder law whether you are an executor, trustee, or beneficiary. If you are a participant of any type in the administration of a will you will want to be aware of the tax ramifications of distributing or receiving an inheritance. You should consider consulting an experienced attorney to guide you through this sometimes complex process. If you are an executor or trustee, you will likely have tax responsibilities. The Inheritance Tax applies to all transfers of real and personal property in New Jersey and intangible property wherever it is located for estates of decedents who are residents of the state.
For nonresident decedents who own property in New Jersey, the tax applies to real and personal property located in the state. Intangible property is something that cannot be moved, touched or felt but that has value. Examples are securities, copyrights, patents, and trademarks. Real property is usually real estate. Real property is not moveable whereas personal property is movable. Examples of personal property are furniture, jewelry or art. Some personal property has title documents that show ownership and transfer rights after death, for example, vehicles and boats. The State of New Jersey is one of only two states that collect both an inheritance and an estate tax – Maryland is the other.
The Inheritance Tax varies and depends on the amount received and the relationship between the decedent and the beneficiary. No tax, however, is imposed on “Class A” beneficiaries – father, mother, grandparents, descendants, spouses, civil union partners or domestic partners. Charitable institution beneficiaries are also exempt from the tax. A “domestic partner” arrangement involves a couple, both age 62 or older, but not involved in a civil union or marriage, whereas a “civil union partner” is a same-sex person engaged in a committed partnership recognized by the state.
Beneficiaries other than Class A beneficiaries are taxed at various rates. Class C beneficiaries – which includes siblings, the spouse or widow(er) of a child of the decedent, and a civil union partner or surviving civil union partner of a child of the decedent are exempt from paying tax on the first $25,000 of an inheritance. Transfers that exceed $25,000 are taxed at 11%–16%. Class D beneficiaries – all other beneficiaries – are exempt from the first $500 of an inheritance. Transfers that exceed $500 are taxed at 15%–16%.
There may be tax filing and coordination responsibilities in the administration of an estate with associated tax documents to file by specific deadlines, that an experienced inheritance tax lawyer can guide you through. A New Jersey tax return must be filed within eight months of the decedent’s death by beneficiaries other than Class A beneficiaries. Also, in order to have tax liens removed, documents must be filed to release bank accounts, stocks, bonds, brokerage accounts and real estate.
If you need assistance with a probate matter, contact Margaret M. Mahon, Esq. LLC. We offer free 30-minute initial consultations, free parking, and flexible hours for appointments by request. If necessary, we can travel to meet with you.