I think we can all agree that New Jersey is a great place to live, work, and raise a family. But is it a great place to die? Not so much.
Why? In a word (okay, two words): estate taxes.
Sure, the federal estate tax exemption is $5.3 million, and taking advantage of the unlimited marital deduction privilege can bump that up to $10.6 million. But while 30 states impose no additional estate taxes at all, New Jersey does. And the exemption is only $675,000. For estates with assets above this amount, the New Jersey estate tax rate goes from 4.2 percent all the way up to a whopping 16 percent.
So what can you do to protect some, if not all, of your assets from New Jersey estate taxes. Some families are utilizing what is known as domicile planning. This involves establishing residency in another state, such as Florida (which may seem like a great idea after the winter we’ve endured, regardless of the estate tax advantages). Other options include a credit shelter/bypass trust, a spousal lifetime access trust, and outright gifting.
It is important to note that strategies such as these are extremely complicated. The consequences for using them improperly can be financially devastating—worse, even, than simply paying the state’s estate tax itself. These strategies should only be attempted with the help of an experienced New Jersey estate planning/elder law attorney.
Contact our office at your earliest convenience for insight and experienced guidance in all matters that pertain to taking the bite out of death taxes, both federal and state.