New Jersey Repeals Estate Tax, Not Inheritance Tax


Update: On Oct. 14th, Gov. Christie signed into law the transportation funding bill, and the accompanying tax bill. It’s The Law: New Jersey Estate Tax Repeal In 2018 .

The New Jersey legislature today voted to repeal the state’s estate tax as part of a deal including a 23-cents-a-gallon tax hike to renew the state Transportation Fund. The once-wannabe Republican presidential candidate Governor Chris Christie is expected to sign the bills into law, which will mean he follows in the footsteps of the two vice presidential candidates Democratic Senator Tim Kaine and Republican Governor Mike Pence who oversaw the elimination of their state’s estate taxes in 2007 (Virginia) and 2013 (Indiana) respectively.


Changes for the NJ Estate Tax

Q. Now that the estate tax is being phased out, what is meant that it benefits the top 4 percent? Please address the new estate tax exemption.
— Planning ahead

A. The estate tax in New Jersey is one of the reasons many people decide to leave the state.

That’s because while the federal government has increased its estate tax exemption to more than $5 million, New Jersey has stuck with $675,000.

That means anyone who dies with assets worth more than $675,000 will have estates subject to the tax.

That may sound like a lot of money, but if you own even a modest home in the northern part of the state, you’ll probably hit the $675,000 threshold.

Now, the 4 percent statistic you stated comes from data by New Jersey Policy Perspective, which says about 4 percent of estates in New Jersey pay the tax.


Kinds of Trusts





There are two basic types of trusts: living trusts and testamentary trusts. A living trust or an "inter-vivos" trust is set up during the person's lifetime. A Testamentary trust is set up in a will and established only after the person's death when the will goes into effect.

Living trusts can be either "revocable" or "irrevocable."

Revocable trusts allow you to retain control of all the assets in the trust, and you are free to revoke or change the terms of the trust at any time.

With irrevocable trusts, the assets in it are no longer yours, and typically you can't make changes without the beneficiary's consent. But the appreciated assets in the trust aren't subject to estate taxes.

There are many more complicated types of trusts, too, that apply to specific situations. Some include:

Credit shelter trusts: With a credit-shelter trust (also called a bypass or family trust), you write a will bequeathing an amount to the trust up to but not exceeding the estate-tax exemption. Then you pass the rest of your estate to your spouse tax-free. And there's an added bonus: Once money is placed in a bypass trust, it is forever free of estate tax, even if it grows.

Generation-skipping trusts: A generation-skipping trust (also called a dynasty trust) allows you to transfer a substantial amount of money tax-free to beneficiaries who are at least two generations your junior - typically your grandchildren.

Qualified personal residence trusts: A qualified personal residence trust can remove the value of your home or vacation dwelling from your estate and is particularly useful if your home is likely to appreciate in value.

Irrevocable life insurance trusts: An irrevocable life insurance trust can remove your life insurance from your taxable estate, help pay estate costs, and provide your heirs with cash for a variety of purposes. To remove the policy from your estate, you surrender ownership rights, which means you may no longer borrow against it or change beneficiaries. In return, the proceeds from the policy may be used to pay any estate costs after you die and provide your beneficiaries with tax-free income.

Qualified terminable interest property trusts: If you're part of a family in which there have been divorces, remarriages, and stepchildren, you may want to direct your assets to particular relatives through a qualified terminable interest property trust. Your surviving spouse will receive income from the trust, and the beneficiaries you specify (e.g., your children from a first marriage) will get the principal or remainder after your spouse dies.

The Fundamentals of Estate Planning: How to Protect Your Family's Future


One of the best ways to help assure that your assets will be managed for your family as you intend is to develop a comprehensive estate plan designed to meet your individual needs. The estate planning process typically involves working with your financial, tax and legal advisors to develop a customized estate plan. Many estate plans include the following:
• Last Wills and Testaments
• Durable Financial Powers of Attorney
• Advance Medical Directives
• Revocable and/or Irrevocable Trusts
• Insurance Trusts
• Charitable Remainder Trusts
• Minor's Trusts - Spendthrift Trusts
• By-Pass or Credit Shelter Trusts
• Marital Trusts (QTIP)
• Grantor Retained Annuity Trusts or Grantor Retained Uni-Trusts
• Qualified Personal Residence Trusts
• Planning for Disabled Children
• Life and Long-Term Care Insurance
• Gifting Strategies
• Business Succession Planning
• Family Limited Partnerships
• Pre-Nuptial Agreements

Areas of Practice

 Estate Plannning



SGW estatePlanningLG

When planning the financial future of your family and loved ones, it's crucial to get it right. At SGW, we assist clients throughout New Jersey with estate planning needs, so that you will be able to leave a lasting legacy and provide for them even after you're gone. Alex M. Hilsen, Esq., LL.M. has a Master of Laws (LL.M.) degree in estate planning, and is very knowledgeable about the procedures involved in drafting a proper estate plan under the laws of New Jersey.

Alex understands that every client has unique needs, so he strives to provide personalized and professional guidance when discussing and preparing documents.   He designs your estate planning documents, to carry out your final wishes exactly as you would like. 

A well-drafted estate plan should include a Will, Powers of Attorney as well as possible trust documents that will help you feel more at ease about your family’s financial future. If you would like to schedule a free initial consultation, please click here to send Alex a message and get started.

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