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John J. Ross, Attorney at Law 46 Thoreau Dr., Freehold, N.J. 732-294-9036

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ESTATE TAXATION

     Individuals whose primary residence is in the State of New Jersey, who died prior to January 1, 2017 and who have assets worth more than $675,000 can be subject to the New Jersey Estate Tax.

   Individuals whose primary residence is in the State of New Jersey, who die between January 1, 2017 and December 31, 2017 and who have assets worth more than $2,000,000 can be subject to the New Jersey Estate Tax.

   The New Jersey Estate Tax is scheduled to be eliminated altogether, for individuals dying on or after January 1, 2018.  The Federal Government imposes estate taxes on estates on excess of $5,490,000.

     Individuals whose primary residence is in the State of New Jersey and who have assets worth more than $2,000,000 can be subject to the New Jersey Estate Tax. Here are examples of what the New Jersey Estate tax is on various amounts with respect to people who died prior to January 1, 2017:

       NET ESTATE    NEW JERSEY ESTATE TAX

       $   775,000                      $ 21,599.60
       $   875,000                      $ 26,399.60
       $1,000,000                      $ 33,200
       $1,350,000                      $ 54,800
       $2,000,000                      $ 99,600
       $2,500,000                      $138,800
       $3,000,000                      $182,000
       $3,500,000                      $229,200
       $4,000,000                      $280,400
       $4,500,000                      $335,600

The New Jersey Division of Taxation has not yet published information necessary to determine the tax that may be due for individuals who die between January 1, 2017 and December 31, 2017 and whose assets are in excess of $2,000,000.  

     The broad reach of the New Jersey Estate Tax is underscored by the fact that virtually all assets that pass upon a persons death are considered in determining whether they are above or below the applicable exemption amount, including jointly held assets, IRAs and 401ks, and death benefits under life insurance policies. Even though such taxes are not imposed when assets pass to a surviving spouse, once the spouse dies and assets pass to children or grandchildren, estate taxes will be triggered that can substantially erode the inheritance of the children and/or grandchildren.

     There are various strategies to reduce or eliminate estate taxes and some of the most flexible, user-friendly and effective strategies can be implemented through a properly designed will that incorporates trust provisions.