Oct 18

New Jersey Abolishes Its Estate Tax

shutterstock_329024504Since 2002 New Jersey has imposed one of the highest, if not the highest, estate tax among those states which continue to impose an estate tax.  That is because its estate tax exemption of $675,000 was the smallest in the nation.

That is no longer the case.  As a result of legislation signed by Governor Chris Christie on October 14, 2016, for New Jersey residents dying during 2017 the New Jersey estate tax exemption will be $2,000,000.  Beginning January 1, 2018 there will be no New Jersey estate tax.

While the New Jersey estate tax remains in effect it will continue to be applied based on a graduated rate table which begins at 4% for estates of $675,000 or more and increases to 16% for estates in excess of $10,100,000.

New Jersey also imposes an inheritance tax and that has not been affected by the abolition of the estate tax.  The New Jersey inheritance tax does not apply to transfers at death to parents, spouse, children and other descendants and charity, only to transfers to other relatives and friends.  The lowest New Jersey inheritance tax rate is 11% and the highest is 16%.

If you are a resident of New Jersey and your will was drafted to minimize or avoid New Jersey estate tax, perhaps your will can be simplified.  You should consult with an estate planning attorney.

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