27 Sep My brother died. Do I owe inheritance taxes?

Q. My brother died in July 2022. The bank where he had a checking account put half on hold for the state and I got the other half. The bank said there was nothing more I had to do, but then I heard I had to fill out an inheritance tax form because I am a Class C beneficiary. I received $4,000. What do I need to do and how can I get the needed forms?
— Sibling

A. We’re sorry to hear about your brother.

You’re correct that you’re a Class C beneficiary.

Here’s what you need to know.

A financial institution is required to hold half of the value of an account back when the estate of the decedent is required to file a New Jersey inheritance tax return, said Tom Szieber, a trusts and estates attorney at Avelino Law in Morristown.

The existence of a non-Class A beneficiary — Class A would be a spouse or domestic partner, lineal ancestor and their descendants — triggers a requirement that a New Jersey inheritance tax return (Form IT-R) be filed, he said.

“Such a return is required to be filed within eight months of the decedent’s date of death,” Szieber said. “ So, if the responsible party has not yet filed the return nor made any required estimated payment, your brother’s estate may have already accrued interest.”

You do not mention whether the $4,000 is the only asset left to a non-Class A beneficiary.

If there is no other asset left to a non-Class A beneficiary, then your brother’s estate will not owe any inheritance tax because distributions to Class C beneficiaries are entitled to a $25,000 exemption per beneficiary, he said. But if there are other assets left to you or one or more non-Class A beneficiaries, there will likely be inheritance tax due, he said.

You also do not mention whether you are the named executor in your brother’s will, or for that matter, whether your brother has a valid will at all.

Szieber said the State of New Jersey’s website provides that the “executor, administrator, or heir-at-law of the estate must file an Inheritance Tax return (if required) within eight (8) months of the date of the decedent’s death.”

You didn’t say whether there was an executor or administrator or if there were any other heirs.

“So it is unclear whether it is actually your responsibility to file the return — though, as an heir-at-law, it may well be,” he said.

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This story was originally published on Sept. 27, 2023.

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