On October 14th, 2016, then-Governor Christie signed a law that would eliminate the New Jersey estate tax entirely by January 1, 2018. Beginning in 2016, decedents could not be taxed on an estate of less than $675,000. As of January 1, 2017, there was no tax on a decedent’s taxable estate of less than $2 million. Now, the New Jersey estate tax is eliminated altogether.
For many individuals this may alleviate certain estate planning concerns. However, it is important to remember that New Jersey is one of six states that have an inheritance tax placed on any transfer to a beneficiary that is not a spouse, parent, child, or grandchild. Those who may have an inheritance tax imposed on them include:
- Nieces or nephews; and
The rate in which a person is taxed on their inheritance is dependent upon the assigned class that the beneficiary falls into.
In addition to the New Jersey Estate Tax repeal, The Tax Cuts and Jobs Act (TCJA) doubled the federal estate tax exclusion to almost $11.2 million per individual and almost $22.4 million dollars per married couple as indexed for inflation for those who die between 2018 and 2025. This means that heirs or beneficiaries may be left up to this amount federal estate tax free. Furthermore, gifts made during the course of an individual or married couple’s lifetime that does not exceed this amount will also be free of federal gift taxes.
Even with the New Jersey estate tax repeal, it is important to make sure you continue to plan for your future and the future of your loved ones, regardless of whether there is no estate tax in New Jersey and the Federal Estate Tax exemption has been doubled. Planning for your future and the future of your loved ones requires guidance from a skilled estate-planning attorney that can establish a comprehensive plan, which includes a trust, advanced directives, and a last will and testament, among others.
In light of the recent tax changes, if you or a loved one has any questions, contact an experienced estate-planning attorney. The attorneys at Richard P. Rinaldo, Esq are skilled estate-planning lawyers that are dedicated to representing their clients with compassion. Please contact us today at 908-352-2500 to schedule a free initial consultation.