Legal Question in Wills and Trusts in New Jersey
Revocable Trust
My father died in 1999 and had a revocable trust in which the first part was to provide income for my mother through distributions from stocks. The second part is upon her death(she died Oct. 16) the entire trust is to be distributed between my sisters and me. The trust is approximately $500,000 . My question is will we owe federal estate taxes since his death was in 1999 or not because the trust will dissolve in 2006? Thank you!
3 Answers from Attorneys
Re: Revocable Trust
That will depend on the value of your mother's estate. I would need to review the terms of your father's trust and also his estate tax returns. Based on what you have said, I assume your father's trust is includable in your mother's taxable estate. What other assets does she own? I would need to know the answer to that before I could advise you on the taxability of her estate. The current Federal estate tax exemption is $2,000,000, but in NJ the limit is only $675,000 so it's also possible that you may pay no Federal tax, but still owe money to NJ.
Re: Revocable Trust
Sorry about your loss. You have said nothing about other assets your mother may own, besides the trust. If the sole asset of your mother's estate is the trust and no portion thereof became assets of you and your sister upon your father's demise (I have not seen the trust or am aware of its language), there should be no federal taxes, but if she had other assets besides the trust, and the aggregate value of asll assets she owns exceeds $675,000, as Jon said, there may be a NJ Inheritance Tax. More information is needed on your mother's total estate to properly answer your question.
Re: Revocable Trust
Federal estate taxes start with estates worth $600,000.00 or more. Unless you father left something other than the house which he owned with you mother there should be no federal estate taxes payable because the house was not part of the estate if it was owned with you mother, as a married couple. If it was owned as a married couple each of them owned the entire house and when your father died his interest in the house simple expired with him and you mother ALREADY OWNED THE ENTIRE HOUSE. This is known as owning property by the entireties.
Call me if you like.
Gary Moore, Esquire
Hackensack, New Jersey
www.garymooreattorneyatlaw.com
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