23 Sep Will my spouse and children have to pay taxes when I die?

Q. Will my spouse and the children have to pay taxes when they inherit my estate? We have both IRA and non-IRA accounts.
— Planning ahead

A. There are three kinds of taxes to think about in this situation: income, estate and inheritance taxes.

For starters, most people won’t have to worry about estate taxes.

First, the New Jersey estate tax has been repealed, so you won’t have to be concerned about that, said Nancy Heslin Reading, an estate planning attorney with Reading Law Firm in Newton.

On the federal side, only estates worth $11.58 million or more are subject to the tax.

“As to the New Jersey inheritance tax, the spouse and children are exempt as `Class A’ beneficiaries,” she said. “No tax there.”

As far as income taxes go, it will depend on the kind of account that’s inherited.

“IRAs can be inherited as IRAs, which allows the payment of income tax to be deferred under certain circumstances for the spouse and children,” she said.

Under the new SECURE Act, non-spouse beneficiaries must now take the funds out within 10 years, and the funds would be counted as income when taxed.

Spouses aren’t subject to the rule.

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This story was originally published on Sept. 23, 2020.

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.