New Jersey Inheritance Tax is an obligation to the transferee of a decedent's estate. In general, when the decedent is a New Jersey resident, the transfer of ALL of his or her property is subject to Inheritance Tax, except for transfers that qualify as exempt transfers (generally as determined by transferee Class), transfers of real property located outside the State of New Jersey and transfers of tangible personal property located outside the State of New Jersey for a permanent purpose. All property transferred in contemplation of death and transfers intended to take effect in possession or enjoyment at or after the transferor's death are also included.
Though not exhaustive, below is a list of some items that the New Jersey Inheritance Tax Return (Form IT-R) will require to be listed:
All real estate located in New Jersey or any interest therein, owned by decedent, individually or jointly but not as tenant by the entirety.
The market value of any interest the decedent held at the date of his or her death in a a sole proprietorship, partnership, joint venture and/or closely held corporation.
All tangible personal property, such as jewelry, wearing apparel, silverware, household goods, books, paintings, automobiles, boats, unless such personal property was kept physically outside of New Jersey for a permanent purpose; and all intangible personal property(excluding that listed on Schedule B), such as US Savings bonds, treasury certificates, cash on hand and in bank, deposits in Federal or State Credit Unions, mutual funds, bonds and mortgage, stocks, accrued interest, dividends, salary or wages, insurance payable to the estate or executor or administrator, cash surrender value of life insurance covering the life of another, interest in any undistributed estate of or income from any property held in trust under the will or agreement of another, even though physically located outside the State at the time of death.
Items Exempt from New Jersey Inheritance Tax
Real Property Out of State
Real property owned and located outside the State of New Jersey for both resident and nonresident decedents is exempt from inheritance tax.
Transfers Under $500
Where a transfer of any interest or income therefor is less that $500 in value, the transfer of interest or income is exempt from inheritance tax.
Tangible Property located outside the State
Property that is kept physically out of state for a permanent purpose is exempt from inheritance tax. Note, however, that the property must not be located on a transient or temporary basis.
For example, a decedent's car that is registered in New Jersey but borrowed or located temporarily at a friend's home in Delaware would be taxed, whereas a yacht that is permanently docked in Florida, and registered in Florida as a Florida vessel would not be taxable. Intangible property of a resident decedent is deemed to be situated in New Jersey regardless of its actual location, as it follows the domicile of its owner by law.
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For more information about New Jersey Inheritance Tax or to discuss your Estate Planning needs, contact Hartmann Law today.