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Inheritance tax still applies to some New Jersey heirs

On Behalf of | Oct 11, 2018 | Estate And Gift Tax Planning |

New Jersey does not have an estate tax as of January 1, 2018. However, it is one of the remaining states to have an inheritance tax. Also known as a “beneficiary” task, the basis of this tax is on the person who receives an inheritance as well as the amount of the estate that person inherited. An inheritance tax applies to bequests worth at least $500. The tax amounts from 11 percent to 16 percent on inheritances.

However, there are certain heirs who are exempt from the inheritance tax. These include: spouses; civil union partners after February 19, 2017; domestic partners after July 10, 2004; children; grandchildren; great-grandchildren; parents; grandparents; mutually acknowledged children and stepchildren. In addition, certain nonprofit organizations are exempt including: qualified charities; religious institutions; educational and medical institutions; nonprofit benevolent or scientific institution; and the State of New Jersey or any of its subdivisions.

Those to whom the inheritance tax applies include: siblings of the decedent; the spouse of a child of the decedent; and civil union partners of a child of the decedent. However, these heirs can still receive as much as $25,000 before the inheritance tax applies.

In the end, it is important that those who are required to pay an inheritance tax do so properly. Filing these types of tax returns can be complicated and it is crucial that no important step is overlooked. Therefore, it can help to consult with a legal professional who can explain whether the inheritance tax applies to you, and what you must do to ensure it is properly paid.