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 It’s important to note that currently the estate tax in the Garden State is scheduled to be repealed at the beginning of 2018.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.
In December, the U.S. Securities and Exchange Commission (SEC) announced charges against two privately held companies for failing to file a Form D notice, which is generally utilized for exempt securities offerings. Here, the SEC’s enforcement sends a strong message: compliance with regulatory requirements is not optional and failure to comply can have significant consequences. […]
Author: Kenneth C. Oh
On February 14, 2025, the Office of General Counsel (OGC) of the National Labor Relations Board (NLRB) under Acting General Counsel William B. Cowen issued Memorandum 25-05, “New Process for More Efficient, Effective, Accessible and Transparent Case handling.” The Memorandum rescinds nearly all of the Memoranda issued by his direct predecessor, Jennifer Abruzzo, setting the […]
Author: Matthew F. Mimnaugh
If you purchase real property from a foreign person or entity, you may be required to withhold taxes from your payment to the seller under the Foreign Investment in Real Property Tax Act (FIRPTA). The federal tax law is designed to ensure that foreign sellers pay any applicable capital gains tax on profits realized from […]
Author: Jesse M. Dimitro
Your home is likely your greatest asset, which is why it is so important to adequately protect it. Homeowners insurance protects you from the financial costs of unforeseen losses, such as theft, fire, and natural disasters, by helping you rebuild and replace possessions that were lost While the definition of “adequate” coverage depends upon a […]
Author: Jesse M. Dimitro
Making a non-contingent offer can dramatically increase your chances of securing a real estate transaction, particularly in competitive markets like New York City. However, buyers should understand that waiving contingencies, including those related to financing, or appraisals, also comes with significant risks. Determining your best strategy requires careful analysis of the property, the market, and […]
Author: Jesse M. Dimitro
Business Transactional Attorney Zemel to Spearhead Strategic Initiatives for Continued Growth and Innovation Little Falls, NJ – February 21, 2025 – Scarinci & Hollenbeck, LLC is pleased to announce that Partner Fred D. Zemel has been named Chair of the firm’s Strategic Planning Committee. In this role, Mr. Zemel will lead the committee in identifying, […]
Author: Scarinci Hollenbeck, LLC
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!