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Inheritance and Estate Taxes Overview

What is Transfer Inheritance Tax?

When someone dies, the assets he/she owns must go somewhere or to someone.  When these assets are transferred from the name of the person who died (“the decedent”) to someone else (“the beneficiary”), the State of New Jersey may impose a tax on this “transfer” of ownership.

The amount of tax imposed depends on several factors:

  • Who the beneficiaries are and how they are related to the decedent;
  • The date of death value of the assets (and debts) that the decedent owned;
  • What kind of assets the decedent owned;
  • Whether the decedent lived in New Jersey or another state. (Where the beneficiaries lived is not a factor.)

There are two types of Inheritance Tax based upon where the deceased person legally lived:

  1. Resident Decedents (someone who died as a legal resident of New Jersey):  Essentially anything a decedent owned (house or real estate, bank accounts, stock, bonds, cars, etc.) is eligible to be taxed depending on who inherits them. 

  2. Non-Resident Decedents (someone who died as a legal resident of another state or a foreign country):  People who did not live in New Jersey, but owned certain types of property in New Jersey (usually real estate) may be subject to NJ Non-Resident Inheritance Tax.  See New Jersey Non-Resident Inheritance Tax Frequently Asked Questions for more information.

What is NJ Estate Tax?

In addition to Inheritance Tax, the State of New Jersey for years imposed an Estate Tax based upon the size of the decedent’s gross estate and according to the decedent’s date of death.

The New Jersey Estate Tax will be phased out beginning January 1, 2017.  The Estate Tax exemption increased from $675,000 to $2 million for the estates of individuals who die on or after January 1, 2017, but before January 1, 2018.

On January 1, 2018, the New Jersey Estate Tax will no longer be imposed on the estates of individuals who die on or after January 1, 2018.

Note:
The estate only pays the amount of Estate Tax which is over and above the amount of any Inheritance Tax due.

In all cases, if the decedent was not a resident of New Jersey, there is no New Jersey Estate Tax due.

For resident decedents dying before January 1, 2017:

Estate Tax applies if the resident decedent’s gross taxable estate plus adjusted taxable gifts exceeds $675,000 as determined in accordance with the provisions of the Internal Revenue Code in effect on December 31, 2001.

For resident decedents dying on or after January 1, 2017, but before January 1, 2018:


Estate Tax applies if the resident decedent’s taxable estate, exceeds $2 million as determined in accordance with the provisions of the Internal Revenue Code in effect on January 1, 2017.

For resident decedents dying on or after January 1, 2018

No New Jersey Estate Tax will be imposed on the estates of resident decedents dying on or after January 1, 2018.  No Estate Tax return will be required.  NOTE: New Jersey Inheritance Tax may still apply.  See Inheritance Tax filing requirements below.

What is an Inheritance or Estate Tax Waiver (Form 0-1)?

Form 0-1 is a “waiver" that represents the written consent of the Director of the Division of Taxation to transfer or release certain property in the name of a decedent.  New Jersey property (i.e. - real estate located in NJ, NJ bank accounts, NJ stocks and bonds, etc.) cannot be transferred or released without this consent. A separate waiver will be issued for each asset. Each waiver will contain specific information about the property (i.e. – For banks: bank name, account balances, and names on the account). 

IMPORTANT: Form 0-1 only can be issued by the Division of Taxation. You do not fill out the waiver.

Do You Need to Get a Tax Waiver or Pay Tax?
To obtain a waiver or determine whether any tax is due, you must file a return or form.  The type of return or form required generally depends on the relationship of the beneficiaries to the decedent and the size (in dollar value) of the whole estate.  To determine which return or form to file, please read the filing requirements below.

Go to: Inheritance Tax Filing RequirementsEstate Tax Filing Requirements


Last Updated: Monday, 09/25/17



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