Posted on October 26, 2018
Taxes are very complicated and tax laws change regularly. You should seek the help of an attorney or accountant to get information about taxes that could affect the estate. What follows in this section is a very general discussion of the taxes most likely to affect an estate in New Jersey. There are three main types of taxes that affect the estate administration process. They are: estate tax, inheritance tax and income tax.
Estate tax is a tax on the value of the estate. Currently for people dying in 2018 or later, New Jersey does not have an estate tax. There is a federal estate tax but in 2018 the first $5.6 million someone owns when they pass away is exempt from estate taxes. Therefore, if the taxable estate is worth less than that amount it will not have to pay estate tax to either the state or federal government.
Inheritance tax is a tax based on the relationship between the decedent and the beneficiary receiving money from the estate. There is no federal inheritance tax but New Jersey does have an inheritance tax. Certain relationships aren’t taxed – spouses, parents, children, grandchildren – but most every other relationship is. You need to check the relationship between the decedent and the beneficiary and, if its is a relationship subject to tax you need to calculate how much tax is due.
Income tax is a tax on the income received by the estate beginning immediately after the decedent passes away. The tax professional – hopefully an attorney or accountant with experience preparing tax returns for estates – can help the executor prepare the final income tax return for the decedent for the part of the year when the decedent was alive and then the estate income tax return or returns (depending on how long the estate is open).
Price & Price attorneys have received recognition from various groups and publications. Specific awards are noted on our attorney bios. More information about each of these awards and the methodology used for selection can be found on the following links. Super Lawyers and SJ Magazine 2017 Top Attorneys. No aspect of these accolades has been approved by the Supreme Court of New Jersey.