"New Jersey estate administration attorneys" Tag Archives

Except in the case of spouses, civil union partners and domestic partners, when a New Jersey resident dies owning a jointly held asset, whether it is real estate, stocks, bank accounts, etc., the entire value of the asset will be taxed as if it belonged to the decedent. If the surviving joint tenant can prove that a portion of it actually belongs to the surviving joint tenant and not the decedent, the New Jersey Division of Taxation may grant an exemption from taxation for that portion of the value of the asset. This makes selecting an estate administration and tax planning attorney extremely important.

In order to prove that a portion of the asset actually belonged to the surviving joint tenant, you must be able to show the surviving joint tenant’s financial contribution to the asset or that the surviving joint tenant inherited their portion of the asset from another. Depending upon the relationship between the decedent and the surviving joint tenant, the asset will be subject to inheritance tax at a rate between 11 percent and 16 percent. Class A Beneficiaries (which include spouses, civil union partners, registered domestic partners, parents, grandparents, and children) do not pay any tax on inheritances. Class C Beneficiaries (which include siblings of the decedent and spouses/civil union partners of a child of the decedent) receive $25,000 free from inheritance tax, are taxed at a rate of 11 percent on the next $1,075,000 of inherited assets and the rate increases as the amount inherited increases – up to 16 percent. While bequests to charities are not taxed, inheritances received by all other non-charitable beneficiaries not included in Class A or C are Class D beneficiaries and their inheritances are taxed at a rate of 16 percent for the first $700,000 and 17 percent for the remaining balance of the inheritance.

Many people list another person as a joint owner on an account or an asset because they believe it simplifies the estate administration and probate of the estate. But, it actually can result in a significant tax burden which might not have been due or would have been significantly lower if assets were not jointly held. Moreover, in New Jersey probate and estate administration are not difficult or expensive so it is not usually necessary to attempt to avoid it.

When you discover that you are named as the executor of an estate, it can be overwhelming. The executor of an estate has a fiduciary obligation under New Jersey estate law to administer the estate and collect and distribute the assets in accordance with the last person’s will.

The first step is to probate the will. The executor must appear before the surrogate in the county where the person resided at the time of their death and provide the surrogate with the original will and a certified death certificate. In New Jersey you must wait ten days after the date of death to probate the will. If the will was properly executed and no caveats were filed objecting to the will, then the surrogate will admit the will and issue letters testamentary appointing the executor. The executor will then have the power to act. New Jersey probate law requires that the executor must act in the best interests of the estate and the beneficiaries. After the will is probated, the executor must provide formal notice of the probate to the beneficiaries named in the will and the deceased person’s next of kin.

Then the executor must gather the deceased person’s assets. This can be difficult as you must conduct a search to find all accounts, businesses, physical property and real estate. Appraisals of certain property must be obtained by the executor. The executor must apply to the Internal Revenue Service to obtain a federal tax identification number. Additionally, the executor must pay all of the decedents legitimate debts. One of the executor’s responsibilities is to confirm that the debts are actually owed by the estate. All uncontested bills must be paid, and the questionable bills, debts and obligations must be researched and resolved. Also, there may be statutory liens and liabilities which should be researched and paid. If legitimate debts of the estate are not paid the executor may become personally responsible for them.

The executor is responsible for preparing, filing and paying any applicable federal New Jersey estate and inheritance tax return and filing the estate tax return and the final income tax returns for the decedent. Each of these tax returns has filing and payment deadlines which must be met or the estate will be subject to interest and penalties for the late filings and/or payments. An executor may be personal liable for interest and penalties which are the result of the executor’s unexcused failure to act in a timely manner. After payment in full of any New Jersey estate or inheritance taxes, the state of New Jersey will issue inheritance tax waivers which are required to transfer assets to the estate and/or the beneficiaries. Tax waivers for real property must be recorded.
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Articles Tagged with “New Jersey estate administration attorneys”

The Effect of Joint Ownership on a New Jersey Estate’s Inheritance Tax Liability

The Fiduciary Obligations of an Executor in New Jersey