21 Aug I’m a Class D beneficiary. Will I owe inheritance tax?
Q. I am a Class D beneficiary who is a named beneficiary on various financial instruments, including life insurance, traditional IRAs, and various fixed and variable annuities that are not IRAs. I am trying to determine which will be taxed under the New Jersey inheritance tax laws.
A. The New Jersey inheritance tax is levied based on the relationship between the beneficiary and the deceased. And as you note, some assets are treated differently.
A Class D beneficiary has to pay an inheritance tax of 15% on the first $700,000 that is inherited, said Shirley Whitenack, an estate planning attorney with Schenck, Price, Smith & King in Florham Park.
Anything over $700,000 is taxed at a rate of 16%.
“Life insurance payable to a Class D beneficiary is exempt from the inheritance tax,” Whitenack said. “Annuity contracts, however, are generally subject to the New Jersey inheritance tax.”
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This story was originally published on Aug. 21, 2023.
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