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Does New Jersey’s inheritance tax apply to your heirs?

| Feb 16, 2021 | Estate Planning |

When you die, your heirs inherit your property and assets per the provisions of your last will and testament. Alternatively, if you live in New Jersey and die without a will, the state’s laws of intestacy determine who inherits your property and in what proportion. Either way, your heirs may have to pay inheritance tax on the value of the property they receive. 

The New Jersey Division of Taxation explains that New Jersey passed its state inheritance tax in 1892, imposing a tax on some property transferred from a deceased person to some of his or her heirs. 

Factors involved

Your heirs to whom this inheritance tax applies, and its amount, depends on various factors, including the following: 

  • Where you live at the time of your death 
  • The identity of your heirs 
  • Their relationships to you 
  • The type of asset(s) transferred 
  • The value of the asset(s) on your date of death 

For inheritance tax purposes, it makes no difference where your heirs live. Only your own state of residency at death matters. 

Resident decedent

If you reside in New Jersey at the time of your death, virtually any asset you own can become subject to inheritance tax when transferred to your heirs, including such things as the following: 

  • Your home 
  • Your other real estate holdings 
  • Your bank account balances 
  • Your investment account balances 
  • Your vehicles 
  • Any other tangible personal property you own 

Nonresident decedent

If you reside in another state at the time of your death, only the property and assets you own in New Jersey become subject to New Jersey’s inheritance tax. 

Inheritance tax rates

New Jersey’s inheritance tax rates range between 11% and 16% of the value of the transferred property depending on which category your heirs fall into.