03 Dec Will my niece owe inheritance tax on my N.Y.-based estate?

Q. If a New York resident has no real property in either New York or New Jersey and leaves only IRA and brokerage accounts to a niece in New Jersey, is there a New Jersey inheritance tax?
— Auntie

A. We’re glad to see you’re planning ahead.

The New Jersey Inheritance Tax and the requirement to file a New Jersey inheritance tax return is not based on the beneficiary’s residence, said Catherine Romania, an estate planning attorney with Witman Stadtmauer in Florham Park.

She said when a non-resident of New Jersey dies owning New Jersey real estate, such as a vacation home, or tangible personal property — for example an automobile, furniture, or jewelry — located in New Jersey, a New Jersey Non-resident Inheritance Tax return may be required and tax may be due.

But investments and bank accounts are considered intangible personal property and are not taxed in the estate of non-residents, she said.

The New Jersey inheritance tax is also based upon the “class” the beneficiary falls into, Romania said.

“Class A beneficiaries — spouse, civil union or domestic partner, parents, grandparents, descendants, stepchildren, mutually acknowledged child — never incur an inheritance tax,” Romania said. “All other beneficiaries may incur an inheritance tax.”

Although a niece would be a Class D beneficiary and generally incur a tax on inheritances of $500 or more, in this case there is no inheritance tax in a non-resident’s estate on intangible assets, Romania said.

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This story was originally published on Dec. 3, 2020.

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