Scarinci Hollenbeck, LLC
The Firm
201-896-4100 info@sh-law.comFirm Insights
Author: Scarinci Hollenbeck, LLC
Date: March 7, 2017
The Firm
201-896-4100 info@sh-law.comThey hear all kinds of scary terms like “estate tax” and “inheritance tax,” and they don’t know what the difference between the two is, or even if there’s a difference at all.
People fear what will happen if they don’t pay the right amount, and don’t know how to determine what the right amount might be. Explore a primer on the similarities and differences between an estate tax and inheritance tax, and how a New Jersey tax attorney can help you.
Ever since the most recent changes to the New Jersey inheritance tax and estate tax laws, which occurred as a result of the same bill that raised the gas tax in the state, there has been confusion about the difference between the two. Estate and inheritance taxes are two different taxes, but both fall under the overall umbrella of death taxes.
The federal government has an estate tax, but no inheritance tax. Currently, this tax rate is at 40 percent, with an exemption of $5.49 million. This tax rate is applied to the taxable portions of the estate that exceed the exemption amount, and tax is reported and paid on the estate tax return of the decedent.
The taxable estate is, in general, based on the current market value of the assets possessed by the decedent on the date of their passing. This total is then reduced by debts, expenses and certain other liabilities as well as deductions like unlimited charitable and marital deductions. The remaining amount after all deductions is then subject to the estate tax to the extent that it exceeds the exemption amount.
The New Jersey estate tax currently exists and works much like the federal tax, but with an exemption of $2 million, for decedents dying after January 1, 2017, and a 16% tax rate. This means an estate tax is only paid on estates worth more than the exemption amount, and the tax is 16% of the portion that exceeds the exemption, minus allowable deductions. It’s important to note that currently the estate tax in the Garden State is scheduled to be repealed at the beginning of 2018. However, with a gubernatorial election between now and then, the scheduled repeal is in doubt.
An inheritance tax is based on the beneficiary’s relationship to the decedent as well as the amount received by the beneficiary. The federal government does not impose an inheritance tax, but New Jersey does. Spouses, children, and grandchildren are exempt in New Jersey, but siblings, nieces, and nephews are not. Each category of the beneficiary is subject to its own exemption amount and tax rate.
However, the current books are written in such a way that inheritance and estate taxes offset one another. This means that, in theory, no one should pay more through the combination of taxes than they would normally pay for the greater of the two when calculated separately.
It’s tricky to understand the death taxes in New Jersey, the classes of beneficiaries, and the tax rates paid based on the different levels of an estate, relationships and the like. If you’re facing the need to close an estate, it can be helpful to talk with a qualified and experienced New Jersey tax attorney.
At Scarinci Hollenbeck, we have years of experience in dealing with these complex issues. Therefore, if you have any questions or if you would like to discuss the matter further, please contact me, Amy Van Fossen, at 201-806-3364.
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Business partnerships, much like marriages, function exceptionally well when partners are aligned but can become challenging when disagreements arise. Partnership disputes often stem from conflicts over business strategy, financial management, and unclear role definitions among partners. Understanding Business Partnership Conflicts Partnership conflicts place significant stress on businesses, making proactive measures essential. Partnerships should establish detailed […]
Author: Christopher D. Warren
*** The original article was featured on Bloomberg Tax, April 28, 2025 — As a tax attorney who spends much of my time helping people and companies who have large, unresolved issues with the IRS or one or more state tax departments, it often occurs to me that the best service that I can provide […]
Author: Scott H. Novak
On January 28, 2025, the Trump Administration terminated Gwynne Wilcox from her position as a Member of the National Labor Relations Board (NLRB or the Board). Gwynne Wilcox, a union side lawyer for Levy Ratner, was confirmed to the Board for an original term in 2021 and confirmed again for a successive five-year term expiring […]
Author: Matthew F. Mimnaugh
Breach of contract disputes are the most common type of business litigation. Therefore, nearly all New York and New Jersey businesses will likely have to deal with a contract dispute at least once. Understanding when to file a breach of contract lawsuit and how long you have to sue for breach of contract is essential […]
Author: Brittany P. Tarabour
Closing your business can be a difficult and challenging task. For corporations, the process includes formal approval of the dissolution, winding up operations, resolving tax liabilities, and filing all required paperwork. Whether you need to understand how to dissolve a corporation in New York or New Jersey, it’s imperative to take all of the proper […]
Author: Christopher D. Warren
Commercial leases can take a variety of forms, which is often confusing for both landlords and tenants. Understanding the different types, especially the gross lease structure, is important when selecting the lease that best suits your needs. One key distinction between lease types is how rent is calculated and paid. This article addresses the two […]
Author: Robert L. Baker, Jr.
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.
Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.
Let`s get in touch!
Sign up to get the latest from the Scarinci Hollenbeck, LLC attorneys!