The federal estate tax is coming back in 2011; do you know where your money is going? Did you know that New Jersey also levies an estate tax? Much focus has been spent on the currently absent, but pending, federal tax. However, New Jersey has its own tax on assets.
In New Jersey, assets are protected from an estate tax if they do not exceed $675,000. Once you factor in things like home value, vehicle value and property value – in addition to your actual banking account and retirement savings – many find that $675,000 is not such a high number after all.
It is important to note that $675,000 is the exempt amount in New Jersey only, which levies a state estate tax in addition to any federal estate tax. In 2011, New Jersey residents will be subject to both a state tax and federal tax on estates.
The federal estate tax exemption is set to be $1 million.
In Sunday’s Star-Ledger, Karin Price Mueller discussed some ways in which one might protect more of his or her estate from taxes.
Money transferred from one spouse to another is not subject to the estate tax. Ask an estate planning attorney about how you may best utilize the “marital deduction,” if it applies to your situation.
As for gifts, you may make a lifetime gift of $1 million to any member of your family, tax-free. You may also utilize the “annual exclusion,” making tax-free gifts of $13,000 every year. The annual exclusion can be bumped up to $26,000 per couple.
You might also consider setting up a trust, which was discussed in our last post.
- Ways to shelter your money should estate tax return (Star-Ledger)