Because our firm practices in both states, I thought we would share some of the main differences in the general estate planning rules between the states.
Topic One
Is there a State Estate Tax?
New York: Yes. NY taxes a decedent if he or she owns assets in excess of $5.85 million upon death in 2020. This figure is adjusted for inflation each year. Moreover, the estate tax can be significant even if the assets are slightly over the estate tax cap. Moreover, unlike the Federal estate tax (which current has an exemption of over $11 million per decedent), there is no way to transfer any unused exemption to a surviving spouse in NY.
New Jersey: No. New Jersey eliminated what was a costly state estate tax in 2018. The only estate tax that a New Jersey resident is subject to is the Federal estate tax, which only applies if a decedent has an estate that exceeds $11.4 million.
Topic Two
Is there a separate Inheritance Tax?
New York: No.
New Jersey: Yes. Although New Jersey does not have its own separate estate tax, it does have an Inheritance Tax which is essentially designed to tax those beneficiaries of the estate of a New Jersey resident who are not immediate family members (i.e. a sibling, niece or nephew or a more remotely related beneficiary). The tax rates are between 11% and 16% and there is little to no amount that is exempt from this tax.
Topic Three
Which state has an easier probate process to probate a Will?
New York: Not that easy. Probating a Will in New York is normally more paper-intensive and is not very consumer friendly and can involve many upfront costs.
New Jersey: The probate process is much simpler in New Jersey. Unless there is a challenge to the Will, the appointed Executor can normally secure Letters from the Court almost immediately.
Disclaimer
This is general information. It is not intended to be legal advice to be relied upon by any person who is reading this Blog nor is it intended to create a lawyer-client relationship. If you have any questions, you are free to contact our office.