20 Dec Is NJ’s estate tax gone for good?
Q. Is there any way, after we get a new governor, that they may change their minds about the New Jersey estate tax changes? I need to update my plan and I’m trying to decide the best time to do it.
— Planning ahead
A. You’re smart to want to update your plan, and you shouldn’t wait for changes in elected officials to do it.
Gov. Chris Christie signed a new law on Oct. 14, 2016 which changed New Jersey’s estate tax.
Effective Jan. 1, 2017, the exemption amount for New Jersey residents dying on or after that date in 2017 will increase from $675,000 to $2 million, said Shirley Whitenack, an estate planning attorney with Schenck, Price, Smith & King in Florham Park.
On Jan. 1, 2018 the New Jersey estate tax will be repealed completely.
“New Jersey still has, however, a separate inheritance tax that is imposed on property passing to anyone other than a spouse, parents or lineal descendants — children, grandchildren, and step-children, but not step-grandchildren — referred to as Class `A’ beneficiaries, or to charities,” Whitenack said. “The tax rates for additional beneficiary classifications range from 11 to 16 percent.”
The federal estate tax remains unchanged. Effective Jan. 1, 2017, the federal estate tax exemption will be increased to $5.49 million per person, up from $5.45 million in 2016, she said.
Now, could there be change? Sure, but it never comes quickly or easily.
“A legislator can always introduce a bill to change the law, but individuals should not wait to change their estate plans based on such a possibility,” Whitenack said. “Plans can be created now to take into account a possible revival of the estate tax in the future.”
Whitenack said individuals who previously established estate plans around the New Jersey estate tax, especially those whose plans include credit shelter or residuary trusts, may want to revisit their plans in light of the new law.
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This post was first published in December 2016.NJMoneyHelp.com presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.