Avoiding Probate

Avoiding Probate

18:26-5.9 Certain profit sharing and retirement plans

TRANSFER INHERITANCE AND ESTATE TAX  
SUBCHAPTER 5. TRANSFERS SUBJECT TO TAX
N.J.A.C. 18:26-5.9 (2014)
§ 18:26-5.9 Certain profit sharing and retirement plans

   The proceeds of a profit sharing or retirement plan payable at the date of death of a decedent to a beneficiary named by the decedent or in accordance with the preference schedule of beneficiaries is deemed to be a transfer which takes effect at or after death and is as such subject to the tax, except for the exemption provided by N.J.A.C. 18:26-6.16.

18:26-5.8 Transfers taking effect in possession or enjoyment at or after death

 TRANSFER INHERITANCE AND ESTATE TAX  
SUBCHAPTER 5. TRANSFERS SUBJECT TO TAX
N.J.A.C. 18:26-5.8 (2014)
§ 18:26-5.8 Transfers taking effect in possession or enjoyment at or after death

   (a) Any transfer of property by deed, grant, bargain, sale, gift or in trust (except in the case of a bona fide sale for an adequate valuable consideration in money or money's worth) made by a decedent transfer or during his lifetime under which he has retained for his life or for any period not ascertainable without reference to his death or for any period which does not in fact end before his death:

1. The possession or enjoyment of the property so that possession or enjoyment of the property can be obtained only by surviving the transferor; or

2. The right to income from the property, is a transfer subject to the New Jersey inheritance tax.

(b) The transfer is taxable if by any means whatsoever the transferor has in form transferred property but has deferred the actual possession, use or enjoyment of the property until a time which can only be measured by reference to the transferor's death.

18:26-5.7 Transfers made in contemplation of death

TRANSFER INHERITANCE AND ESTATE TAX  
SUBCHAPTER 5. TRANSFERS SUBJECT TO TAX
N.J.A.C. 18:26-5.7 (2014)
§ 18:26-5.7 Transfers made in contemplation of death

   (a) Any transfer by deed, grant, bargain, sale or gift made without adequate valuable consideration within three years ending with the date of death of the grantor, vendor, or donor, in the absence of proof to the contrary, is deemed to have been made in contemplation of death. Any transfer made prior to such three-year period is not deemed to be in contemplation of death.

(b) The term "contemplation of death" includes that expectancy of death which actuates the mind of a person of the execution of his will and is therefore not restricted to that expectancy of death which actuates the mind of a person making a gift causa mortis.

(c) The term "adequate valuable consideration" means the clear market value of property in money or money's worth on the date of transfer.

18:26-5.6 Inter vivos transfers

TRANSFER INHERITANCE AND ESTATE TAX  
SUBCHAPTER 5. TRANSFERS SUBJECT TO TAX
N.J.A.C. 18:26-5.6 (2014)
§ 18:26-5.6 Inter vivos transfers

   (a) Any transfer of real or tangible personal property situated in this state or intangible personal property wherever situated in the case of a resident decedent or of real or tangible personal property situated in this State in the case of a non-resident decedent made by such decedent during his lifetime, whether in contemplation of death or intended to take effect in possession or enjoyment at or after decedent's death, is subject to the New Jersey Inheritance Tax. Any such transfers will be taxed upon the clear market value of the transferred property on the date of death.

(b) In the case of a resident decedent, all intangible personal property is deemed to be situated in this State, even though it may be actually located anywhere outside the State.

18:26-5.5 Devises in lieu of commissions

TRANSFER INHERITANCE AND ESTATE TAX  
SUBCHAPTER 5. TRANSFERS SUBJECT TO TAX
N.J.A.C. 18:26-5.5 (2014)
§ 18:26-5.5 Devises in lieu of commissions

   In any case where a decedent appoints or names one or more executors or trustees and makes a devise of property to such fiduciaries in his will in lieu of commissions or allowances or appoints him or them his residuary legatee or legatees, the transfer to such fiduciary or fiduciaries of that portion of the property in excess of the reasonable compensation fixed by the Superior or County Court having jurisdiction in the matter, is subject to the New Jersey Inheritance Tax.

18:26-5.4 Classification of property as real or personal n1

TRANSFER INHERITANCE AND ESTATE TAX  
SUBCHAPTER 5. TRANSFERS SUBJECT TO TAX
N.J.A.C. 18:26-5.4 (2014)
§ 18:26-5.4 Classification of property as real or personal n1

n1 This regulation is intended to conform the treatment of real property under contract of sale or purchase at the time of decedent's death with that of adjoining states (Cf. Estate of Paul, 303 Pa. 330, and In re DeSteur's Estate, 99 N.Y. Supp. (2d.39)), and to revoke previous regulations in conflict herewith.

   (a) For purposes of the transfer inheritance tax laws of this State, the doctrine of equitable conversion will not be applied in estates of New Jersey decedents which involve realty situated in New Jersey.

(b) The doctrine of equitable conversion will not be applied in the case of those estates where a New Jersey decedent was a party to a contract of sale involving real estate situated in a foreign jurisdiction;

Example 1. The interest of a deceased resident vendor located in another state, which was under contract of sale at the date of his death, shall be deemed to be an interest in real property, the transfer of which is not subject to tax under the inheritance tax laws of this State;

Example 2. The interest of a deceased resident vendee, under a contract in effect at the date of death to purchase real property located in another state, shall be deemed personal property and taxable to the extent of the sum paid on account of the contract price at the time of death. Pursuant to the provisions of N.J.S.A. 54:34-5, as amended, the balance due under the contract shall not be allowed as a deduction in determining the clear market value of decedent's estate subject to tax under the inheritance tax laws of this State.

and, also, where a nonresident decedent was involved as a party to a contract of sale involving realty situated in New Jersey.

Example 1. The interest of a deceased nonresident vendor of real property located in New Jersey, which was under contract of sale at the date of such nonresident decedent's death, shall be deemed to be an interest in real property the transfer of which shall be taxable under the inheritance tax laws of this State. If such nonresident shall die intestate, his interest in the New Jersey real property shall, for the purposes of the inheritance tax laws of this State, be deemed to have descended under the intestate laws of this State to his heirs at law;

Example 2. The interest of a deceased nonresident vendee, under a contract in effect at the date of death to purchase real property located in New Jersey, shall be deemed personal property and not subject to tax under the inheritance tax laws of this State;

Note:--This rule will apply whether a decedent died testate or intestate, or where real property is specifically devised but is under contract of sale at the date of death.

(c) Concerning ground rents, or leasehold interests, ground rents or any leasehold interest in land for 99 years or more is deemed to be an interest in real property for the purpose of valuation only under the New Jersey inheritance tax laws; however, as to succession under the laws of descent and distribution of this State, such an interest is personal property. Such an interest, when held by a husband and wife/civil union couple, is held as a tenancy in common, unless the conveyance expressly states they hold as joint tenants. There can be no tenancy by the entirety in such an interest. Unaccrued ground rent on property located outside this State and owned by a resident decedent is deemed to be foreign real property and, therefore, not subject to tax; however, ground rent accrued prior to the date of death on property located outside the State of New Jersey owned by a resident decedent is subject to tax as it is deemed to be personal property.

(d) Partnership real estate. Any real property held by a partnership of which a decedent is a partner even if held by the deceased partner and his wife/her husband/civil union partner as tenants by the entirety, is deemed to be a partnership asset and therefore is considered personal property.

 

18:26-5.3 Property includible in estate of decedent

TRANSFER INHERITANCE AND ESTATE TAX  
SUBCHAPTER 5. TRANSFERS SUBJECT TO TAX
N.J.A.C. 18:26-5.3 (2014)
§ 18:26-5.3 Property includible in estate of decedent

   (a) Moneys recovered under New Jersey Death Act (N.J.S.A. 2A:31-1 et seq.).

1. Any sum recovered under the New Jersey Death Act representing damages sustained by a decedent between the date of injury and date of death, such as the expenses of care, nursing, medical attendance, hospital and other charges incident to the injury, including loss of earnings and pain and suffering are to be included in the decedent's estate.

2. Where an action is instituted under the New Jersey Death Act and terminates through settlement by a compromise payment without designating the amount to be paid under each count, the amount so recovered is first applied toward the payment of funeral expenses, the expenses of care, nursing, medical attendance, hospital and other proper charges incident to the injury and is includible in the estate of the decedent.

(b) Unpaid dividends--Stock, which on the date of death is quoted "exdividends" or "dividends" payable to the holder of record on the date prior to the date of death, constitute a part of the estate and are to be included in a decedent's estate.

(c) Accrued unpaid income--The amount of any accrued unpaid income on mineral and oil deeds or leases as of the date of death is considered an asset of the estate of a New Jersey decedent and includible in the estate.

18:26-5.2 Transfers of residents and nonresidents

 TRANSFER INHERITANCE AND ESTATE TAX  
SUBCHAPTER 5. TRANSFERS SUBJECT TO TAX
N.J.A.C. 18:26-5.2 (2014)
§ 18:26-5.2 Transfers of residents and nonresidents

   (a) Residents. Transfers by will or by the intestate laws of this State of real or tangible personal property situated in this State and intangible personal property, such as stock, bonds, securities, and mortgages wherever located from the estate of a resident decedent who died seized or possessed of such property, are subject to the tax. Intangible personal property of a resident decedent is deemed situated in this State, regardless of where it is actually located, since by law personalty is deemed to follow the domicile of its owner.

(b) Nonresidents. In the case of a nonresident decedent, only real or tangible personal property located within this State of which the decedent was seized or possessed transferred by will or intestate law are subject to the tax.

18:26-5.1 Transfers generally

TRANSFER INHERITANCE AND ESTATE TAX  
SUBCHAPTER 5. TRANSFERS SUBJECT TO TAX
N.J.A.C. 18:26-5.1 (2014)
§ 18:26-5.1 Transfers generally

   (a) Any transfers of property real or personal of the value of $ 500.00 or over, or any interest in a transfer or income from a transfer which interest or income is $ 500.00 or over in value, whether such transfer, interest or income is held in trust or otherwise to or for the use of any transferee, distributee or beneficiary, is subject to the transfer inheritance tax at the rates designated in Sections 2.4, 2.7 and 2.8 of this Chapter.

(b) In any case where a transfer or any interest or income is less than $ 500.00 in value, the transfer, interest or income is exempt from the tax; provided, however, if the transfer, interest or income is valued at $ 500.00 or more, then the entire transfer, interest or income is subject to tax.

Example:

Mr. "X" bequeaths his gold ring worth $ 250.00 to "Y", this being the only transfer made to "Y", the transfer is not subject to the tax. If Mr. "X" had bequeathed not only the ring but a watch and chain worth $ 300.00, then the transfer would be taxable and the tax would be based upon the entire amount, i.e., $ 550.00.

18:26-4.3 Payment pursuant to compromise

OMPROMISES (INHERITANCE AND ESTATE TAXES)
N.J.A.C. 18:26-4.3 (2014)
§ 18:26-4.3 Payment pursuant to compromise

   (a) Any compromise or settlement shall be null and void unless the amount agreed to be paid shall be paid pursuant thereto within the time or times fixed in said agreement and in such event all payment made thereunder shall belong to the State and shall be credited upon the arrears of taxes and interest or interest penalties due. Upon payment in full of the amount agreed to be paid pursuant to the terms of such agreement of alteration, revision, compromise or settlement, the person or persons so paying shall be entitled to receive a receipt for such payment which shall be a proper voucher in the settlement of the account and the Treasurer or Director shall issue a statement of payment which may be recorded in the office of the county clerk of the county where any real property is situated.

(b) If a judgment or decree has been entered in favor of the State of New Jersey, the Treasurer or Director, upon payment of the amount agreed upon or upon determination that the assessment be cancelled, shall execute and record a proper satisfaction of the lien, claim, judgment or decree in accordance with the facts.

18:26-4.2 Compromise and settlement of certain tax claims or liens; waiver of defenses

TRANSFER INHERITANCE AND ESTATE TAX  
SUBCHAPTER 4. COMPROMISES (INHERITANCE AND ESTATE TAXES)
N.J.A.C. 18:26-4.2 (2014)
§ 18:26-4.2 Compromise and settlement of certain tax claims or liens; waiver of defenses

   Where any lien or claim for any past due transfer inheritance taxes or estate or transfer taxes shall be brought into question, claimed to be invalid or impaired, or shall be in the course of litigation, or the Director, and the State Treasurer shall, after investigation, determine that there is reasonable doubt of the State's ability to enforce said lien or claim or to collect the taxes due, or claimed to be due, or that there is a reasonable doubt that said lien is valid or unimpaired, such officer shall enter into an agreement with the executor, administrator or trustee of any estate against whose assets said lien or claim shall be asserted, or the heirs, next of kin or beneficiaries succeeding to the property of any decedent against which such lien or claim is asserted, to alter, revise, compromise and settle all claims or liens for past due inheritance taxes or estate or transfer taxes, together with all interest or interest penalties thereon; provided, however, that the executor, administrator, trustee, heir or heirs, next of kin, beneficiary or beneficiaries, shall waive all defenses which might be set up against the claim or lien of the State and shall submit to such terms of payment and settlement as the Treasurer or Director shall deem to be equitable and just and in the best interest of the State.

18:26-4.1 Domicile doubtful; terms of settlement

TRANSFER INHERITANCE AND ESTATE TAX  
SUBCHAPTER 4. COMPROMISES (INHERITANCE AND ESTATE TAXES)
N.J.A.C. 18:26-4.1 (2014)
§ 18:26-4.1 Domicile doubtful; terms of settlement

   (a) Where the Director claims that a decedent was domiciled in this State at the time of death and the taxing authorities of another state makes a similar claim with respect to their state or states and an investigation discloses a reasonable doubt regarding domicile, the Director may, in his discretion, enter into a written agreement with such taxing authorities and the executor, administrator, or trustee, fixing the sum acceptable to this State in full settlement of the transfer inheritance tax of this State; provided, that said agreement also fixes the sum acceptable to such other state or states in full settlement of the death taxes imposable by said state or states; and, provided further, that said agreement has the approval of the Superior Court of this State.

(b) If the aggregate amount payable under such agreement to the states involved is less than the maximum sum allowable as a credit to the estate against the Federal estate tax imposed thereon, then the executor, administrator or trustee shall also pay to the Director so much of the difference between such aggregate amount and the amount of such credit as the amount payable to the Director under the agreement bears to such aggregate amount, and the agreement aforesaid shall so provide.

(c) Payment of the sum or sums fixed by said agreement shall be accepted by the Director in full satisfaction of this State's claim for transfer inheritance and estate taxes which would otherwise be chargeable under the law.

18:26-3A.13 Protests, hearings and appeals

TRANSFER INHERITANCE AND ESTATE TAX  
SUBCHAPTER 3A. ESTATE TAX--DECEDENTS DYING AFTER DECEMBER 31, 2001
N.J.A.C. 18:26-3A.13 (2014)
§ 18:26-3A.13 Protests, hearings and appeals

   (a) Any executor, administrator, trustee, person or corporation liable for the payment of the estate tax and aggrieved by any decision, order, finding or assessment of the Director, may submit a written protest to the Individual Tax Audit Branch in accordance with N.J.A.C. 18:26-12.9 and 12.10.

(b) Any executor, administrator, trustee, person or corporation liable for the payment of the estate tax and aggrieved by any decision, order, finding or assessment of the Director, may appeal to the Tax Court of New Jersey for a review thereof within 90 days of the date of notice assessing the tax complained of, in accordance with pertinent provisions of the State Tax Uniform Procedure Law, N.J.S.A. 54:51A-13 et seq. (See N.J.A.C. 18:26-12.12.)

18:26-3A.12 Refunds

TRANSFER INHERITANCE AND ESTATE TAX  
SUBCHAPTER 3A. ESTATE TAX--DECEDENTS DYING AFTER DECEMBER 31, 2001
N.J.A.C. 18:26-3A.12 (2014)
§ 18:26-3A.12 Refunds
  (a) All applications for the refund of estate taxes claimed to have been excessively or erroneously paid must be filed with the Director within three years from the date of payment. In the event it is determined that the tax was erroneously or excessively paid, the Director, upon receipt of satisfactory proof of payment, shall certify the same to the Director, Division of Budget and Accounting, who, in turn shall draw his or her warrant on the State Treasurer in favor of the executor, administrator, trustee, person or corporation who has paid said tax, or who may be lawfully entitled to receive the same, for the amount of such tax excessively paid.

(b) Said warrant shall be paid by the State Treasurer out of any appropriation for the refund of transfer inheritance taxes the same as warrants for the refund of such taxes under the transfer inheritance tax statutes of this State are paid.

(c) Interest will be paid on overpayments of tax at a rate determined by the Director to be equal to the prime rate, determined for each month or fraction thereof, compounded annually at the end of each year, from the date that such interest commences to accrue to the date of refund. Interest shall commence to accrue on the later of the date of the filing by the taxpayer of a claim for refund, the date of the payment of the tax, or the due date of the return; but no interest will be paid on an overpayment of less than $ 1.00, nor upon any overpayment refunded within six months after the last date prescribed, or permitted by extension of time, for filing the return or within six months after the return is filed, whichever is later.

(d) The date of payment is defined as the date the payment is actually received by the Division. It is not the date on which the tax return is filed, the date the Notice of Assessment is issued or the date on which the audit is completed and/or the file closed.

(e) Protective refund claims based on reasonably anticipated events may be filed within the time periods set forth in (a) above.

1. The refund claim must be made on the inheritance and estate tax "Protective Claim for Refund" form. The form must be fully completed and set forth the estimated refund amount and the basis for the claim.

2. The Director must be notified of the actual refund claimed within 90 days after occurrence of the anticipated event.

3. For the purpose of determining the interest, if any, payable on a protective refund claim, the refund claim shall be deemed to have been made on the date that the Director is notified of the occurrence of the anticipated event.

 

18:26-3A.11 Certificate of inheritance

TRANSFER INHERITANCE AND ESTATE TAX  
SUBCHAPTER 3A. ESTATE TAX--DECEDENTS DYING AFTER DECEMBER 31, 2001
N.J.A.C. 18:26-3A.11 (2014)
§ 18:26-3A.11 Certificate of inheritance

   The Director shall not issue any certificate or other evidence of inheritance, succession or legacy tax paid this State in the estate of a resident decedent for use before the Internal Revenue Service in an estate tax proceeding until all inheritance, succession or legacy taxes have been paid or payment duly provided for, but the Director may, in his or her discretion pending final determination of all inheritance, succession, legacy, transfer or estate taxes due this State, issue temporary or preliminary certificates, so marked, showing payments on account of such taxes.

18:26-3A.10 Payment; due date; interest; extension of time

TRANSFER INHERITANCE AND ESTATE TAX  
SUBCHAPTER 3A. ESTATE TAX--DECEDENTS DYING AFTER DECEMBER 31, 2001
N.J.A.C. 18:26-3A.10 (2014)
§ 18:26-3A.10 Payment; due date; interest; extension of time

   (a) The New Jersey estate tax is due at the date of a decedent's death. However, if payment is made within nine months from the date of death, no late penalty shall be imposed.

(b) All or any part of the estate tax due this State, if not paid within nine months from the date of death, shall bear interest at the rate of 10 percent per annum from the expiration of the said nine months until the date of actual payment, unless an extension of time to file the Federal estate tax return is granted, in which case the Director may reduce the interest rate to six percent per annum until the expiration of the extension. If the decedent was a member of the United States armed forces, the estate tax will not bear interest until the expiration of nine months after receipt of official notification of the decedent's death by the decedent's husband, wife, father, civil union partner, mother, or next of kin. The Director may, for cause shown, extend the time for payment with interest at the rate of 10 percent per annum, for such period as the circumstances, in his or her discretion, may require. In those cases where a Federal estate tax return is not required to be filed and where an extension of time to file the Federal estate tax return is not requested, the Director may reduce the interest rate to six percent per annum for the period until the expiration of any extension of time requested and granted for the filing of the New Jersey estate tax return. The request must be filed on or before the due date of the return.

(c) All administrators, executors, trustees, grantees, donees and vendees shall be personally liable for any and all estate taxes until paid, for which an action at law shall lie in the name of the State.

(d) New Jersey estate tax returns (except returns filed using the Form 706 method, which are due nine months plus 30 days following the death of the decedent) must be filed within nine months following the death of the decedent. The Director may grant an extension of time in which a return may be filed. The estate representative may request an extension of time to file the New Jersey estate tax return for a period of six months beyond the original due date. Extensions beyond six months from the original due date of the return will be granted only in cases where the Director determines that exceptional circumstances exist. This subsection provides the authority only for an extension of time to file the tax return, and does not extend the time to pay the tax. The tax liability is due on the decedent's date of death and must be paid in full within nine months.

(e) Where interest has accrued at the time of any payment, such payment is first credited in satisfaction of the accrued interest, and the excess credited in payment of the tax chargeable. Interest shall continue to accrue on any remaining balance from the date of said payment to the date of final adjustment.

18:26-3A.9 Taxation of future interest after estate tax paid; credit

TRANSFER INHERITANCE AND ESTATE TAX  
SUBCHAPTER 3A. ESTATE TAX--DECEDENTS DYING AFTER DECEMBER 31, 2001
N.J.A.C. 18:26-3A.9 (2014)
§ 18:26-3A.9 Taxation of future interest after estate tax paid; credit

   If, after the payment of the New Jersey estate tax, there shall become due and payable a tax upon any future interest in any property under an instrument creating an executory device or an estate in expectancy of any kind or character which is contingent or defeasible, or if by reason of any additional or corrected assessment by the Director an additional inheritance, succession or legacy tax shall become due and payable, the tax paid shall be credited against the tax arising therefrom, but the amount so credited shall not in any event exceed the amount of the tax so accruing.

18:26-3A.8 Filing of tax return and other information

TRANSFER INHERITANCE AND ESTATE TAX  
SUBCHAPTER 3A. ESTATE TAX--DECEDENTS DYING AFTER DECEMBER 31, 2001
N.J.A.C. 18:26-3A.8 (2014)
§ 18:26-3A.8 Filing of tax return and other information

   (a) The executor, administrator, trustee or other person or corporation liable for the payment of the estate tax shall file with the Director a copy of any Federal estate tax return filed or required to be filed within 30 days after the filing or required filing of the original with the Federal government and a copy of any communication from the Federal government, making any intermediate or final change in said return, or confirming, increasing or diminishing the tax thereby shown to be due, which is to be filed within 30 days after receipt thereof, and any other evidence, information or data that the Director shall in his or her discretion deem necessary.

(b) The executor, administrator, trustee or other person or corporation liable for the payment of the estate tax shall file with the Director a copy of the tax return filed and a copy of any receipts for payment of succession or estate taxes to other states or territories of the United States or the District of Columbia.

(c) A New Jersey estate tax return must be filed whenever the gross estate plus adjusted taxable gifts as determined in accordance with the provisions of the Internal Revenue Code in effect on December 31, 2001 exceeds $ 675,000. The executor, administrator, trustee or other person or corporation liable for the payment of the estate tax shall prepare and file with the Director a New Jersey estate tax return form IT-ESTATE, and:

1. A Form 706 completed in accordance with the provisions of the Federal Internal Revenue Code of 1986, U.S.C. §§ 1 et seq., in effect on December 31, 2001 within 30 days after the date on which a Federal estate tax return would have been due under those provisions for decedent dying on that date; or

2. A New Jersey inheritance tax return completed in accordance with the provisions of the inheritance tax statutes and regulations in effect on December 31, 2001 within nine months of the date of death of the decedent.

(d) In those cases where a taxpayer makes an election for Federal estate tax purposes, a like election must be made for New Jersey estate tax purposes. Assets and deductions must be treated in the same manner for both Federal and New Jersey estate tax purposes.

(e) If the decedent was a partner in a civil union and died on or after February 19, 2007, survived by his or her partner, a marital deduction equal to that permitted a surviving spouse under the provisions of the Internal Revenue Code in effect on December 31, 2001, is permitted to the surviving civil union partner for New Jersey estate tax purposes. In these cases, a pro forma 2001 Form 706 should be completed as though the Internal Revenue Code treated a surviving civil union partner and a surviving spouse in the same manner.

(f) A Simplified Tax System method may also be used, but only in those situations where a Federal estate tax return has not and will not be filed nor is a tax return required to be filed with the Internal Revenue Service. The Simplified Tax System requires that a Form IT- Estate be prepared and filed along with a New Jersey Inheritance Tax return Form IT-R completed in accordance with the provisions of the Inheritance Tax statute in effect on December 31, 2001.

18:26-3A.7 Time limit for assessments

TRANSFER INHERITANCE AND ESTATE TAX  
SUBCHAPTER 3A. ESTATE TAX--DECEDENTS DYING AFTER DECEMBER 31, 2001
N.J.A.C. 18:26-3A.7 (2014)
§ 18:26-3A.7 Time limit for assessments

   (a) No assessment of additional estate tax shall be made after the expiration of more than four years from the date of filing of an estate tax return except in the following cases:

1. The return is false or fraudulent with the intent to evade tax;

2. If, before the expiration of the four-year period prescribed in this subsection for the assessment of additional tax, a taxpayer consents in writing that such period may be extended, the amount of such additional tax may be determined at any time within such period. The period so extended may be further extended by subsequent consents in writing made before the expiration of the extended period;

3. The taxpayer requests that the completion of the assessment be held in abeyance pending the final determination in the Federal estate tax proceeding;

4. The estate tax return is amended by the taxpayer to include additional property of a decedent.

i. The issues raised in an amended tax return may be assessed within four years from the date that the amended tax return is filed;

5. A decedent's interest in property, or the value thereof, as of the decedent's date of death, has not been determined at the time of the filing of the estate tax return due to litigation or controversy.

i. A decedent's interest in property, or the value thereof, which is established after the estate tax return is filed may be assessed within four years from the date on which the interest or value is established, and the Division receives notification; or

6. A taxpayer or the Internal Revenue Service makes a change or changes to the Federal estate tax return filed subsequent to the filing of the New Jersey estate tax return.

i. A change or changes made by a taxpayer or the Internal Revenue Service to the Federal estate tax return filed subsequent to the filing of the New Jersey estate tax return may be assessed within four years from the date that such change or changes are made, and the Division receives notification.

(b) For the purposes of this section, an estate tax return filed before the last day prescribed for its filing shall be considered to have been filed on the last day prescribed.

 

18:26-3A.6 Lien

TRANSFER INHERITANCE AND ESTATE TAX  
SUBCHAPTER 3A. ESTATE TAX--DECEDENTS DYING AFTER DECEMBER 31, 2001
N.J.A.C. 18:26-3A.6 (2014)
§ 18:26-3A.6 Lien

   The estate tax imposed upon the estate of a resident decedent remains a lien on all property of a decedent as of the date of death of the decedent until paid. Except as otherwise provided in this chapter, no property owned by the decedent as of the decedent's date of death may be transferred without the written consent of the Director.

18:26-3A.5 Estate tax where no inheritance tax imposed

TRANSFER INHERITANCE AND ESTATE TAX  
SUBCHAPTER 3A. ESTATE TAX--DECEDENTS DYING AFTER DECEMBER 31, 2001
N.J.A.C. 18:26-3A.5 (2014)
§ 18:26-3A.5 Estate tax where no inheritance tax imposed

   In the case of a decedent where no inheritance, succession or legacy tax is due this State, the estate tax imposed shall be determined pursuant to N.J.A.C. 18:26-3A.2.

18:26-3A.4 Reduction of tax; out-of-State property

TRANSFER INHERITANCE AND ESTATE TAX  
SUBCHAPTER 3A. ESTATE TAX--DECEDENTS DYING AFTER DECEMBER 31, 2001
N.J.A.C. 18:26-3A.4 (2014)
§ 18:26-3A.4 Reduction of tax; out-of-State property

   (a) The tax, as computed in N.J.A.C. 18:26-3A.2, shall be reduced by:

1. The portion of said tax that is attributable to property located outside New Jersey. The amount of the tax reduction is calculated by multiplying the tax due on the entire gross estate wherever located by a fraction, the numerator of which is the gross value of property located outside the State and the denominator of which is the New Jersey entire gross estate, wherever located. In general, for purposes of the calculation described in this paragraph, intangible personal property is considered to be located in New Jersey; and

2. The inheritance, succession or legacy taxes actually paid this State in respect to any property owned by such decedent or subject to such taxes as part of or in connection with the estate.

18:26-3A.3 Simplified tax system

TRANSFER INHERITANCE AND ESTATE TAX  
SUBCHAPTER 3A. ESTATE TAX--DECEDENTS DYING AFTER DECEMBER 31, 2001
N.J.A.C. 18:26-3A.3 (2014)
§ 18:26-3A.3 Simplified tax system

   (a) The taxable value of the estate is determined as follows:

1. Net estate determined for New Jersey inheritance tax purposes under the provisions of the statutes and regulations in effect on December 31, 2001 (line 7 of recital page of form IT-R); plus

2. Real and tangible personal property located outside New Jersey; plus

3. Proceeds of any contract of insurance on the life of the decedent owned by the decedent or transferred by the decedent within three years of death paid to any beneficiary other than the executor, administrator, or estate; plus

4. All transfers made within three years of the decedent's death not included in the inheritance tax net estate; plus

5. In the event that the decedent was a surviving spouse/civil union partner of a decedent who died on or after February 19, 2007 and received qualified terminable interest property (QTIP) from the predeceased spouse or civil union partner for which the marital deduction was elected for Federal and/or New Jersey, the full value of the QTIP property; plus

6. Any other property includable in the Federal gross estate under the provisions of the Internal Revenue Code in effect on December 31, 2001; less

7. Any property passing outright to the decedent's surviving spouse or to the surviving civil union partner of a decedent who died on or after February 19, 2007, provided the surviving spouse/civil union partner was a U.S. citizen on the decedent's date of death. This deduction does not include QTIP (Qualified Terminable Interest Property) or similar property. QTIP is property that passes from the decedent and in which the surviving spouse or civil union partner has a qualifying income interest for life. The surviving spouse or civil union partner has a qualifying income interest for life if he or she is entitled to all or a specific portion of the income from the property payable annually or at more frequent intervals, or has a usufruct interest in the property (right to enjoy the property) for life and during the surviving spouse's or civil union partner's lifetime no person has a power to appoint any part of the property to any person other than the surviving spouse or civil union partner. Additionally, the surviving spouse or civil union partner must be a citizen of the United States on the decedent's date of death. If QTIP or the surviving spouse's or civil union partner's citizenship is a significant factor, consideration should be given to the use of the Form 706 method of filing; and

8. Any property which passes to, for the use of or in trust for any educational institution, church, hospital, orphan asylum, public library or Bible and tract society or to any institution or organization organized and exclusively for religious, charitable, benevolent, scientific, literary or educational purposes, including any institution instructing the blind in the use of dogs as guides, no part of the net earnings of which inures to the benefit of any private stockholder or other individual or corporation; provided, that this exemption shall not extend to such educational institutions and organizations of other states, the District of Columbia, territories and foreign countries which do not grant an equal, and like exemption to such institutions and organizations of this State. This exemption does not apply if any portion of the property can be used by, for the benefit of or paid to any private stockholder, individual or corporation.

(b) The taxable value of the estate is reduced by $ 60,000 and taxed at the following rates:

1. On any amount less than $ 615,000, no tax;

2. On any amount equal to or more than $ 615,000 but less than $ 667,174, 37.0 percent of the excess over $ 615,000;

3. On any amount equal to or more than $ 667,174 but less than $ 840,000, 4.8 percent of the excess over $ 667,174 plus $ 19,304;

4. On any amount equal to or more than $ 840,000 but less than $ 1,040,000, 5.6 percent of the excess over $ 840,000 plus $ 27,600;

5. On any amount equal to or more than $ 1,040,000 but less than $ 1,540,000, 6.4 percent of the excess over $ 1,040,000 plus $ 38,800;

6. On any amount equal to or more than $ 1,540,000 but less than $ 2,040,000, 7.2 percent of the excess over $ 1,540,000 plus $ 70,800;

7. On any amount equal to or more than $ 2,040,000 but less than $ 2,540,000, 8.0 percent of the excess over $ 2,040,000 plus $ 106,800;

8. On any amount equal to or more than $ 2,540,000 but less than $ 3,040,000, 8.8 percent of the excess over $ 2,540,000 plus $ 146,800;

9. On any amount equal to or more than $ 3,040,000 but less than $ 3,540,000, 9.6 percent of the excess over $ 3,040,000 plus $ 190,800;

10. On any amount equal to or more than $ 3,540,000 but less than $ 4,040,000, 10.4 percent of the excess over $ 3,540,000 plus $ 238,800;

11. On any amount equal to or more than $ 4,040,000 but less than $ 5,040,000, 11.2 percent of the excess over $ 4,040,000 plus $ 290,800;

12. On any amount equal to or more than $ 5,040,000 but less than $ 6,040,000, 12.0 percent of the excess over $ 5,040,000 plus $ 402,800;

13. On any amount equal to or more than $ 6,040,000 but less than $ 7,040,000, 12.8 percent of the excess over $ 6,040,000 plus $ 522,800;

14. On any amount equal to or more than $ 7,040,000 but less than $ 8,040,000, 13.6 percent of the excess over $ 7,040,000 plus $ 650,800;

15. On any amount equal to or more than $ 8,040,000 but less than $ 9,040,000, 14.4 percent of the excess over $ 8,040,000 plus $ 786,800;

16. On any amount equal to or more than $ 9,040,000 but less than $ 10,040,000, 15.2 percent of the excess over $ 9,040,000 plus $ 930,800; and

17. On any amount equal to or more than $ 10,040,000, 16.0 percent of the excess over $ 10,040,000 plus $ 1,082,800.

 

18:26-3A.2 Amount of the tax and certain valuations

 18:26-3A.2 Amount of the tax and certain valuations

   (a) The tax is, at the discretion of the person or corporation liable for its payment, either:

1. The maximum credit that would have been allowable under the provisions of that Federal Internal Revenue Code in effect on December 31, 2001 against the Federal estate tax that would have been payable under the provisions of the Federal Internal Revenue Code in effect on December 31, 2001 on account of taxes paid to any state or territory of the United States or the District of Columbia; or

2. An amount determined pursuant to the Simplified Tax System set forth in N.J.A.C. 18:26-3A.3. The Simplified Tax System may not be used in those cases where a Federal estate tax return is filed or required to be filed. The Simplified Tax System is not intended for use in all estates. It may not be used in situations where the tax liability produced is not similar to the tax liability determined pursuant to (a)1 above.

(b) The following principles are applicable in making valuations and calculating the tax where family limited partnerships are involved.

1. A family limited partnership is a limited partnership in which more than 50 percent of the partners are related by blood or marriage/civil union and which does not have a true business purpose. It may or may not hold an interest in another partnership or other asset which has a true business purpose. One indicia of a true business purpose is that the family limited partnership has and engages in business or commercial transactions with customers, clients, persons or entities other than the partners of the family limited partnership, their family members or other related individuals or entities.

2. In an estate where a Federal estate tax return is required to be filed and where the discounts for an interest in a family limited partnership claimed have a Federal estate tax consequence, the discounts, if any, permitted by the Internal Revenue Service will generally be permitted for New Jersey estate tax purposes unless deemed by the Director to be excessive.

3. In an estate where a Federal estate tax return is not required to be filed and where the tax is computed in accordance with the provisions of (a)1 above (maximum credit) and in an estate where a Federal estate tax return is required to be filed but where the discount claimed for an interest in a family limited partnership has no Federal estate tax consequence:

i. If an interest in a family limited partnership was created or funded within one year of a decedent's death, it is presumed that the value of the interest is the value of the underlying assets on the date of death of the decedent unless conclusive proof to the contrary is submitted which clearly indicates a different value. Discounts are not permitted unless the Director determines that they are warranted by the interest in the partnership and/or the nature of and risk associated with the underlying assets. Discounts totaling more than 10 percent are not permitted unless the Director determines that a greater total discount is warranted by the nature and risk associated with the underlying assets.

ii. If an interest in a family limited partnership was created or funded more than one year prior to a decedent's death, the interest is valued based upon the interest in the partnership and the value of the underlying assets on the date of death of the decedent. Discounts totaling more than 10 percent are not permitted unless the Director determines that a greater total discount is warranted by the nature and risk associated with the underlying assets.

4. In an estate where a Federal estate tax return has not been filed and is not required to be filed and the tax is computed in accordance with (a)2 above (simplified tax system), an interest in a family limited partnership is valued at the value of the underlying assets on the date of the death of the decedent. Discounts are not permitted for an interest in a family limited partnership unless the Director determines that they are warranted by the nature of and risk associated with the underlying assets.