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FEDERAL ESTATE TAX AND NEW JERSEY ESTATE TAX
IRS Estate Tax Exclusion
For 2015, the IRS estate tax exclusions are as follows:
- the estate tax exclusion amount for deaths in 2016 is $5.45 million
- the annual exclusion for gifts is $14,000
- the applicable exclusion amount for lifetime gifts is $5.45 million
The gross estate of the decedent consists of all probate and non-probate assets owned by the decedent at the date of death. The fair market value of these items is utilized to determine value. Property included in your estate may consist of cash and securities, real estate, insurance, trusts, annuities, business interests and other assets.
The gift tax is a tax on the transfer of property to another person, where there is nothing received in return, or less than full value is received. The general rule is that any gift is a taxable gift. However, there are many exceptions to this rule. Generally, the following gifts are not taxable gifts:
- Gifts that are not more than the annual exclusion for the calendar year
- Tuition or medical expenses you pay for someone (the educational and medical exclusions)
- Gifts to your spouse
- Gifts to a political organization for its use
- Gifts to qualifying charities are deductible from the value of the gift(s) made
New Jersey Estate Tax
In New Jersey, any estate larger than $675,000 is subject to the New Jersey Estate Tax.
A New Jersey estate tax return, Form IT Estate, must be filed if the decedent's gross estate plus adjusted taxable gifts exceeds $675,000 within 9 months of date of death. The New Jersey estate tax is either the maximum credit for state inheritance, estate, succession or legacy taxes allowable under the provisions of the Internal Revenue Code in effect on December 31, 2001 (this is called the "Form 706 Method"), or an amount determined pursuant to the Simplified Tax System prescribed by the Director, Division of Taxation (this is called the "Simplified Form Method").
If you have any questions or concerns regarding estate taxation or would like a consultation related to estate tax planning and gifting, please contact The Law Offices of Hunziker, Jones & Sweeney at (973) 256-0456 or fill out our contact form for a consultation.