How Does the New Jersey Estate Tax Repeal Affect You?

It is official—Governor Christie has signed the bill to repeal the New Jersey estate tax. Starting in 2017, the estate tax exemption amount will increase to $2 million with a general tax rate of 7.2% and up to 16% on estates over $10 million. The full repeal goes into affect starting January 2018. 

But, how does this affect you? For those who have already prepared their estate plans, there is not much effect; however, you might be able to simplify your documents, such as those creating a trust for your surviving spouse. For those who domicile in New Jersey, you will no longer need to make substantial gifts during your lifetime because there is no worry for reducing your estate tax burden. For married couples with credit sheltering trusts, it may be a good idea to keep these estate vehicles but there is no longer concern over how much can be included in the trust. For those non-domiciled residents and those wishing to avoid the “death tax,” the incentive to move will be reduced starting in 2018. For those surviving spouses with money left in trust, once the repeal goes into affect, it might be beneficial to consider terminating the trust because the assets will not receive another step-up in basis. Finally, for those considering Medicaid planning, it is more prudent to leave assets in your name instead of giving them away early unless your estate is large. 

See NJ Estate Tax Repeal: How Does This Affect You?, Kevin A. Pollock BLAWG, October 24, 2016.