The New Jersey Transfer Inheritance Tax is a lien on all property owned by a decedent as of the date of his/her death for a period of 15 years. The law provides, with certain exceptions, that banking institutions and other institutions, corporations and persons may not deliver or transfer any assets within their control or possession which belong to or stand in the name of a resident decedent, or in the joint names of a resident decedent and one or more persons (N.J.S.A. 54:35-5, N.J.S.A. 54:35-19) without the consent of the Director of the Division of Taxation.
Exceptions to the Requirement(s) of Receiving a Tax Waiver
- Non-Resident Decedents: Estate Tax waivers are not required for the estates of non-resident decedents. Inheritance Tax waivers are required only for real property located in New Jersey.
- Real Property Held as tenancy by the entirety by a husband and wife or civil union partners as tenancy can be transferred without a tax waiver in the estate of the spouse who died first.
- The transfer of any assets, whether real or intangible, which stand in the name of a bona fide trust as of the date of a decedent’s death, does not require a tax waiver.
- Transfers to savings accounts without a tax waiver
- Funds of a decedent on deposit in a checking account in any bank may be transferred to an interest-bearing account in the same bank in the name of the decedent or his/her estate without obtaining a tax waiver.
- Funds of a decedent on deposit in an Individual Retirement Account (IRA) or Keogh retirement plan account may be transferred to another account in the same bank without obtaining a tax waiver.
- Any certificate of deposit or any type of a preferred account containing funds of a decedent may be transferred to another account in the same bank without obtaining a tax waiver.
- The transfers permitted in (1) through (3) above are subject to the requirement that the banking institution promptly file a notice with the Division of Taxation Inheritance and Estate Tax Branch, PO Box 249, Trenton, New Jersey 08695-0249, containing the following information:
- Decedent’s name;
- Date of death and domicile;
- Name and address of executor or administrator of estate;
- The account number, or certificate number, sought to be transferred and the balance on deposit or the maturity value as of the date of death.
- The bank is required to retain the same control over the substituted account as the original account until the New Jersey Inheritance Tax and the New Jersey Estate Tax are provided for and paid.
- Transfer of partnership interest. A tax waiver is not required for the transfer of real or personal property, tangible or intangible, owned by a bona fide partnership in which a decedent had an interest.
- Transfer of assets held by nonresident custodian: A tax waiver is not required in order to transfer any assets held by a nonresident custodian on behalf of a resident or non-resident decedent.
- Transfer of tangible or intangible personal property.
- A waiver is not required in order to transfer all other tangible or intangible personal property, including but not limited to:
- Wages;
- Salaries;
- Vacation and sick leave pay;
- Payment under pension, profit sharing, bonus plans or stock purchase plans;
- All automobiles;
- Mortgages;
- Accounts receivable;
- Household goods;
- Personal effects;
- Funds held in an account in the name of a funeral director in trust for a decedent in accordance with the provisions of N.J.S.A. 2A:102-13 (advance funeral payment); Funds to a decedent’s credit in a credit union plan organized under N.J.S.A. 17:13-26 et seq. in addition to any matching sums paid under any type of credit union plan in the form of a life insurance where said matching sum is directed to be paid to a decedent’s estate or his or her executor or administrator. However, funds held under the Federal Credit Union Act must be reported and a waiver obtained.
Note the following: All property, including property that can be transferred without a waiver, must, nevertheless, be reported on a decedent’s Inheritance or Estate Tax return.
To discuss your NJ estate administration matter, please contact Fredrick P. Niemann, Esq. toll-free at (855) 376-5291 or email him at fniemann@hnlawfirm.com. Please ask us about our video conferencing or telephone consultations if you are unable to come to our office.
By Fredrick P. Niemann, Esq. of Hanlon Niemann & Wright, a Freehold Township, Monmouth County, NJ Estate Administration Attorney