On October 14, 2016, Governor Christie signed a new law that will eliminate the New Jersey estate tax. Currently, decedents residing in New Jersey with taxable estates exceeding $675,000 may be subject to New Jersey estate tax. With the new law, New Jersey residents who die during 2017 will not be subject to the New Jersey Estate tax unless their taxable estate is greater than $2,000,000. Starting January 1, 2018, the New Jersey Estate tax is repealed.
This law does not impact the New Jersey inheritance tax. The New Jersey inheritance tax is based on the relationship between the decedent and the beneficiary receiving the assets from the decedent. Qualifying charities and Class “A” beneficiaries such as a spouse, lineal ancestors, descendants and stepchildren are exempt from the New Jersey inheritance tax. The rate of tax imposed on transfers to other individuals is based on the individual’s assigned “Class.”
As a result of this new law, you may want to review your current estate plan in order to confirm that the documents in place will continue to accomplish your goals in a tax efficient manner.