Name: Live Webinar: Navigating New Jersey Inheritance Tax - Essential Strategies for Success
Uploaded: 2025-02-12T17:30:06.555Z
Duration: 1 h 30 min 3 s
Description: Live Webinar: Navigating New Jersey Inheritance Tax - Essential Strategies for Success

Transcript for "Live Webinar: Navigating New Jersey Inheritance Tax - Essential Strategies for Success": Good morning, and welcome to our live webinar, Navigating New Jersey Inheritance Tax, Essential Strategies for Success, hosted by O'Connor Davies. Before we get started, I'd like to go over a few housekeeping items so you know how to participate in today's call. You will have the opportunity to submit text questions to today's presenters by clicking on the q and a tab on the right hand panel. You may send in your questions at any time during the webcast. We have a lot of material to cover and if time permits, we will make an effort to respond. If we cannot get to your questions, a response will be sent post event. This webinar is offering one CPE credit and taxes. Polling questions will be launched in the polls tab on your right hand panel, and you will need to respond to three of the polling questions to receive credit. Polling questions will only appear as they launch. Please pay special attention as these polls will be launched periodically. CP certificates will be issued within eight to ten days via email. A copy of the PowerPoint slides and a recording of today's webinar will be made available to you via email twenty four hours post event. As we near the end of the webinar, we do have a very short survey which will be prompted and your response is greatly appreciated. At this time, I would like to introduce Bhakti Shah, partner of our trust and estate planning practice. Bhakti? Thank you, Alana. Good morning, everyone. Thank you, for taking the time to attend this session to learn about the New Jersey inheritance tax. Speaking with me today, I have Mani Gupta as a director in the trust and estate group, and Anna Pareddy, the manager on our trust and estate team. And all three of us are based in our firm's, Cranford office location. So today's agenda, these are the some of the topics that we'll go over. High level of what the New Jersey inheritance tax is and how it's applied, the different types of beneficiary classes, an overview of when the inheritance tax, applies. It's and we'll go over the return high level. Moni will also continue to on with transfers that are subject to this tax and transfers that are exempt from the inheritance tax. Donna will speak about waivers and their importance, and I'll go over some planning considerations and some strategies that may be beneficial or useful. And then we'll open it up for questions and answers. So what is the New Jersey inheritance tax? First and foremost, it's a transfer tax. We, you know, as individuals all on this webinar, we may be fairly familiar with our annual income tax filings for ourselves and perhaps entities that we are responsible for. But as you can see on the slide, the inheritance tax is a transfer tax. There are two types of transfer tax that fall under this trust and estate umbrella that we're in, and, you know, it's one is the estate tax, and then, of course, the topic of this presentation is the inheritance tax. The estate tax exists for federal tax purposes in a number of states. New Jersey was one of those states, but for decedents passing in 2018 and later years, the New Jersey estate tax is no longer imposed. And the estate tax, just for familiarity, is a tax that's based on the fair market value of the decedent's assets as of the date of death. The inheritance tax, has a long standing history. You know, as you can see, it was enacted in the eighteen nineties. And over the years, there has been legislation introduced to repeal the inheritance tax. However, none of those attempts have yet been successful. Actually, New Jersey is one of six states that has an inheritance tax, and each state may have different, rules or variations as to how the tax applies. And, just for today, we'll be focusing on the New Jersey inheritance tax. So the inheritance tax applies to property transferred from a New Jersey decedent to a beneficiary or from a non New Jersey decedent that owns real or tangible personal property, TPP, in the state. So TPP includes cars or boats, you know, other vehicles, artwork, jewelry, the, like, physical stuff that was residing in New Jersey. And so with this statement, as you can see that the inheritance tax applies to residents and potentially nonresidents, and that always takes people by surprise. The tax, depends on the relationship that the beneficiary had with the decedent and how much that beneficiary is supposed to receive or inherit from the decedent. So the amount of tax imposed here depends on several factors, who the beneficiaries are and their relationship to the decedent, the date of death value of the assets and debts that the decedent owned, the type of assets that the decedent owned, and whether the decedent lives in New Jersey or a different state. If they were in New Jersey, almost anything that a resident decedent owned can be taxed depending on the person who's inheriting that property. So here, as a visual aid, I've categorized the beneficiary classes into two buckets, nontaxable and taxable. Under the nontaxable category, you'll see class a and class e, and under taxable, you'll see class c and d. There's not a typo on this slide. Class b purposefully, does not appear here. Class b used to exist but, no longer does, and it was deleted by statute, in the nineteen sixties. So we'll get into, the details of each of these classes. Class a beneficiaries. These are the beneficiaries that are generally have the closest you know, a very close relationship with the decedent, and that includes a spouse or a civil union or domestic partner and the lineal relatives up and down the chain, parents, grandparents, children, grandchildren. And then there's two important notations in class a, a mutually acknowledged child who would be someone that's not legally adopted by the decedent, but where that child was taken into the household and the decedent had a parent child relationship with that child for at least, ten years, for ten continuous years and which began at the before the child's fifteenth birthday. Another important note for a class a beneficiary is that a class a beneficiary includes a stepchild, but notably excluded are a step grandchild or step parent. All these beneficiaries that fall under class a would be a % tax exempt from the New Jersey inheritance tax, and there would be a 0% tax rate applied to all transfers to class a beneficiaries. Here is an example. So we have a New Jersey resident, Tom, who's passed away. His will leaves $700,000 cash to his wife, Pam, and $30,000 cash to each of his four children. Because we see the wife and the children are the ones inheriting from Tom's estate, the estate will pay no inheritance tax because all of those beneficiaries are class a and would be considered exempt from the New Jersey inheritance tax. Our next nontaxable class would be class e, and that includes all qualifying charities. I've listed, you know, some. It's not an exhaustive list, but some popular ones are on here. Educational institutions, hospitals, religious organizations, libraries, etcetera. And once again, they are all tax exempt from the inheritance tax, and a 0% tax rate applies. Class c now going into the taxable beneficiaries. Class c includes siblings and children in law, and each of these beneficiaries would receive a $25,000 exemption for the first twenty five thousand that they are slated to inherit. And then any transfer amount that exceeds that first twenty five thousand dollars would be taxed at rates graduated from 11 to 16%, and the brackets are listed on this slide. So at 1,700,000, you would be at the top 16% inheritance tax rate. And here's an example for class c and showing the tax calculation. So, again, we have Tom, and his will is leaving his entire estate of $2,500,000 to his brother, Phil, who's a resident of Florida. And on this slide, you'll see that how we calculated the, inheritance tax that's owed. The first twenty five thousand dollars would receive a 0% tax rate, and then anything in excess of the 25,000 would be taxed between 1116% based on the amounts per the brackets. One thing to note here is that the the residence of the beneficiary has no impact as to whether the New Jersey inheritance tax applies, and so that is also another, surprise point for individuals. You know? So Phil here living in Florida, he's still subject to the inheritance tax because the decedent was a New Jersey resident when he passed. Our last class, also taxable, is class d beneficiaries, and this is really the catchall. It is every other beneficiary or transferee who is not included in class a, c, or e. And this is not an exhaustive list, but, you know, some some categories of people to start thinking about who would fall under class d. And, first one I have is step grandchildren and step parent. If you remember on class a, I carved them out and said they do not qualify to be a class a, beneficiary, and they would be class d. Also, in this category would be aunts, uncles, nieces, nephews, cousins, stepsiblings, a fiance, friends of colleagues, etcetera. And class d beneficiaries, anything a transfer to a class d Benny under $500 would be exempt from inheritance tax. However, if the transfer exceeds 500, there is no exemption, and then the first dollar that they receive would be taxed. And the rates are 15 to 16% up, you know, depending on how much they're receiving, as you can see on the slide. Up to $700,000 would be taxed at 15%, and anything over the $700,000 would be taxed at 16%. Here are a couple of examples for class d. I think the first poll has been launched for everyone that's listening and needs CPE credit. I'll continue with this slide. New Jersey resident, same decedent Tom, has passed away, and his will leaves $500,000 of cash to his wife and $20,000 to each of his four children. Also, there's a bequest of $499 being left to Tom's nephew, Larry, something to just know that we just learned that Tom's estate will not have any inheritance tax to pay because all transfers are exempt. The wife and the children are class a, and Larry, who's the nephew, is receiving $499. And we'll just drive that point home in the next example. Same same situation, except now the will leaves instead of $499 to the nephew, it leaves a thousand dollars to the nephew, Larry. And we know nieces, nephews are class d beneficiaries. Class d beneficiaries would have a $500 exemption. But if the transfer exceeds $500, then that exemption doesn't apply. So the full thousand dollars here would be taxed at the 15% tax rate because it's under $700,000, so there would be an inheritance tax owed of a hundred and $50. Next, I will pass it over to Mani to go into detail about the inheritance tax return. Thanks, Bhakti, for the introduction and setting the ground to further talk regarding New Jersey inheritance tax return. As you may all know, when someone passes away, the assets owned at death must be transferred from the decedent estate to its beneficiaries. New Jersey, by law, imposes a tax on this transfer of ownership depending upon the class of the beneficiary, as Bhakti had earlier mentioned in her presentation. The law basically freezes all New Jersey financial and non financial assets till the tax is assessed and paid. In this coming section, I'm going to give you an overview of New Jersey inheritance tax return and then later talk about the transfers which are subject to the inheritance tax returns and exempt from it. From the visual perspective, let me start by sharing this New Jersey inheritance tax return form, which has been recently revamped, in December 2024 with its own cover page and with an elaborate and clearer layout compared to its previous version that had been in existence for more than a decade. So this newly introduced cover page encapsulates the basic information about the decedent's name, Social Security number, date of death in the first section, and then it further asks about the questions on the last will and testament. Trusts, if it established during the lifetime of the decedent, the division asked to submit the copies of such trust. So question number three, it asked about the last filed form ten forty, the personal income tax return of the decedent. Going on to four, any disclaimers which are filed by the beneficiaries? If so, the the division also asked to send a copy of the stamped disclaimer. Last but not least, question number five, It is a newly introduced question. It talks about the virtual currency. If the decedent owned at the date of death, the the division asked for the valuation report of it as well. Signatures and notarization, the return must be filed by the legal representative of the estate, be an executor, administrator, or ear at law, and the signature must be notarized by a notary public. The entire return is an affidavit and it will not be considered valid without an authorized signature. So an attorney or other fiduciary, they may not be able to sign the return on behalf of the legal representative. Just a point to, like, remember. Going on to the next slide, this basically, it's a summary page. It clearly lays out the fields one through four to report the value of real estate on line one, followed by closely held businesses if the decedent owned that on line two, or other personal properties such as bank account, CDs, IRAs, stocks, bonds, and brokerage account on line three, and transfers which are made during decedent's lifetime such as gifts made within three years. If those gifts are 500 or more without receiving any full consideration, that also goes on line four along with any incomplete transfers or transfers which are payable on debt policies, they all go as a part of line four item. So the information on these lines, they are captured after completing the underlying schedules, schedule a, b, b one through four, and schedule c. I'm not gonna go over the schedules here because of the interest of time, but just wanna share that there's a link. As a matter of fact, on top of this slide, you will see a link which you can use to view the schedules which I just spoke about. On Line five of this form, you will see the gross estate, which is a total from Line one through four, which is then reduced by allowable deductions such as funeral expenses, administrative expenses, and so on. And then we derive at the taxable estate number which is used to calculate the inheritance tax based upon the various classes of beneficiaries discussed earlier. Again, I just wanted to, you know, briefly talk about the resident ITR form, inheritance tax return form, to help you visualize how the form looks like. Of course, there are many determinations and requirements and complexities which are involved that CPS like us and attorneys, they have to look into before we file the return. Going on to the next slide, let's discuss a few other nuances surrounding the inheritance tax return. New Jersey ITR is required for class C, D, and E. For either a resident or a non resident decedent, a return must be filed whenever the tax is due or when the property is passing to someone other than class A beneficiaries. Please note that the inheritance tax, it constitutes a lien on all the New Jersey property for fifteen years from the date of death unless the tax is paid before that time or an acceptable bond is filed. Talking about the filing of this return, the filing are due eight months following the date of death. Of course, you can file for an extension if you're not able to file by eight month. You can initially request for four months. And if it is not possible to file within that four month time period, an additional two month is also granted by the division. Extensions which are beyond six months may be available only in an exceptional circumstances. There is no penalty for filing late if there is no tax due. However, if there is a tax due, interest must be interest will be paid on any unpaid taxes and it accrues at 10% rate, beginning eight months after the date of death. Unlike many forms, IDR, it cannot be e filed. It must be paper filed. Just a point to remember. Going on, we are talking about the resident decedent when the filing can be done. If there is a transfer of real or tangible property located in New Jersey and all intangible personal property required to file the New Jersey inheritance tax return. Need to report the fair market value of all the assets as of the date of death, not as of the date of filing or alternate valuation debt, which is six months post the date of death. So only report the fair market value which exist as at the date of death. Moving on, let's talk few things about the non residents. For a non resident, a return must be filed for the transfer to a non class A beneficiary of real or tangible personal property located in New Jersey. There is no direct effect, no direct tax on intangible assets, but they are used for the calculation of taxes and they must be therefore reported on the return. Tax for a specific device of a real or tangible personal property of non resident is determined at the resident rate. If it is other than a specific device, it is based on a ratio tax. This is a little flowchart that can be useful for a non resident. It goes like this, was the decedent domiciled in New Jersey? If the answer is yes, of course, it's a resident decedent, you have to follow the resident decedent inheritance tax instructions. However, if it is no, like we're talking about nonresident, the next check post is, did the nonresident decedent die owning only the intangible personal property located in New Jersey such as bank accounts or stock? If the answer is yes, New Jersey tax return is not required. If the answer to this question is no, then the next check is, did the nonresident die owning the tangible personal property, such as car, boat, furniture, artwork located in New Jersey? If the answer is yes to this question, then nonresident has to file the New Jersey inheritance tax return nonresident tax return. Going on, if the answer to this question of tangible personal property is no, the next check would be, did the nonresident decedent die owning a interest in New Jersey real estate only? If the answer is no, then the New Jersey tax return is not required. However, answer to this question is yes. Then the next check is, is the entire estate being inherited by class a or class e beneficiaries? In an event of yes, then you can file form l n l nine r. We are going to talk about l nine as we, you know, go further in our presentation. If the answer to this question is no, if it is not inherited by Class A or Class E beneficiary, then you must file a non resident inheritance tax return. Just for the visual perspective, this is how the New Jersey non resident inheritance tax return looks like, the summary page of it. Let's talk about few more nuances surrounding the New Jersey inheritance tax return. Let's talk about the transfers which are subject to the inheritance tax. Testimatory transfer of real or tangible personal property located in New Jersey and intangible personal property wherever it's located. If it is passing under a will or a trust or a revocable trust or through intestacy, if it is passing to the non class a beneficiary, this is a transfer which is subject to the inheritance tax. Jointly held property passing to a survivor or a property passing by operation of law to, again, a non class a beneficiary that attracts the inheritance tax. There's a little caveat. With regard to the jointly held property, only the portion of the property which the surviving joint tenant can prove to the satisfaction of the division that it belongs to them and never belong to the decedent. Only that portion will be exempt from the tax. Let's look at this example. Tom, who's a not who's a New Jersey resident, he died owning a joint bank account with his brother Phil. Phil, who's a class c beneficiary being a brother, if he can show he contributed 50% of the account value, then the inheritance tax would be only on the 50% that was owned by the decedent. If Phil cannot satisfy the branch that he contributed 50% of the account value, then the entire value will be subject to the inheritance tax at Tom's death. So something to keep in mind. Again, it's, emphasizes the important importance of the good record keeping. Going on further, another transfer which is subject to the inheritance tax is a retirement account. If it's a retirement account other than the New Jersey retirement funds and it's passing to the non class A beneficiary. It is subject to the inheritance tax. Certain lifetime transfers that may be brought back into the decedent estate for inheritance tax purposes. We earlier discussed gift and contemplation of death. If a gift is made without adequate valuable consideration within the three years of decedent death, that is considered as contemplation of death, gift made in contemplation of death. The executor has an onus or a burden to prove otherwise. So if the division is not satisfied, if those gifts are made in contemplation of death, they are included as a transfer subject to the inheritance tax. Another one, transfer intended to take effect on or after death. If it's a retained interest kind of a transfer, those are also transfer subject to the inheritance tax. For example, a retained life estate and residence that passes to the non class a beneficiary at death, that will attract the inheritance tax. This is a last slide in the presentation and it talks about the transfer subject. No. This is this is another example of transfer subject to the inheritance tax. So some transfer that involve the contingent beneficiary, they may be subject to the inheritance tax, but the tax is not due till the contingency occurs. So when the inheritance tax on a transfer of subject of the property cannot be definitely determined till the occurrence of the certain contingency, the inheritance tax liability may be immediately adjusted by payment of the compromise tax. The compromise tax is amount of the inheritance tax that the division will accept in satisfaction of the tax liability, which if it is not settled in this manner, will be laid in suspension for an indefinite time period. This compromised tax is determined after consideration of tax that might become due upon the occurrence of various contingency, the present value of tax, the probability of the various contingencies occurring. I don't want to delve further into this discussion of this topic as it demands its own comprehensive webinar. But again, I wanted to briefly mention this, while we are at this point. So let's talk about transfer exempt from the inheritance tax. And I see a polling question is going live. So in case you're interested for CPA credits, please answer that polling question. So going back with the transfer exempt from inheritance tax, real property and tangible personal property located outside New Jersey, that's a transfer exempt from inheritance tax. Life insurance payable to a specific beneficiary is exempt. However, life insurance payable to a state of a decedent is not exempt. Let's look at this important example here. New Jersey resident Tom, he dies owning a life insurance policy on his life with a death benefit of 500,000. He named his estate as the beneficiary under the policy. His will distributed his entire estate to his nephew. Since the nephew is class d beneficiary, New Jersey inheritance tax in the amount of 75,000 would be due on the transfer. If instead, Tom named his nephew, as % beneficiary of the life insurance proceed, then no inheritance tax would be due because insurance policies or insurance proceeds are exempt from the inheritance tax. Again, you know, it emphasized the importance of record keeping. It emphasized the importance of having a beneficiary designation so that it can bypass the probate. Next transfer, which are exempt from the inheritance tax, a transfer of transfer at death of real or tangible personal property held as tenancy by entities to a surviving spouse or civil union partner. A transfer of assets more than three years prior to death that we initially talked. The proceeds of any bench any pension, annuities, retirement allowances, or benefit payable by US government. If it is to a named beneficiary, not an estate, that would be exempt from the inheritance tax. So and any payment, from the New Jersey Public Employee Retirement System, New Jersey Teachers Pension and Annuity Fund, and New Jersey Police Firemen Retirement System, whether to a named beneficiary or the deceit in the state, those are exempt from the inheritance tax. Last and but not least, wrongful death award recovered under New Jersey Death Act, that is also, you know, exempt from the inheritance tax. So in the next section, Donna is going to talk about the waivers. I thank you for your time, and, Donna, take it away. Thank you, Mani. After the New Jersey ITR has been filed, reviewed, and accepted by the inheritance tax division, the inheritance tax division will let's go back one slide. Will issue a notice of assessment and waivers. The notice of assessment will indicate if there is additional tax assessed by the inheritance tax division, or it would even indicate zero tax due and they have accepted the return. The waivers, they constitute the consent of the division, and they signify that that review has been completed and that they have consented to the transfer of the property. The new the waivers are required for any New Jersey real estate, except if it if it's held by spouses or civil union partners as tenants in the entirety. The waiver is also required for assets held in New Jersey financial institutions such as banks and brokerage accounts, IRAs, stock in New Jersey corporations, New Jersey municipal bonds, or mutual funds in New Jersey. There are certain types of assets that are still required to be reported on the New Jersey ITR, but waivers aren't issued. Those types of assets are automobiles, other vehicles, boats, household goods, accrued wages, mortgage mortgages. Again, these are included on the return, but you will not receive a waiver for those nor are they needed to transfer the assets. As Moni had mentioned before, though, if the waivers are not obtained, then the tax will be will constitute a lien on the property that's owned by the decedent for fifteen years from the date of death until the tax is paid or it's secured by a bond. Now there are circumstances where the waivers can be obtained without the filing of a full New Jersey ITR, such as if the assets are being passed directly to class a beneficiaries, such as those linear relatives that, Bakhti had discussed before. But, again, it has to be directly to them, not through a trust if we're filing a form l eight. We'll get to a form l four later in where those beneficiaries are obtaining the assets through a trust. But let's first discuss the form l eight. The form l eight is a much simplified version of obtaining a waiver instead of filing a New Jersey ITR. These are for non real estate investments of resident decedents. They can be used to transfer the assets that are held in bank accounts, brokerage accounts, stocks, bonds when the assets are transferred to class a beneficiaries. Just as a note here, financial institutions may release 50% of the assets without a waiver. However, they need to obtain this waiver to release the rest of the funds. One thing to keep in mind about this form l eight, it's a self executing waiver. And what I mean by that is it's not necessary that you submit it directly to the New Jersey inheritance tax division. If once this waiver is completed I'm sorry. This form is completed, it is and notarized. It is presented directly to the financial institution. The financial institution will then submit it to the inheritance tax division. The second form is the form l nine for resident decedent or the l nine n r for a nonresident decedent. And these are for the transfer of real property. This is only used for real property when it's being passed to class a beneficiaries. The final form is the form l four. This is an affidavit requesting preliminary waivers of resident decedents for property of resident decedents. This is used in only a few limited circumstances, such as if you can't yet complete the New Jersey ITR or if all the beneficiaries are class a, but you can't use l eight. And if you remember, the reason why we can't use l eight with class a beneficiaries is because it's passing either through a disclaimer or through a trust. So then you'd use the l four alternatively. The final, reason to use the l four is if all the beneficiaries are class e or class e and class a. On the next slide, the few the next couple of slides, I have an example of these forms. And as you could see, this first one, this this is the form l eight. It's much more simplified than the full New Jersey ITR. The first page just asks basic questions about who the beneficiaries are, what the how the property is being passed. This is really just to ascertain that you qualify to file the form l eight. The second page of the form l eight is listing the specific property that you're seeking to be transferred and the beneficiaries to who those that property is going to. There's a part there for the signature and the notarization. Now if you recall, I said before, this is a self executing waiver, so this gets directly submitted to the financial institution. So you will have to complete the form l eight for each individual financial institution, and they will again then submit it to the inheritance tax division. The next slide shows the l nine. Again, the first page is just showing the beneficiary information, who's filling out the form, a place for the signature, and a place for the notarization. The second page is where you describe what the property is, what that real estate property is in New Jersey. If you need additional forms, you can attach it. Now with this one, this has to be submitted to the inheritance tax division with required documentation, such as a copy of the will, copies of the deeds of the property that you're looking to transfer. There's a few other things that are listed on the form specifically that has to be included. You would then submit this to the division who will then, issue the waivers. The final affidavit, l four is listed on the next slide. This one's a little bit longer. I just included for simplicity the first two pages. But similar to the other ones, the first page just describes, basic information about who's filling out the form. And the next few pages are going is where they're going to specifically describe the property that is being transferred and to who it's going to. This next slide is just, again, another flowchart of questions that you should ask to determine how you're going to obtain these waivers. Okay? So if we look, the first question is going to be, are all the beneficiaries class a? If the answer is no, we know that we have to file a New Jersey ITR. If the answer is yes, then the next question that we have to ask is, do the assets pass according to a disclaimer? Again, if the question is yes, you have to file a New Jersey ITR. If the answer is no, then the next question is, are they going to a trust? Are the assets passing to the beneficiaries through a trust? If the answer is yes, you will either have to file a New Jersey ITR or a form l four to obtain these waivers if those beneficiaries are class a. If there's no trust, then you ask, okay. Do I I have my class a beneficiaries. There's no trust. There's no disclaimer. Are we looking to to transfer real property, real estate in the state of New Jersey? Yes. Then you can complete the form l nine. If you're looking to release assets held in a bank, brokerage account, stocks, bonds, then you'd complete the form l eight presented to the financial institution who will then release the assets. The next slide is just, actually, there's a polling question that just went live, so you can answer that polling question to receive your CPE credit. And then this slide, is an example of what a waiver will look like for those assets. Once you've filed once you've filed either your New Jersey ITR or the required forms, you will get a waiver for each institution that is releasing those assets. As you note at the top, it's going to have the decedent's name. It's going to have the actual institution, then it's going to list the assets, the amount of those assets, the value of those assets, how it's held, at that institution. And, again, you'll get a waiver for each of those institutions. Now I'm gonna pass it back to Bakhti who's going to discuss some planning considerations for you to consider. Thank you, Donna. So, you know, when thinking about planning for estate tax or the inheritance tax specifically, it's important to go through what your goals and objectives are, review the type of assets and their approximate values, especially, you know, their the titling of the assets that you have, whether it's jointly owned or individually owned, and whether you have a payable or transfer on death designation assigned. All of these are considerations. Do you want any of your assets to pass to non class a beneficiaries? On this slide, we have some options to help avoid the inheritance tax or minimize. However, you know, it's important to note that it's not an all it's not a one size fits all situation, and these options may not be the right option for every person. There's pros and cons. Most of these options have pros and cons, and, you know, they all need to be carefully analyzed since saving on the inheritance tax might not be the most important goal in the overall estate plan. So let's just go through some of the considerations that we've highlighted here. With life insurance, there's a few options. As mentioned in this presentation, life insurance proceeds, if they're payable to someone's estate, if it ends up in someone's residuary, that will be subject to inheritance tax. So a simple way is to make sure you're, directing that the insurance policy proceeds are paid directly to a named beneficiary. This way, it would, you know, not be included in the estate and would be exempt from inheritance tax. Another option with life insurance is to create an irrevocable life insurance trust or an ILIT, as the owner and the beneficiary of the policy during life. And then, you know, the the trust will dictate how the proceeds are to be distributed, after passing. Another option is to transfer assets that are entirely exempt from the New Jersey inheritance tax, such as real property that's located outside of New Jersey or, proceeds paid to a named beneficiary, once again, not to the estate, of certain New Jersey retirement funds, such as the teachers pension and annuity funds or the public retirement system for police officers and firemen. Another option is to leave assets that are valued under $25,000 to class C beneficiaries. Once again, Class C beneficiaries include siblings and half siblings and children in law. That's because we now know that the first twenty five thousand dollars that each Class C beneficiary would receive would be exempt from the inheritance tax. Another option is to transfer assets either as outright gifts or to an irrevocable trust more than three years before death. And the reason is that if the transfer is less than three years before death, then the estate must prove that the transfer was not made in contemplation of death, and that may be, you know, an uphill battle to climb. If it was made within three years, and you're not able to sufficiently satisfy the division that it wasn't made in contemplation of death, the transfer would be includable back into the estate for inheritance tax purposes. The last bullet on this slide, it might seem extreme, but it happens more often than we may realize, is to change residencies from New Jersey to a state that has more beneficial loss for transfer taxes such as Florida or Nevada. On this slide, we have listed some of the resources that New Jersey has in assisting, administrators or executors, and beneficiaries for the inheritance tax. New Jersey's website is a fantastic resource. Some of many of the materials on today's presentation came directly from New Jersey's website. So you can find the forms, instructions, and frequently asked questions right on New Jersey's, website that's listed here. They also have a hotline that you can call for you know, and ask questions generally, general questions that you may have, and they also have an email. I wouldn't put in specific confidential information for a specific case, but general questions, with the subject line transfer inheritance tax, and they will respond. And, of course, if you don't want to reach out to the state, absolutely feel free to reach out to any of the three of us on this presentation today, and we are happy to assist, in, you know, the questions that you may have. And so with that, we'll look to see what questions. I see a bunch came through, so let's we'll just open them up. First question I see is, do we need an original copy of the waiver, or is the copy sufficient for for banks to, release assets? Donna, do you wanna take that since you discussed waivers? Sure. So when you receive a waiver from the inheritance tax division, it actually comes with a raised seal on it. So, yes, you do need to present the original copy of the waiver to, the financial institution. We always recommend keeping a copy for your records. So, obviously, the copy is not going to have that reseal. If there is an instance where you do need a second original copy, you could just call the inheritance tax division and request an additional original, and they'll send it to you. But, yes, you do need the original to present to the financial institution. Great. Mani, do documents need to be attached to the inheritance tax return when it's filed? Yeah. So when we are filing the return, you should include all the schedules that we earlier talked about. Even if some of them contain no information, also include the death certificate of the decedent, letters testamentary, administration, affidavit of next of kin, last full year federal income tax return, Form ten forty, last will testament, trust documents with amendments, if any, any file disclaimers, other attachments that can be included if you are including, you know, real estate, if that's a part you're reporting. You need a qualified, you know, appraisal report. For the brokerage accounts, you need the valuation. Those are some basic documents that need to go when you're filing the inheritance tax return. Another question on waivers. Donna, how long does it take from the filing of the inheritance tax return to receive waivers? So, typically, it takes a minimum of four to six months from the date of the filing of the New Jersey inheritance tax return to obtain these waivers. Of course, if the inherited tax division comes back with requests for additional information or requires anything further, it might delay it and take a little bit longer than that. But typically, it it takes between four to six months to get these waivers. Great. I see a question on someone asking about obtaining waivers for safe deposit box. So I'll take that. Safe deposit boxes are no longer inventoried by the New Jersey division of taxation. They have actually issued a blanket release in the form of a letter from the division, I guess, to all banking institutions and, safe deposit companies or, you know, those that are custodians of safe deposit boxes so that the contents of those boxes can be released without any inspection by the division. So I hope that answers that. What if a mistake was discovered on the filing of the tax return or if information was subsequently discovered? Mani, just because you talked about the inheritance tax return. Sure. Absolutely. So if the mistake is mistake has happened, you know, there's a fix to it, you can file the amended inheritance tax return. The way there are ways to file an amended inheritance tax return and it depends upon the level and the complexities regarding the changes needed. If it is a non complex change, you may not have to file the full blown amended IPR. It may be fixed by submitting revised summary and affected schedules. But if it is a multiple if the changes are multiple and they're complex in nature, complete the New Jersey ITR, and you have to submit a letter explaining the changes. There is a box on the left side of New Jersey ITR summary page that I earlier showed. That box needs to be checked while we are filing the return. Of course, if there is an additional tax that is due due to the amendment, you have to submit the estimated taxes and interest with it. Great. Is the inheritance tax return needed when the beneficiary is a trust with only class a beneficiaries? Donna? So when it the assets are passing to only class a beneficiaries through a trust, you don't need to file a full blown New Jersey ITR. You can file a form l four. That's again, I showed the copy of that, the simplified, version to obtain those waivers. One important, thing to keep in mind, though, is you need to ascertain that all those beneficiaries are truly class a beneficiaries. If there's any, type of contingent beneficiaries or contingencies, then you might be subject to a contingency tax, which will require the New Jersey ITR. Like, as Mani discussed before, she touched on it, that that's beyond the scope of this, webinar, but that was be something we could help you with if they are contingent beneficiaries. Right. That would be a situation where potentially the compromise tax applies when there's a trust with different classes of beneficiaries. That could be its own separate webinars beyond the scope of this, and, just something to be aware of. And we, yes, as Donna said, are able to assist in specific situations with a trust with multiple classes of beneficiaries inheriting. What happens if someone who passes lives in another state? Example, New York, and leaves money to a class d New Jersey resident? So I'll I'll take that. As I've mentioned or as, you know, it's been brought up on this webinar, the New Jersey inheritance tax does, impact non residents if they had real property or tangible personal property in the state of New Jersey. So if in this question, someone's saying, if the person was a New York resident and they're leaving money to New Jersey to a New Jersey class d beneficiary, how is the inheritance tax implicated, if at all? So if the New York domiciled decedent had, again, real property that was situated in New Jersey or TPP and that's the property that they're leaving to the New Jersey beneficiary, then there would be an inheritance tax owed. If it's, you know, if it's just New York property that a New Jersey resident is inheriting, then the New Jersey inheritance tax would not apply. Because once again, the beneficiary's domicile is not pertinent for the New Jersey inheritance tax. We're looking at the decedent and where they owned property and where they resided. Who is responsible for filing the inheritance tax return? Mani, do you wanna take that? Sure. Sure, Bhakti. So the personal representative of the state who can be an executor, administrator, they are responsible for filing the inheritance tax return. In case there is no executor, the beneficiary themselves, you you know, they can be responsible for filing the return. Yeah. In New Jersey, if the will is silent, you know, in New Jersey's default is that each recipient pays their pro rata share of inheritance taxes on the amount they receive. And it could be, you know, that the the executor is chasing an IRA beneficiary because the IRA beneficiary received property outside of probate as a through the beneficiary designation form by operation of law. They, you know, are slated to inherit, and, the executor would have to really they they would be in a pickle to try to get the inheritance tax paid if there was inheritance tax owed. Any anything else? I have one question. How do we determine the tax class if the assets pass to a trust? What if the trust distributes to various classes of beneficiaries? We touched on that. That may be a potential compromise tax situation if, you know, there's different layers of beneficiaries, income beneficiary and a remainder beneficiary. We would have to look into what are the probabilities of the income the class a beneficiary receiving certain amount of money and how much are the other classes receiving. And there that may be a more intricate calculation. I'm not seeing anything else coming through. Alana, do you wanna wrap the webinar up? It's Sparky and, thank you to our speakers. Just a reminder that a copy of the PowerPoint slides and a recording of today's webinar will be made available to all attendees via email twenty four hours post event. The CPE certificates will be issued within eight to ten days via email. Thank you again, and have a great rest of your day. Thanks, everybody. Bye, everybody.