L8 Inheritance form: Form L-8 (Affidavit & Self-Executing Waiver) This form may be used in most cases to transfer bank accounts, stocks, bonds and brokerage accounts, when the transfer or release is to a Class "A" beneficiary. You must file this form directly with each bank, financial institution, broker or transfer agent holding the assets. Form L-8 is used instead of a tax waiver (Form 0-1).
However, the Form L-8 cannot be used for:
- The transfer of real estate, or
- Decedents who die after December 31, 2001, but before January 1, 2017, with a taxable estate, plus adjusted taxable gifts, that exceeds $675,000 for Federal Estate Tax purposes under the provisions of the Internal Revenue Code in effect on December 31, 2001.
- Decedents who die on or after January 1, 2017, but before January 1, 2018, with a taxable estate that exceeds $2 million for Federal Estate Tax purposes under the provisions of the Internal Revenue Code in effect on January 1, 2017.
NOTE: If you are qualified and use Form L-8, you will not need or receive a waiver (Form O-1) from the Division.
Tax waivers (Form 0-1) are required to transfer assets from a decedent's name to a beneficiary. Such assets can include:
• New Jersey real property (such as real estate);
• Funds held in New Jersey financial institutions;
• Brokerage accounts doing business in New Jersey;
• Stock or bonds of a company incorporated in New Jersey, or a New Jersey institution.
A summary of the laws that require the waiver are as follows:
Inheritance Tax (N.J.S.A. 54:35-5, N.J.S.A. 54:35-19)
New Jersey Transfer Inheritance Tax is a lien on all property owned by the decedent as of the date of their death for a period of 15 years unless the tax is paid before this, or secured by bond. The lien exists whether the tax is levied and assessed or not.
The law requires that, with certain exceptions, banking institutions and other institutions, corporations, and persons must receive written consent (i.e., a tax waiver) from the Director of the Division of Taxation before delivering or transferring any assets from a resident decedent to a beneficiary.
Specific Waiver Situations:
1 Individual Retirement Accounts (IRA's): A waiver is required to transfer any IRA that is held in a bank or other financial institution which would otherwise require a waiver. IRA's in the form of an annuity administered by an insurance company do not require waivers.
2 Brokerage Accounts: Waivers will be issued only for the total date of death value of the account. No waivers will be issued for individual securities held within a brokerage account. See "Brokerage Account" tab for further details.
3 Qualified Tuition Programs (529 Plans): Waivers are required to transfer any 529 Tuition Program in which the funds are held in a financial institution which would otherwise require a waiver.
Blanket Waiver – provides for the release of certain funds from banks without a waiver.
1 Authorized parties: An institution, association, organization, corporation, or person holding a decedent's funds may release up to 50 percent of the entire amount of funds on hand, without a waiver, to any of the following:
• An executor;
• Administrator;
• Legal representative of the decedent;
• Surviving joint tenant;
• Cestui que trust; or
• The estate of a minor in which title to funds are held in the name of a custodian for the minor.
2 50% of funds provision: The Blanket Waiver is limited to no more than 50 percent of the total funds in the entire account, whether the account is held in the decedent's name only or jointly with another.
3 Payment of tax: In addition to the amount permitted to be released by financial services firms under the above, institutions may honor any checks made payable to New Jersey Inheritance and/or Estate Tax without written consent of the Director. Payment can be in any amount for which there are sufficient funds held on deposit in any account owned by a decedent or their estate.
4 Payment of checks issued prior to death: When a check written by a decedent prior to their death is presented to a bank within 10 days of the decedent's date of death, the bank may honor the check. These payments can then be deducted before calculating 50% of the funds available for release under the Blanket Waiver provisions.
5 Stock exception: Securities of a New Jersey corporation registered in the name of a decedent and issued by any bank, or savings and loan association situated in this State, are not subject to the Blanket Waiver rule provided for in this section. Therefore, the written consent of the Director must be obtained in order to transfer or release all such assets.
6 Informant provision: The Director reserves the right to require the informant (the person who provides information about the decedent) to withhold any amount not yet distributed, pending further order of the Director.
Transfers permitted by banks and financial services institutions prior to receiving a tax waiver
Accounts: When making the transfers described below, the bank is required to retain the same control over the substituted account as the original account, until it has received a New Jersey Inheritance and Estate Tax waiver indicating the date of death balance of the original account.
1 Funds of a decedent on deposit in a checking account in any bank may be transferred to an interest-bearing account in the same bank in the name of the decedent or their estate without obtaining a tax waiver.
2 Funds of a decedent on deposit in an Individual Retirement Account (IRA) or Keogh retirement plan account may be transferred to another account in the same bank without obtaining a tax waiver.
3 Any certificate of deposit or any type of a preferred account containing funds of a decedent may be transferred to another account in the same bank without obtaining a tax waiver.
The transfers permitted above are subject to the requirement that the banking institution promptly file a notice with the Division of Taxation, Inheritance and Estate Tax Branch, PO Box 249, Trenton, New Jersey 08695-0249, containing the following information:
1 Decedent's name;
2 Date of death and domicile;
3 Name and address of executor or administrator of estate;
4 The account number, or certificate number, sought to be transferred, and the balance on deposit or the maturity value as of the date of death.
Last Updated: Tuesday, 08/02/22
How to Obtain a Waiver
Waivers (Form 0-1) can only be issued by the Inheritance Tax Branch of the NJ Division of Taxation. It is not a form you can obtain online or fill out yourself. In most circumstances, some kind of return or form must be filed with the Division in order to have a waiver issued.
Form L-8 (self-executing waiver for certain Class A beneficiaries ) can be substituted for Form 0-1 to obtain the release of financial (non-real estate) assets. An L-8 is valid only when the form is properly executed and used by or for the Class A beneficiaries indicated on the form.
Waiver Requirements - Brokerage Accounts
The New Jersey Inheritance Tax and Estate Tax statutes do not allow property owned by, or in the name of, a resident decedent to be transferred without written consent – in the form of a tax waiver – from the Director of the Division of Taxation. A lien remains on the decedent's property until taxes are paid.
An Inheritance/Estate Tax waiver is required to release the funds for all brokerage accounts held – individually or jointly – in a resident decedent's name. This tax waiver is required if the brokerage firm had an office in New Jersey, regardless of where the account was opened.
However, funds can be released without a waiver if a brokerage account passes to a decedent's :
• Surviving spouse/civil union partner or domestic partner;
• Child, stepchild, or legally adopted child;
• Grandchild or great-grandchild, (but not a step-grandchild or a step great-grandchild);
• Parent or grandparent.
Under the above circumstances, funds can be released if the executor, administrator, or certain beneficiaries of the estate, provides a properly completed Form L-8 to the brokerage firm. The L-8 form is an affidavit and self-executing tax waiver that is filed directly with the brokerage firm.
Assets are often held in a brokerage account registered in “street name” (i.e., when a brokerage holds a security – on behalf of a client – which is registered in the name of the institution). Those assets may be bought and sold within the account without first obtaining a tax waiver. However, until a tax waiver is obtained, these assets may not be transferred or released to the estate or beneficiaries, other than those permitted by the blanket waiver provisions of N.J.A.C. 18:26-11.16.
All blanket waiver provisions are applicable to brokerage accounts. The brokerage institution must retain assets worth half the value of an account on the decedent's date of death. The retained assets may not be released without a tax waiver. The institution may release whatever assets remain in the account, without a tax waiver, to:
• An executor;
• Administrator;
• Legal representative of the decedent;
• Surviving joint tenant;
• Cestui que trust (the beneficiary of a trust); or
• The estate of a minor, when the account is titled in the name of a custodian for the minor.
Examples:
A decedent's brokerage account held 1,000 shares of XYZ Corporation stock valued at $100,000 on the date of death:
• If, three months after the decedent's death, the account is valued at $200,000, assets valued at $150,000 may be released without a tax waiver. Assets valued at $50,000 must be retained pending receipt of a tax waiver;
• If, three months after the decedent's death, the account is valued at $60,000, assets worth $10,000 may be released without a tax waiver. Assets valued at $50,000 must be retained pending receipt of a tax waiver;
• If, three months after the decedent's death, the account is valued at $40,000, no assets may be released without a tax waiver.
The provisions of N.J.A.C. 18:26-11.8 also apply to brokerage accounts. Specifically, funds held in a decedent's Individual Retirement Account (IRA) may be transferred to another account within the same institution (such as an inherited IRA) without obtaining a waiver.
Additionally, all – or any part – of the assets held in a decedent's brokerage account may be moved to an estate account within the same institution. Until a waiver for the original account is received, the institution is required to retain the same control over the substituted account as it had over the original account.
Source https://www.nj.gov/treasury/taxation/inheritance-estate/inheritance.shtml
