NJ Inheritance ax?

Hello,

If a father has a home and wants to pass it to his two daughters after he dies, do those girls have to pay an inheritance tax? Is there anyway to not have this happen?

Thank you.

Reply to
Healthy Stealthy
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I live in Massachusetts, so i looked at the Google and found on nj.gov,

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Which states; If a decedent's death occurs on or after July 1, 1988, property passing to a decedent's surviving parents, grandparents, children, stepchildren or grandchildren is entirely exempt from the tax. This is for the inheritance tax. The estate tax is a bit more complex, but appears to depend more on the size of the estate. So further details on the total estate value would be needed to answer, or you may read the details at the link I posted. JOE
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Reply to
joetaxpayer

The NJ estate tax is a "pickup" or "sponge" tax that originally was designed to pick up the credit that was allowed under the federal estate tax law for state death taxes. After the federal credit started to phase out, NJ amended its law so that it picks up the credit for state death taxes that would have been allowed under the federal law as it was in effect as of December 31, 2001. At that time, the federal unified credit for estate and gift taxes covered the first $675,000 of the tax base (it's $1 million now, for federal purposes). So you have to calculate the federal estate tax that would have been due if the decedent had died on December 31, 2001, and the maximum credit for state death taxes that would have been allowed at that time. No point in going through that exercise if the estate, plus any gifts that absorbed any of the unified credit during the decedent's lifetime, totals more than $675,000.

Of course, assuming the father in your example is still living, these rules may change between now and the date of his death, depending on whether the federal estate tax "comes back" after 2011 and if so, whether it incorporates a credit for state death taxes again.

As Joetaxpayer noted, bequests to lineal ancestors and descendants are not subject to the NJ inheritance tax.

Katie in San Diego

Reply to
Katie

Oops, I meant you needn't bother if the estate tax base totals LESS than $675,000, not more!

Katie in San Diego

Reply to
Katie

NJ has both and estate tax & an inheritance tax. The estate tax applies if the taxable estate is $675,000 The inheritance tax applies depending on the class of beneficiary Lineal decendents are not subject to the inheritance tax.

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Reply to
Benjamin Yazersky CPA

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