If you live in New Jersey and are planning your estate, you may be wondering how the N.J. and federal estate taxes will affect your heirs. Unfortunately, N.J. has both an inheritance tax and an estate tax. Furthermore, the state’s estate tax exemption limit is quite low when compared to the rest of the states in the union.
State exemption limit
The exemption limit in New Jersey as of 2016 is $675,000. If you are the executor of a Will, and the value of the gross estate is more than $675,000, you will have to file a New Jersey estate tax return. However, keep in mind that there are various deductions such as funeral expenses, attorney’s fees, and income tax bills that may reduce the estate value below the exemption limit.
Federal exemption limit
The federal exemption limit as of 2015 is $5.43 million per person, which is up from $5.34 million in 2014. This means that a married couple in 2016 can give away $10.86 million tax free. It also means, that unless the decedent’s gross estate is valued at more than $5.43 million, it won’t have to pay the federal estate tax rate of 40%.
What is meant by “the value of the gross estate”?
Many people make the mistake of assuming the word “estate” refers only to a house. In fact, it encompasses much more. In order to calculate the total value of a decedent’s estate, numerous assets are gathered and assessed, including:
- New Jersey real estate;
- Vehicles and other items of personal property;
- Securities and investment accounts;
- Funds from retirement account;
- Business interests such as a sole proprietorship, limited liability company, or small corporation; and
- Bank accounts and certificates of deposit.
Also keep in mind that any property you leave to your spouse or civil partner is exempt from the NJ estate tax.
Comprehending legal information after losing a loved one can be difficult and frustrating. An experienced attorney can explain estate planning to you in an easily accessible manner so that you and your family can move on with your lives. For more information on estate planning in Union and Hunterdon Counties, contact Alec Borenstein, Esq., at firstname.lastname@example.org or call 908-236-6457 today.
Contrary to what you may have heard, an administrator is not the same as an executor. An executor is a person named in a will to carry out the descendant’s last wishes. The job of the administrator, on the other hand, is to ensure the estate of the descendant is processed in accordance with the state’s intestacy laws. In addition, an administrator is appointed by the Surrogate Court in the event that no will exists.
If you are appointed administrator of an estate in New York, your first move should be to contact your attorney. Your lawyer can explain the process and guide you through the necessary steps. Following is a basic checklist of tasks you’ll want to take care of immediately:
- Identify and list out the decedent’s assets.
- Contact financial institutions and notify them of the death and that you have been appointed administrator of the estate.
- Have real and personal property, including furniture, jewelry, art, collectibles, automobiles, etc., professionally appraised.
- Open an estate checking account.
- Find out if there are creditors of the estate and if their claims are valid. If their claims are valid, consult with your lawyer on how to proceed.
- Pay off all estate expenses including court fees, appraisal costs, funeral expenses, attorney fees, etc.
- Create a journal and record all financial transactions related to the administration of the estate.
- If required, be sure to have the decedent’s last income tax return and estate income tax returns organized and filed.
- Distribute the balance of estate funds to the surviving beneficiaries.
It is important to remember that you are appointed by the court and you should take your responsibilities as an estate administrator seriously. If state or federal taxes are owed on the estate, be sure to file them correctly and on time. A failure to do so may result in penalties against you.
Recently appointed executor/administrator of an estate in NY or New Jersey? Without proper legal guidance, you could find yourself in over your head. An experienced estate planning lawyer can assist you in obtaining and filling out paper work, understanding the probate process and creating an estate plan of your own. For estate planning help in Union and Hunterdon Counties, contact Alec Borenstein, Esq., at email@example.com or call 908-236-6457 today.