The only two things guaranteed in life, the old saying goes, are death and taxes. The tax codes of some states combine the two guarantees by imposing estate taxes and/or inheritance taxes on the transfer of property upon death. Because these taxes vary greatly from state to state, where you live could very much affect the amount of taxes your estate or heirs pay.
According to Forbes, 22 states and the District of Columbia collect an estate or inheritance tax. With the federal government imposing a 35 percent estate tax with an exemption of $5 million for 2011 and 2012, residents of the states that also have estate or inheritance taxes may want to consider an estate plan that takes account of the current state of federal law. This includes residents of New Jersey.
New Jersey Taxes
New Jersey is one of two states that that assess both estate and inheritance taxes. Both taxes have progressive rates, with a top tax rate of 16 percent. The New Jersey estate tax allows for an exemption of up to $675,000.
Though they are similar in some ways, estate and inheritance taxes are different in others. They are different because they apply to different entities.
•· Estate tax - is a tax that is applied to the transfer of property, including through a will, upon death. This tax is imposed on the decedent's estate.
•· Inheritance tax - is a tax that is imposed on the recipient (heir) of property through inheritance. The surviving spouse, parents, children, grandchildren and stepchildren are exempt from inheritance tax in New Jersey.
When planning for the future it is prudent to consider all costs and taxes so that you minimize the impact on both your estate and heirs. Speak with a New Jersey estate planning attorney to discuss your situation and plan for the future.
From our law offices in Hackensack and Manhattan, Kirsch Gartenberg Howard LLP has served individuals and businesses across northern New Jersey, including Bergen County, Essex County, Union County, Middlesex County and Passaic County, and the five boroughs of New York City since 1984.
