Kenneth Vercammen, Esq. handles Probate, Estate Administration and Wills. He was a speaker at the American Bar Association ABA Annual meeting and is Co-Chair of the Probate & Estate Planning Committee. To schedule a confidential consultation, email us at VercammenAppointments@NJlaws.com or call.
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Monday, July 28, 2014

18:26-8.21 Contingent or defeasible estates

18:26-8.21 Contingent or defeasible estates

   (a) When an instrument creates an executory devise, or an estate in expectancy of any kind or character which is contingent or defeasible, the property which is the subject of such devise or in which such contingent or defeasible interest is created is appraised immediately at its clear market value. The value of the estate for life or term of years is then deducted from the appraised value of the property which is the subject of devise or limitation and the tax on such balance of the estate shall not be levied or assessed until the person or corporation entitled thereto comes into the beneficial enjoyment, seizing or possession thereof.

(b) Where the provisions of an inter vivos trust or decedent's last will and testament create a right in the beneficiary to request that a limited sum be paid to her or him annually and no right exists in the beneficiary to terminate the trust, the interest of said beneficiary will be construed as contingent in character for inheritance tax purpose.

(c) Where a number of years have elapsed between the date of death and the date of initial assessment, the Branch will inquire as to the amounts and dates of any payments to, or withdrawals by the beneficiary. If such payments or withdrawals have been made a contingent assessment, based upon the amount of corpus paid less any vested life estate value or discounted value will be completed.

(d) To secure contingent taxes, the bond of New Jersey Bank as principal or as one of the principals and as surety will be accepted, provided such bond meets the requirements of form and content of the approved form of Bond, 0-54. In the case of a foreign fiduciary, however, a bond issued by a surety company licensed to operate in New Jersey as surety must be filed.

8:26-8.20 Discretionary and legal common trust funds

 8:26-8.20 Discretionary and legal common trust funds

   (a) Since the admission and withdrawal to the funds are controlled by contract, the value of the fund, therefore, is to be determined as of the close of business on the last bank business days of January, April, July and October of each year. For inheritance tax purposes the valuation date shall be:

1. Where approval was obtained by the donor in his lifetime, then the valuation date so approved, will control the value of his interest in the fund.

2. If the donor dies more than five days prior to a contractual valuation date without having applied for approval, it shall be deemed that such a request was in fact made; then the valuation date shall be the one next following his death.

3. If the donor dies five days or less prior to a valuation date, then the valuation date shall be the one next following the valuation date immediately after death.

4. If the donor dies one or more days subsequent to a valuation date, but more than five days prior to the next valuation date, the valuation date shall be the one following the date of death.

18:26-8.19 Patents, trade marks, copyrights, and other items

 18:26-8.19 Patents, trade marks, copyrights, and other items

   The valuation of a "Patent", "Trade Mark", "Copyright", "License", "Franchise", is a question of fact in each instance, the burden of proof being on the representative of the estate to show the history of the item being valued, the state of the art or the monopoly created as of the date of death. The bookkeeping entries or its original costs are not regarded as a reliable gauge of value. In most cases, the date of death value is primarily based upon the probable earnings such items will bring its owner.

18:26-8.18 Stocks, bonds, mutual funds and securities

18:26-8.18 Stocks, bonds, mutual funds and securities

   (a) The value of stocks, bonds and securities listed on any stock exchange is appraised on the basis of the intermediate price between the low and high price prevailing on the date of death.

1. If there were no sales of stocks, bonds, and securities listed on a stock exchange on the date of death, either the mean between the highest and lowest selling price for the previous day, or the nearest trading day prior to the date of death, or the prorated value used for Federal estate tax purposes reflecting the mean between the highest and lowest selling price on the nearest trading dates prior to and subsequent to the date of death may be used. The Alternative Valuation Date method of valuing stocks and bonds for Federal estate tax purposes is, however, not applicable for New Jersey transfer inheritance tax purposes. All of the assets must be valued using the same method;

2. Where stock on the date of death or thereafter is selling "ex dividend", the dividend is required to be added to the taxable estate in addition to the quoted value of the stock.

(b) The value of stocks and bonds which are sold infrequently or in unconsequential numbers may not be ascertainable by reference to the sales price on an exchange since the stock exchange value reflected by quotations is nothing more than evidence of true value under ordinary and normal conditions. Therefore, in cases where stocks or bonds are infrequently traded or sold in small quantities it is necessary to resort to financial statements along with any other pertinent data to determine the value at date of death.

(c) Shares of mutual funds are appraised at the bid price prevailing on the date of death, and in the event there is no bid price if the date of death falls on holiday or Saturday or Sunday, the values shall be those provided in subsection (a) of this Section.

(d) The market value of rare or unlisted securities is established by information furnished by brokers regularly dealing in such securities, officers of the corporations involved, or other documentary proof satisfactory to the Director.

18:26-8.17 Government bonds and securities

18:26-8.17 Government bonds and securities

   (a) Treasury bonds and similar negotiable obligations issued by the United States Government are valued at:

1. The intermediate price between the low and high price prevailing on the date of death of the decedent if traded on an exchange or over the counter;

2. If there were no sales of bonds or similar negotiable obligations issued by the United States Government on the date of death, either the mean between the highest and lowest selling price for the previous day, or the nearest trading day prior to the date of death, or the prorated value used for Federal estate tax purposes reflecting the mean between the highest and lowest selling price on the nearest trading dates prior to and subsequent to the date of death may be used. The Alternative Valuation Date method of valuing bonds for Federal estate tax purposes is, however, not acceptable for New Jersey transfer inheritance tax purposes. All of the assets must be valued using the same method;

3. Interest accrued from last interest date to date of death is required to be added to the taxable estate in addition to the quoted value of bonds or similar obligations; except,

(b) Interest accrued from the last interest date to the date of death is not included in the appraisal of the United States Savings Bonds Series "H".

(c) Further, Government Securities acceptable in payment of Federal estate taxes at par will be valued for New Jersey Transfer Inheritance Tax purposes at their market value as of the date of a decedent's death in accordance with paragraph 1 of subsection (a) of this Section.

 

18:26-8.16 Assets of close corporation or partnership of known market value

18:26-8.16 Assets of close corporation or partnership of known market value

   (a) When the assets of a "closely held" corporation or "partnership" include stocks and bonds which have a definite, established and known daily market value and are readily reducible to cash at that value, no deduction thereon will be allowed in determining the book value of the stock of the corporation or interest in the partnership.

(b) In ascertaining the book value of the common stock of a "closely held" corporation, the preferred stock, issued and outstanding, must be deducted at par value even though it might be selling or it is claimed that it shall be valued for less.