Estate and inheritance taxes can be a killer. They can leave beneficiaries with far less than what is intended for them. However, New Jersey residents can reduce the tax burdens of their heirs with proper estate planning.
When someone dies, both the state and federal government may come calling to collect taxes. Currently, 2017 federal laws allow the Internal Revenue Service to collect taxes on estates valued at over $5.49 million. That is a pretty significant chunk of change and will not apply in every case. The state of New Jersey, on the other hand, collects taxes on estates valued at $2 million and above. So more estates may be subject to state taxes, which range from 0.8 to 16 percent.
Along with basic estate taxes comes the inheritance tax. This is money beneficiaries have to pay to the state after an estate has been taxed and distributed. Basically, it is the government double dipping -- so to speak. New Jersey is one of just a few states that does have the inheritance tax with current rates listed at 0.8 percent to 16 percent. The rate at which on is taxed depends on how much he or she receives from a loved one's estate.
Sometimes estate and inheritance taxes cannot be avoided. However, there are some ways to reduce the amount that has to be paid. An experienced estate planning attorney can assist New Jersey residents as they search for ways to ensure their beneficiaries get what is intended for them instead of having what they worked so hard for go to Uncle Sam.
Source: The Motley Fool, "These States Will Tax Your Assets After You're Dead," Christy Bieber, accessed Nov. 20, 2017