06 Feb How do you value an estate for inheritance tax calculations?

Q. I have a client who inherited money. I was not sure what form to use to pay the inheritance tax. The New Jersey inheritance tax form asks values of the estate. I did not know what to fill in. He simply inherited $100,000.
— Unsure

A. There are a couple of things to know here.

The executor or other fiduciary appointed to represent decedent’s estate is the person responsible to file the New Jersey inheritance tax return (IT-R), said Catherine Romania, an estate planning attorney with Witman Stadtmauer in Florham Park.

The return would list all property in decedent’s taxable estate, including both probate assets that passed by a will and non-probate assets where the beneficiaries are other Class A (surviving spouse, civil union partner or domestic partner; child, stepchild, grandchild, great-grandchild, parent or grandparent), she said.

“Once the return is filed and any tax due is paid, the New Jersey Division of Taxation will issue a waiver for the account, releasing the lien on the account,” she said. “However, even before receipt of the tax waiver, one half of any account may be released to the beneficiary of the account; the financial institution is required to only hold one-half of the account to ensure any tax due is paid.”

If the individual claiming an account is a Class A beneficiary, a simplified form may be filed to release just the account being claimed, namely a Form L-8, she said.

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This story was originally published in February 2024.

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.