New Jersey no longer has an estate tax, but it still has an inheritance tax – albeit one with a number of exemptions. We break down New Jersey inheritance laws, including what happens if you die without a valid will and where you may stand if you’re not part of the decedent’s immediate family. If you want professional guidance for your estate planning after reading this article, the SmartAsset matching tool will pair you with capable financial advisors in your area who will assist you throughout this process.
Does New Jersey Have an Inheritance Tax or Estate Tax?
Up until Jan 1, 2018, New Jersey had both an inheritance tax and an estate tax. Since the repeal of the estate tax on Jan 1, 2018, New Jersey only has an inheritance tax, in addition to the federal estate tax. However, if you are a family member of the deceased, you may be exempt from the inheritance tax. If you are the spouse, civil union partner, domestic partner, child, grandchild, great-grandchild, mutually acknowledged child or stepchild, parent or grandparent of the deceased, you are exempt from New Jersey’s inheritance tax. Inheritances left to religious institutes, schools, or charitable organizations are also exempt from the inheritance tax.
If you are the sibling or child-in-law, which includes civil union and domestic partners, you are a “Class C” relative. Class C relatives can inherit up to $25,000 untaxed. If you receive more than $1.7 million, it is taxed at a rate of 16%. If you inherit between $25,000 and $1.7 million, it is taxed at a graduated rate that ranges from 11% to 16%.
“Class D” relatives are all other relatives, such as nieces, nephews, aunts and uncles. Class D relatives are taxed 15% on the first $700,000 they inherit in New Jersey. Any amount after the first $700,000 is taxed at a rate of 16%.
Other Necessary Tax Filings
When you die, there are many federal and estate tax situations that need to become a priority for those who survive you. Besides the state estate tax, you need to look out for the following:
- Final individual federal and state income tax returns – the federal and state tax returns are due by Tax Day of the year following the individual’s death.
- Federal estate/trust income tax return – due by April 15 of the year following the individual’s death
- Federal estate tax return – due nine months after the individual’s death, though an automatic six-month extension is available if asked for prior to the conclusion of the nine-month period
- This is required only of individual estates that exceed a gross asset and prior taxable gift value of $11.4 million
Dying with a Will in New Jersey
There are some basic requirements to make a will legitimate in New Jersey. For starters, the person making the will, or the “testator,” must be at least 18 years old. The testator must also be of “sound mind,” which generally means that they have not been determined incompetent in a previous legal proceeding. The will must be in writing and must be signed by the testator and two witnesses.
If the will is determined to be valid, the next step is the probate process. New Jersey is one of the states with the Uniform Probate Code, which means there’s a standard set of rules that applies to New Jersey and other states. Probate proceedings are usually only required if the deceased person owned any assets in their name only. Other assets, also known as “non-probate” property, can generally be transferred to the other owner without probate.
New Jersey offers a simplified probate procedure in cases where the decedent didn’t have a will or a lot of valuable property. The simplified probate procedure is available if the value of all of the assets left by the deceased person is $20,000 or less, and the surviving spouse or domestic partner is entitled to all of it without probate. The simplified probate procedure is also available if there is no surviving spouse or domestic partner and the value of all of the assets doesn’t exceed $20,000. In that case, one heir, with the written consent of the others, has the option to file an affidavit with the court and receive all the assets.
Dying without a Will in New Jersey
Dying without a will isn’t ideal if you care about estate planning or deciding where your assets will end up after your death. New Jersey inheritance laws label these types of estates “intestate,” which means there is no will, or no valid will. The court then has to follow intestate succession laws to determine who inherits your property, and how much of it.
If there isn’t a will, the probate court will appoint an “administrator” who effectively does the same job as an executor. Executors take care of the estate of the decedent. New Jersey gives the surviving spouse or domestic partner first priority when choosing an administrator.
Often there are extenuating factors, but if you can help it, it’s best not to die intestate and put your loved ones through that kind of stress. If you’re not sure what kind of estate plan you want to make, you can seek the help of a financial advisor specializing in legacy planning.
Spouses in New Jersey Inheritance Law
If you pass away intestate with a spouse but no living parents or children, your spouse will inherit all intestate property; that is, the property that does not have a named beneficiary. However, if you have living parents or children after you pass, your spouse will only get a certain percentage of your intestate property, depending on the exact amount.
If you die with parents but no children, your spouse will inherit the first 25% of your intestate property, as long as it is not less than $50,000 or more than $200,000. And 25% of the remaining intestate property is given to your parents, and your spouse keeps the rest.
Children in New Jersey Inheritance Law
If you have no spouse and any of your children are alive, they are the only heirs to your estate. However, if your spouse is alive, that’s a different story. If you die with a spouse and children, and your spouse has no other children, your spouse will inherit everything. However, if you die with children and your spouse has children that are not related to you, your spouse will inherit the first 25% of your intestate property, as long as it is not less than $50,000 or more than $200,000. Your children will get half of the remaining intestate property, and your spouse will keep the rest. That same rule applies if you die with a spouse and children who are not your spouse’s children.
|Intestate Succession: Spouses and Children|
|Inheritance Situation||Who Inherits Your Property|
|Children, but no spouse||– Children inherit everything|
|Spouse, but no children or parents||– Spouse inherits everything|
|Spouse and children from you and that spouse; the spouse has no other children||– Spouse inherits everything|
|Spouse and children from you and that spouse; the spouse has children from another relationship||– Spouse inherits the first 25% of your intestate property (but not less than $50,000 or more than $200,000), plus 1/2 of the balance |
– Your descendants inherit everything else
|Spouse and children from you and someone else||– Spouse inherits the first 25% of your intestate property (but not less than $50,000 or more than $200,000), plus 1/2 of the balance |
– Descendants inherit everything else
|Spouse and parents||– Spouse inherits the first 25% of your intestate property (but not less than $50,000 or more than $200,000), plus 3/4 of the balance |
– Parents inherit remaining intestate property
|Parents, but no spouse or descendants||– Parents inherit everything|
|Siblings but no spouse, descendants or parents||– Siblings inherit everything|
Although biological children are still the most common type of child in intestate succession law, they are not the only type of children. Legally adopted children have just as much right to their intestate share as biological children do. In addition, if the decedent placed their child up for adoption and that child was adopted by another family – other than your spouse – they are not legally eligible to receive intestate inheritance from the decedent. However, foster children and stepchildren that were never legally adopted by the decedent are not eligible to receive a share as the decedent’s child. If there are no other living relatives, stepchildren have the right to inherit.
Children born outside of marriage still receive their share as long as paternity was acknowledged by the decedent or otherwise established under New Jersey law. Any child born to the decedent’s wife during their marriage is assumed to be his child. The decedent’s children can still receive their share if they are born after the decedent’s death, as long as the child survives at least 120 hours after birth. Grandchildren will receive a share only if their parent is not alive to inherit.
Unmarried Individuals Without Children in New Jersey Inheritance Law
If there are no spouses or children, the inheritance then goes to the closest living relatives, in the order listed in the chart below.
|Intestate Succession: Extended Family|
|Inheritance Situation||Who Inherits Your Property|
|Parents but no spouse or children||– Parents inherit everything|
|Siblings but no spouse, children or parents||– Siblings inherit everything|
|No siblings||– Estate split evenly among maternal/paternal grandparents|
|No grandparents||– Estate split evenly among aunts and uncles|
|No aunts and uncles||– Estate split evenly among cousins|
|No cousins||– Stepchildren inherit everything|
Although there’s an intestate process designed to make sure your family inherits, it might be best to write your own will to ensure that all of your property ends up in the hands you want it in.
Non-Probate New Jersey Inheritances
The probate process can be difficult and expensive. However, you have some options when it comes to avoiding probate in New Jersey. Listed below are some of the assets that will not have to go through probate and instead go directly to the beneficiaries.
- Any property in a living trust
- Life insurance policies
- 401(k)s, IRAs, other retirement accounts
- Securities in transfer-on-death accounts
- Pay-on-death bank accounts
- Joint tenancy real property
Other Situations in New Jersey Inheritance Law
New Jersey has some interesting survivorship rules. In order to inherit under New Jersey’s intestate succession law, the heir in question must survive the decedent by at least 120 hours. In addition, relatives conceived before you die but born after the decedent’s death are eligible to inherit as if they had been born while the decedent was alive.
Immigration status is irrelevant when it comes to inheritance. If a relative of yours is entitled to a share of your assets, they can inherit no matter what their citizenship status is. Half-relatives inherit as much as “whole” relatives. For example, your half-sibling would get the same share as any other sibling.
If you give an heir property during your lifetime, the value of that gift can be subtracted from your relative’s share, but only if it is in writing at the time the gift was made, or if the heir admits it in writing.
Tips for Estate Planning
- Consider talking to a financial advisor about estate planning. Finding the right financial advisor who fits your needs doesn’t have to be hard. SmartAsset’s free tool matches you with financial advisors in your area in five minutes. If you’re ready to be matched with local advisors who will help you achieve your financial goals, get started now.
- Managing your own estate or handling the intricacies of inheriting money can be an overwhelming venture that can include taxes to file, possible court proceedings to go through and more. Here is a useful resource for estate planning.
Photo credit: ©iStock.com/Kirkikis, ©iStock.com/Frank DeBonis, ©iStock.com/andykazie