Estate Planning Law in New Jersey: Overview
New Jersey is one of six states with an inheritance tax. The state repealed its estate tax in 2018, but the inheritance tax remains. The inheritance tax applies to transfers to beneficiaries other than spouses, children, grandchildren, parents, and grandparents (Class A, exempt). Siblings, sons- and daughters-in-law (Class C) pay 11-16%, and unrelated beneficiaries (Class D) pay 15-16%. New Jersey is a common law property state with an elective share of one-third. The state requires two witnesses for wills; holographic wills are not recognized. The surrogate's court handles probate in each county. The small estate threshold is $50,000 if all beneficiaries consent.
Key Statutes & Deadlines
Inheritance Tax
Rates 11-16% for non-exempt beneficiaries
N.J.S.A. § 54:34-1
State Estate Tax
Repealed effective January 1, 2018
N.J.S.A. § 54:38-1 (repealed)
Small Estate Threshold
$50,000 with consent of all beneficiaries
N.J.S.A. § 3B:10-3
Will Execution
Two witnesses; no holographic wills
N.J.S.A. § 3B:3-2
Elective Share
One-third of augmented estate
N.J.S.A. § 3B:8-1
New Jersey Inheritance Tax
New Jersey's inheritance tax classifies beneficiaries into groups. Class A (spouse, children, grandchildren, parents, grandparents) is fully exempt. Class C (siblings, sons/daughters-in-law) pays 11-16% after a $25,000 exemption. Class D (all others, including unmarried partners, friends, charities not qualifying for exemption) pays 15-16% with no exemption. Life insurance payable to a named beneficiary is exempt. Planning for New Jersey residents should consider the impact on non-Class A beneficiaries.
Surrogate's Court System
New Jersey probate is handled by the Surrogate's Court in each of its 21 counties. The Surrogate is an elected official who probates wills, appoints executors and administrators, and handles uncontested estate matters. Contested matters (like will contests) are transferred to the Superior Court, Chancery Division. The Surrogate's Court system is relatively accessible and efficient for routine estate administration.
Trust and Estate Planning
Since New Jersey repealed its estate tax in 2018, the inheritance tax is the primary transfer tax concern. Revocable living trusts are used for probate avoidance and estate management but do not avoid the inheritance tax. New Jersey allows transfer-on-death designations for securities and bank accounts. The state does not have a transfer-on-death deed statute for real property. New Jersey does not have a domestic asset protection trust statute.
New Jersey Court System
New Jersey probate is handled by Surrogate's Courts in 21 counties. The elected Surrogate handles uncontested matters. Contested matters go to the Superior Court, Chancery Division. The process involves proving the will, appointing an executor, inventorying assets, notifying creditors (six months from appointment), and distributing assets. Appeals go to the Appellate Division and then the New Jersey Supreme Court.
Damages & Penalties
New Jersey's inheritance tax rates reach 16% for Class D beneficiaries. The tax is due eight months after death. New Jersey repealed its estate tax in 2018. Fiduciaries face liability for breach of duty. Courts can remove fiduciaries and surcharge them. The state criminalizes will destruction and fraud.
Recent Legislative Changes
New Jersey repealed its estate tax effective January 1, 2018, removing the dual estate-and-inheritance tax burden. The inheritance tax remains unchanged. The state has updated its trust and probate procedures.
Key Takeaways
- New Jersey has an inheritance tax (11-16% for non-exempt beneficiaries) but repealed its estate tax in 2018.
- Close family (Class A: spouse, children, parents, grandparents) is exempt from inheritance tax.
- Surrogate's Courts handle probate in each county.
- Holographic wills not recognized; two witnesses required.
- Elective share is one-third of augmented estate.
- No transfer-on-death deeds for real property.
- Small estate threshold is $50,000 with beneficiary consent.
Frequently Asked Questions
Does New Jersey have an inheritance tax?
Yes, New Jersey taxes transfers to non-exempt beneficiaries at 11-16%. Close family (spouse, children, parents, grandparents) is exempt. Siblings pay 11-16%; unrelated persons pay 15-16%.
Did New Jersey repeal its estate tax?
Yes, New Jersey repealed its estate tax effective January 1, 2018. Only the inheritance tax and federal estate tax now apply.
What is the Surrogate's Court?
Each of New Jersey's 21 counties has an elected Surrogate who handles will probate, executor appointments, and uncontested estate matters. Contested matters go to Superior Court.
Are holographic wills valid?
No, New Jersey requires two witnesses for a valid will.
Does New Jersey allow transfer-on-death deeds?
No, New Jersey does not have TOD deed legislation for real property. Trusts are the primary probate avoidance tool for real estate.
What is the elective share?
The surviving spouse can elect one-third of the augmented estate.
This guide is provided for general informational purposes only and does not constitute legal advice. New Jersey laws may change, and the information here may not apply to your specific situation. For advice tailored to your circumstances, consult with a qualified New Jersey attorney.