Some states have varying inheritance taxes, and New Jersey is no exception. Indeed, virtually every state has some sort of inheritance tax, and no two states have the same type of tax. New Jersey has some very specific tax laws that can impact how much money your heirs receive.
How does New Jersey’s inheritance tax work?
When it comes to estate planning, the best thing you can do is understand how the New Jersey inheritance tax operates and how it may interact with the taxes of other states or the federal government. In New Jersey, the most important factor determining the states inheritance tax is timing:
- If someone died on or before December 31, 2016, their first $675,000 is exempt. After that, assets are taxes at a rate that is “in accordance” with the Internal Revenue Service’s rates.
- If a death occurs between January 1, 2017, and December 31, 2017, the exemption is increased to $2 million.
- If the death is after January 1, 2018, the state of New Jersey does not have an inheritance tax.
In some questions – and particularly given the complexities of New Jersey’s inheritance tax – the issue of what is taxed and what isn’t can get somewhat complicated. Furthermore, as you can see, the answers to these questions are also impacted by the timing of the death. Thankfully, a tax professional might help you answer any questions and address a series of legal concerns that may crop up related to these issues.
Furthermore, it is worth noting that proper structuring of your estate can help to minimize your tax burden. These issues are always better addressed preemptively, and you should consider how to plan your estate in order to maximize your heirs’ inheritance.