bnk02-17-11

NEW JERSEY ESTATE TAX REPEAL
 
 

On October 14, 2016, Governor Chris Christie signed legislation repealing the New Jersey estate tax for individuals dying on or after January 1, 2018.  The legislation was reached as part of a larger omnibus package re-authorizing the funding of the New Jersey Transportation Trust Fund for road repairs, cutting the sales tax, increasing the exemption for retirement income along with additional changes, all of which spell good news for New Jersey retirees.  Here is a summary:

      • The gas tax will increase by 23 cents per gallon on November 1, 2016.
      • The New Jersey Estate Tax Exemption ($675,000) presently the lowest in the nation will increase to $2,000,000 for persons dying on or after January 1, 2017.

      • Effective January 1, 2018, the New Jersey Estate Tax is eliminated.

      • The sales tax rate will decrease from 7% to 6.875% on January 1, 2017, and to 6.625% on January 1, 2018.

      • The exemption for retirement income (pension and IRA withdrawals) from New Jersey Gross Income Tax presently $15,000 for single retirees and $20,000 for married couples will increase to $70,000 and $100,000, respectively, over the next four years.

      • The earned income tax credit for the working poor will increase.

      • Veterans of the military and National Guard will be allowed a $3,000 personal exemption.

The new law will have considerable impact on estate plans created prior its enactment.  For married couples, typically on the first death, the plan called for the funding of a credit shelter trust and a marital share passing outright or in trust for the surviving spouse.  This change in our New Jersey law coupled with the Federal Estate Tax concept of portability (introduced in 2012) of the unified estate and gift tax exemption (presently $5,490,000 for single persons and $10,900,000 for married couples), should cause many to revisit the dispositive provisions of their wills and trusts.

While the new law eliminates the New Jersey Estate Tax by 2018, the New Jersey Transfer Inheritance Tax which taxes transfers made to non-lineal heirs (brothers, sisters, nieces, nephews, friends, etc.) remains intact.

Now would be a good time for everyone to revisit their estate plans.  We’ll be happy to meet with you to discuss what should be done to update yours. 
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Tel: (908) 277-2200; Fax: (908) 277-6808; email: lawyers@bournenoll.com