New Jersey is one of the few states with both an inheritance and an estate tax.
Transfers to a surviving spouse, children and their descendants, parents, grandparents and stepchildren are exempt from the inheritance tax. Transfers to anyone else may be subject to New Jersey Inheritance Tax.
The estate tax is another story entirely. The New Jersey estate tax applies to resident decedents with estates exceeding $675,000. Estates less than such sum are exempt from New Jersey estate tax regardless of the relationship of the beneficiaries. Assets left to a surviving spouse (as long as the spouse is a U.S. citizen) are exempt from the New Jersey estate tax upon the death of the first spouse. Assets in excess of $675,000, if left to anyone other than the surviving spouse, including children, will be subject to the New Jersey estate tax.
As an example, assuming the surviving spouse is not the beneficiary, the New Jersey estate tax owed on a $700,000 estate is approximately $9,250, on an $800,000 estate is approximately $22,800, on a $900,000 estate is approximately $27,600, on a $1 million estate is approximately $33,200 and on a $2 million estate is approximately $99,600.
There are also federal estate taxes to consider. As the law stands today, there is no federal estate tax for estates worth up to $5.25 Million.
With planning, married couples can leave $1.35 million to their children without incurring any federal or New Jersey estate tax. I welcome the opportunity to meet with you to see what planning might be appropriate for your situation.