The New Jersey legislature today voted to repeal the state’s estate tax as part of a deal including a 23-cents-a-gallon tax hike to renew the state Transportation Fund. The once-wannabe Republican presidential candidate Governor Chris Christie is expected to sign the bills into law, which will mean he follows in the footsteps of the two vice presidential candidates Democratic Senator Tim Kaine and Republican Governor Mike Pence who oversaw the elimination of their state’s estate taxes in 2007 (Virginia) and 2013 (Indiana) respectively.
New Jersey estate tax repeal would be effective as of Jan. 1, 2018. The state estate tax exemption would go up from its current low $675,00 to $2 million for deaths as of Jan. 1, 2017. That means an individual can leave $2 million to heirs without a state estate tax levy (money left to spouses is always exempt). For out-of-staters with beach houses, there’s another freebie—the latest legislation eliminates a provision that imposed estate tax on the New Jersey property of nonresident decedents.
***
Martin Lepelstat, an estate lawyer with Greenberg Traurig in Florham Park, N.J., had an extreme case with four brothers who owned a business and each time one of them died there was an inheritance tax hit (with no credit back to the prior tax paid by the brothers who died earlier). In a more common scenario, he’s administering an estate of a childless widow who had a $2.5 million estate, with the 16% inheritance tax due on the $500,000 she divvied up to friends and collateral relatives (the rest went to charity).