OT: NJ Inheritance Tax

[Plum Street]

In 2022, Uncle Plum, a resident of Florida passed, and some of my siblings and some cousins wound up getting some coin after his assets were sold off . (Some of us lol )
Not crazy money after it was all sliced up . Low 5 figures to each of us paid out of a personal check from the estate based in Florida .
Does NJ know about this ? Am I subject to the the NJ inheritance tax ? Supposed to just cut a check to the state of NJ ?

Thanks

 

[RUschool]

In 2022, Uncle Plum, a resident of Florida passed, and some of my siblings and some cousins wound up getting some coin after his assets were sold off . (Some of us lol )
Not crazy money after it was all sliced up . Low 5 figures to each of us paid out of a personal check from the estate based in Florida .
Does NJ know about this ? Am I subject to the the NJ inheritance tax ? Supposed to just cut a check to the state of NJ ?

Thanks

If he was a resident of Florida, the NJ inheritance tax is not involved. If he was a NJ resident, the inheritance tax for class D ( normally nephews and nieces) I believe is 15% up to $700,000 and 16% at a higher level. Difference rates for siblings class C.

 

[czxqa]

For decedents that were not residents of New Jersey, inheritance tax is only due in New Jersey on real estate or other tangible physical assets located in New Jersey.

 

[Knight Shift]

In 2022, Uncle Plum, a resident of Florida passed, and some of my siblings and some cousins wound up getting some coin after his assets were sold off . (Some of us lol )
Not crazy money after it was all sliced up . Low 5 figures to each of us paid out of a personal check from the estate based in Florida .
Does NJ know about this ? Am I subject to the the NJ inheritance tax ? Supposed to just cut a check to the state of NJ ?

Thanks

No taxes if all money is funneled to Knights of the Raritan.

 

[RULoyal]

As others have said, the tax laws of the state where the deceased was a resident are the ones that apply. I don’t believe Florida has an inheritance tax.

 

[Plum Street]

As others have said, the tax laws of the state where the descendent was a resident are the ones that apply. I don’t believe Florida has an inheritance tax.

That’s right they don’t . NJ is one of 5 states that do . Go figure ! Iowa, Kentucky, Maryland, New Jersey, and Pennsylvania.
BIG states represented well here

 

[mdk02]

That’s right they don’t . NJ is one of 5 states that do . Go figure ! Iowa, Kentucky, Maryland, New Jersey, and Pennsylvania.
BIG states represented well here

And I believe only NJ doesn't have an exemption amount for non-spouses, siblings and grandchildren. 5K to a niece gets popped for 15% even if the estate falls below the estate tax exemption amount,

 

[RULoyal]

That’s right they don’t . NJ is one of 5 states that do . Go figure ! Iowa, Kentucky, Maryland, New Jersey, and Pennsylvania.
BIG states represented well here

You would think Florida would, given how the elderly flock there for their sunset years. Seems like Florida is missing out on a lot of $$$$$. Then again that's probably one of the reasons they do retire there.

 

[AntiG]

You would think Florida would, given how the elderly flock there for their sunset years. Seems like Florida is missing out on a lot of $$$$$. Then again that's probably one of the reasons they do retire there.

its because Florida is reasonable. The state shouldn't ever tax you on inheritance, which your relative already paid taxes on. Ridiculous way to further steal your family's money.

 

[RULoyal]

its because Florida is reasonable. The state shouldn't ever tax you on inheritance, which your relative already paid taxes on. Ridiculous way to further steal your family's money.

Agreed.

 

[RUScrew85]

In 2022, Uncle Plum, a resident of Florida passed, and some of my siblings and some cousins wound up getting some coin after his assets were sold off . (Some of us lol )
Not crazy money after it was all sliced up . Low 5 figures to each of us paid out of a personal check from the estate based in Florida .
Does NJ know about this ? Am I subject to the the NJ inheritance tax ? Supposed to just cut a check to the state of NJ ?

Thanks

Ask the executor if they filed tax or income paperwork in NJ. If not F em.

 

[RUScrew85]

You would think Florida would, given how the elderly flock there for their sunset years. Seems like Florida is missing out on a lot of $$$$$. Then again that's probably one of the reasons they do retire there.

Yeah maybe FL realizes that your money is actually YOUR money.

 

[Knight Shift]

its because Florida is reasonable. The state shouldn't ever tax you on inheritance, which your relative already paid taxes on. Ridiculous way to further steal your family's money.

Yup

Agreed.

Me too.

Yeah maybe FL realizes that your money is actually YOUR money.

Saw these t-shirts while down there for the Gator Bowl and laughed:

 

[AntiG]

^ America's greatest governor.

 

[Plum Street]

Ask the executor if they filed tax or income paperwork in NJ. If not F em.

Florida . Gonna let sleeping dogs lie

 

[ru66]

When you show up at a RU game Murphy and tax agents will arrest you after your ticket is scanned. Enjoy the game.

 

[Mr_Twister]

Florida, I understand but never confirmed, does not have an estate tax either.

 

[mdk02]

Florida, I understand but never confirmed, does not have an estate tax either.

That is correct. At least NJ raised it's exemption amount for the estate tax a few years ago, but the inheritance tax remains an utter travesty.

 

[newell138]

NJ will always be at the top of any list that involves taxations.

 

[Extra Point_rivals157299]

When my Mom died NJ took $80,000 from her estate. NJ didn't care that her kids were poor. That was before Chris Christie changed the death tax law.

 

[AntiG]

When my Mom died NJ took $80,000 from her estate. NJ didn't care that her kids were poor. That was before Chris Christie changed the death tax law.

Yeah it's absolutely theft by the state. Shameful law.

 

[Retired711]

New Jersey used to be the only state to have both an estate tax and an inheritance tax. The estate tax was repealed in 2017. That leaves only the state inheritance tax.

Inheritances by "Class A" beneficiaries are exempt from the inheritance tax. Class A beneficiaries are parents, grandparents, spouse or civil union partner, direct descendants (children--including adopted children, their children, and their children's children, etc) and stepchildren. All other beneficiaries pay tax up to 16% depending on how much they take. Inheritances by "Class C" beneficiaries -- brother or sister (including a half-brother or half sister, or the surviving spouse of a child) get more favorable treatment than inheritances by others. For instance, there is a $25,000 exemption for Class C beneficiaries. (There is no Class B!) https://www.nj.gov/treasury/taxation/pdf/other_forms/inheritance/itrbk.pdf

 

[mdk02]

New Jersey used to be the only state to have both an estate tax and an inheritance tax. The estate tax was repealed in 2017. That leaves only the state inheritance tax.

Inheritances by "Class A" beneficiaries are exempt from the inheritance tax. Class A beneficiaries are parents, grandparents, spouse or civil union partner, direct descendants (children--including adopted children, their children, and their children's children, etc) and stepchildren. All other beneficiaries pay tax up to 16% depending on how much they take. Inheritances by "Class C" beneficiaries -- brother or sister (including a half-brother or half sister, or the surviving spouse of a child) get more favorable treatment than inheritances by others. For instance, there is a $25,000 exemption for Class C beneficiaries. (There is no Class B!)https://www.nj.gov/treasury/taxation/pdf/other_forms/inheritance/itrbk.pdf

And the $25k exemption has never been adjusted for inflation.

 

[Retired711]

And the $25k exemption has never been adjusted for inflation.

But compare our neigboring state of Pennsylvania, which, unlike New Jersey, taxes inheritances by the children of the decedent. New Jerseyans could be doing a lot worse.

BTW, all this used to be easy. Congress allowed the states to levy an estate tax on the estate as calculated for federal estate tax purposes. So every state levied the tax. Congress deleted this provision, and it started a patchwork of state taxes on estates and inheritances.

 

[RAC’emUp]

But compare our neigboring state of Pennsylvania, which, unlike New Jersey, taxes inheritances by the children of the decedent. New Jerseyans could be doing a lot worse.

BTW, all this used to be easy. Congress allowed the states to levy an estate tax on the estate as calculated for federal estate tax purposes. So every state levied the tax. Congress deleted this provision, and it started a patchwork of state taxes on estates and inheritances.

Are NJ life insurance proceeds treated the same as other inherited assets?

 

[Plum Street]

Are NJ life insurance proceeds treated the same as other inherited assets?

I don’t think so …

 

[mdk02]

But compare our neigboring state of Pennsylvania, which, unlike New Jersey, taxes inheritances by the children of the decedent. New Jerseyans could be doing a lot worse.

BTW, all this used to be easy. Congress allowed the states to levy an estate tax on the estate as calculated for federal estate tax purposes. So every state levied the tax. Congress deleted this %provision, and it started a patchwork of state taxes on estates and inheritances.

But is the tax rate 16%

 

[Retired711]

Are NJ life insurance proceeds treated the same as other inherited assets?

Life insurance proceeds, whether from NJ insurers or not, are not subject to inheritance tax in NJ.

 

[Retired711]

But is the tax rate 16%

The tax rate was 6.5% of the estate as calculated for federal tax purposes. It's hard to compare that with the 16% inheritance tax because the 16% does not apply to out-of-state real estate or to life insurance proceeds.

For Class C beneficiaries, the 16% applies only to the portion of the inheritance that exceeds $1.7 million. For Class D, the 16% applies only to the portion of the inheritance that exceeds $700,000. But Class D beneficiaries pay 14% even on the portion that does not exceed $700,000.

BTW, the tax accounts for only about 1% of New Jersey's tax revenues.https://www.njspotlightnews.org/202...evenues-during-pandemic-questioning-fairness/

 

[Southern Gentleman]

Life insurance proceeds, whether from NJ insurers or not, are not subject to inheritance tax in NJ.

Nor are they subject to income tax unless you have 1 owner of the policy, someone else is the insured on the policy, and a separate 3rd person is the beneficiary. I think the tax courts ruled back in 1952 that scenario makes it a gift, thus taxable. If my memory serves me correctly.

 

[Retired711]

Nor are they subject to income tax unless you have 1 owner of the policy, someone else is the insured on the policy, and a separate 3rd person is the beneficiary. I think the tax courts ruled back in 1952 that scenario makes it a gift, thus taxable. If my memory serves me correctly.

That is correct. But life insurance proceeds did count in calculating the New Jersey estate tax and they also count in calculating the federal estate tax. This does not have much practical importance because the New Jersey estate tax has been repealed and the federal estate tax applies only to very large estates. In addition, life insurance proceeds payable to the spouse are eligible for the marital deduction and so they do not count in calculating estate tax. This was true under the New Jersey estate tax and continues to be true under the federal estate tax.

 

[RUKen]

its because Florida is reasonable. The state shouldn't ever tax you on inheritance, which your relative already paid taxes on. Ridiculous way to further steal your family's money.

It takes forever to get an estate through probate in Florida. If you live in Florida set up a trust. As stated no taxes though

 

[koleszar]

It takes forever to get an estate through probate in Florida. If you live in Florida set up a trust. As stated no taxes though

We were wondering why my mother's lawyer put everything in a trust. Now we know the answer, Thank You. Seems her lawyer steered her the right way.

 

[Retired711]

We were wondering why my mother's lawyer put everything in a trust. Now we know the answer, Thank You. Seems her lawyer steered her the right way.

There are other advantages to setting up a trust despite the cost -- but avoiding probate is a big one. Whether probate is a big problem depends on the state. Probate is generally easy and cheap here in New Jersey -- but horrible in New York. In a state where judges are elected, judges farm out probate to their contributors as a reward.

 

[Retired711]

its because Florida is reasonable. The state shouldn't ever tax you on inheritance, which your relative already paid taxes on. Ridiculous way to further steal your family's money.

Yes and no. Suppose someone buys a stock at 10, and it's worth 20 at their death. TThe heir then sells the stock at 25. The heir is considered to have a capital gain of 5, not 15. This is called carryover basis -- the basis (a fancy word for cost) is considered to be the value when the heir inherited the asset. If there is no estate tax, the gain from 10 to 20 goes untaxed.