If you follow this blog, you know that New Jersey is the most expensive state to die in. In an effort aimed at changing that distinction, Governor Christie in his budget proposal has recommended increasing the New Jersey Estate Tax Exemption Amount from $675,000 per person to $1 million per person.
The New Jersey Estate Tax Exemption Amount is the amount that you can leave to any person upon your death, other than a spouse or charity, without paying any New Jersey estate taxes. (there are no estate taxes on assets passing to spouses and charity). For a married couple, with a properly drafted estate plan, they can effectively shield $2 million from the New Jersey estate tax under the proposed plan. At present, they can effectively shield $1,350,000 from the New Jersey estate tax. The real value difference between a $675,000 exemption amount and a $1 million exemption amount is $33,200.
For an estate planning attorney such as myself, the question is what is this law change going to look like? There have been lots of Wills created in the past 10 years since New Jersey instituted its own estate tax. Will those need to be modified to incorporate a change in the New Jersey estate tax exemption amount? Will the tax rates stay the same? In modifying the estate tax rate, will the Legislature also be dealing with issues about incongruities in the current application of the estate tax, particularly with reference to certain elections for assets passing to spouses where for many people there is effectively no federal estate tax given the $5 million exemption amount. Don't get me wrong, paying less taxes is always a good thing. My hope is that in developing a scheme to reduce the tax burden on New Jersey's residents, it will be done in thoughtful manner that will make the estate tax an appropriate tax plan for its purposes.
Deirdre R. Wheatley-Liss is a shareholder of the Law Firm of Fein, Such, Kahn & Shepard, P.C., with offices in Parsippany and Toms River, New Jersey. She concentrates her practice in the areas of Elder Law, Estate Planning and Administration, Business Planning and Tax Law. Deirdre's individual clients range from their 20's to their 80's and beyond, while her business clients range from start-ups with exciting new ideas to 100+ year old business ventures. Clients seek Deirdre's advice and assistance with a variety of planning issues relating to identifying and meeting their personal, family and business goals, whether in a planning or crises situation.