Legal Question in Wills and Trusts in New Jersey

Re: Inheritance Tax in NJ

I'm afraid there is little you can do at this point. I'm sure you understand that if a person's assets could be transferred to another if that person learns that death is imminent, everyone would do so and no tax would ever be collected.

I realize that hindsight is 20/20 but the essence of estate planning is on the word "planning" i.e. doing things far enough in advance to minimize tax, usually a period of 3 years which is the length of time prior to death that the State can look back to see if any property has been transferred without payment or by gift. Transferring assets now by way of Power of Attorney could lead to civil and criminal penalties later if an effort is made to conceal the transferred assets.

The inhereitance tax on beneficiaries of your husband's relationship to the soon to be decedent is a flat 15%. There is no Estate Tax unless the Estate is $675,000.00 or more.

I'm sorry I couldn't give any solutions to minimizing the tax impact. Sometimes it helps if you look at it as how much you WILL get rather than how much you won't.

Re: Inheritance Tax in NJ

New Jersey has both an inheritance tax and an estate tax. Spouses and children pay no inheritance tax, but a nephew would have to pay a 15% inheritance tax. This is after expenses and outstanding bills of the decedent are deducted. The estate tax does not come into effect until the estate is over $675,000. Then there are taxes up to 55% on the amount over that.

If your aunt livers in northern NJ, please contact my office for help. When she dies her will needs to be probated and the tax returns filed. It is probably too late to make any transrers that would prevent you from paying the tax, but you should make some transfers now so you have enough to pay the bills because when she dies so does the power of attorney. Again any questions either email me or call.

Re: Inheritance Tax in NJ

The replies you have already received give you good counsel.

Re: Inheritance Tax in NJ

I concur with both Dale and Berrnard, but disagree that nothing can be done currently. By law, everyone may give $11,000 to someone as a gift, if currently delievered. This is the annual gift exclusion, and should allow any annual gifts to be excluded from potential taxation, regardless of the 3-year lookback rule. This can be by check or security transfer within the brokerage account. While you say death is imminent, there may be some tax benefits by utilizing the annual gifts, especially if there are members of her nephew's family that could be additional recipients of these gifts. If she lives into 2006, an additional year of gifts may be eligible. The savings will be at 15% tax rate for inheritance by a nephew. If you need assistance or wish to discuss this in further detail, contact me directly.