By Fredrick P. Niemann, Esq. a NJ Estate Administration Lawyer
New Jersey is looking to raise revenue from everybody, everywhere, especially the estates of moderate to wealthier New Jersey residents. In one case, a decedent had a will that pour-overed estate assets to a revocable trust. The Trust distributed the funds in 3 equal shares to the son & daughter-in law, another son and daughter-in -law and a daughter and son-in-law. The documents were originally drafted in Florida. Decedent died a NJ resident. A NJ Inheritance tax auditor has taken the position that a portion of the trust given to the son/daughter as a class A beneficiary is exempt from NJ inheritance tax but to the daughter and son-in-law it is a class C distribution subject to inheritance tax. I do not believe it was decedent’s intent to consider each part as going 1/2 to each child and his/her spouse. I presume she saw this as a gift to each child. So what should I do and is the Inheritance Tax auditor correct or not?
My response is as follows: Department of Taxation has the right in treating a devise to daughter and D’s husband as half to each unless the taxpayer shows that under applicable law each beneficiary isn’t entitled to half of the gift.
But here is how to potentially defeat New Jersey. It seems to me, the “in-law” beneficiaries can disclaim their interest in the stock. The result will be that the class “A” beneficiary (daughter & sons) will take the disclaimed amount as a class “A” beneficiary in full (100%) and NJ tax will be due to New Jersey.
Contact me personally today to discuss your New Jersey estate administration matter. I am easy to talk to, very approachable and can offer you practical, legal ways to handle your concerns. You can reach me toll free at (855) 376-5291 or e-mail me at firstname.lastname@example.org.