New Jersey is a beautiful state in its own right, from the farmlands to the beaches to the extraordinarily colorful change of seasons. Is also well situated in proximity to the a couple of the largest centers of commerce in the world, flanked in the north by the Big Apple of New York City and in the south by the City of Brotherly Love. There’s lots to like about living in the Garden State, but one of the things that’s not so appealing is the high rate of taxation that comes along with the territory.
When it comes to estate planning the federal government is a ubiquitous nemesis from a tax perspective. No matter where you happen to reside in the United States that 35% federal death levy looms large, and it can can take some intricate planning to mitigate asset erosion. But when you live in the state of New Jersey your estate planning challenges are compounded by not just the state estate tax, but the potentiallyNew Jersey inheritance tax as well.
The federal estate tax comes with a $5 million exemption and a 35% maximum rate as a result of the recently passed Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010. The New Jersey estate tax exemption is just $675,000 and the top rate comes in at 16%. Estate taxes are levied on the sum total of your taxable assets after you die simply because you did indeed pass away. The logic behind this is anybody’s guess, but that’s another story.
As though a 35% federal estate tax and a 16% New Jersey estate tax were not enough, the Garden State also imposes an inheritance tax on each individual heir who is not a class A beneficiary receiving inheritances from your heavily taxed estate. These levies can also reach as high as 16%.
The good news is that we can revel in near exclusivity: Maryland is the only other state that opposes both an estate and an inheritance tax on its residents.
- Challenging a Last Will - October 29, 2020
- Comprehensive Latter Life Planning - October 21, 2020
- Who Inherits from a Beneficiary Who Died? - October 14, 2020
