Showing posts with label star Ledger. Show all posts
Showing posts with label star Ledger. Show all posts

Tuesday, September 21, 2010

Death and taxes in New Jersey

The Star Ledger’s Karin Price Mueller writes,


“Sure, the thought of dying doesn’t bring a smile or a happy dance to most. But dying and being taxed, even after you’re dead?

“Welcome to New Jersey.

“While there have been many changes to estate tax law through the years, often benefitting the so-called rich, New Jersey, as usual, rocks to its own drummer. It’s a politically charged issue, but let’s face it: Dead people can’t vote. And the state isn’t likely to give up easy revenue anytime soon.

“So don’t die in New Jersey — or at least don’t die in New Jersey without a comprehensive estate plan.”
What kind of death taxes are there? Federal and state.

“The federal estate tax exemption increased over the past decade, meaning you were able to leave more money free of federal tax as the exemption went up each year. For 2010, the tax was completely repealed, making this year a great year to die, at least federally speaking. If there’s no action in Washington for 2011, a $1 million exemption will be resurrected.

“Congress keeps dallying around the issue, so the future of the federal estate tax remains, for now, in limbo. New Jersey’s estate tax, by comparison, is pretty solid.”
While some states tied their estate taxes to the federal, New Jersey didn’t. Thus, the exemption in New Jersey has been $675,000 since 2001.

“That may sound like a lot of moola, but it’s not hard to die in New Jersey with that much in assets. Lots of state residents reach the $675,000 threshold in real estate alone. Throw in a 401(k) and a bank account or two, and you’re there. Even if you don’t have enough to owe federal estate tax, you very well may owe the tax to New Jersey.

“Here’s an example: Let’s say you die with an estate worth $950,000 in 2010 or 2011. You won’t owe any federal estate tax. But anything over $675,000 — in this case, $275,000 — would face the New Jersey estate tax. That comes to a bill of $31,800. If you instead died in a state with no state estate tax, your estate would owe nothing at all.”
Ouch, so what to do?

Ms. Price Mueller mentions a few options. Find out what they are by reading the full article.


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