05 Mar Can I avoid the inheritance tax?
Q. I’m 84 and unmarried, and I need to write my will. I have one sister and two nephews, and I realize they may have to pay the inheritance tax. How can we avoid this?
— Taxed enough
A. Avoiding the inheritance tax isn’t easy, but there are ways you can do it with advance planning.
First, you didn’t tell us what your estate might be worth, nor did you say what kind of assets you have.
That makes a difference.
An inheritance left to sisters and nephews is subject to the tax, said David Ritter, chair of the tax practice at Brach Eichler in Roseland.
“In order to avoid the inheritance tax you can either move out of New Jersey before dying, or give all your assets to your sisters and nephews before you die,” Ritter said. “I do not recommend this.”
Gifting some assets could be an option, but remember that any gifts made within three years of death would be subject to a “contemplation of death rule” and would probably still be subject to the inheritance tax upon death,” Ritter said.
He said it doesn’t seem likely that New Jersey will repeal the inheritance tax, even though it repealed the estate tax.
To see some options to protect assets from the inheritance tax, read this story.
Email your questions to moc.p1603662471leHye1603662471noMJN1603662471@ksA1603662471.