Who pays the NJ Inheritance tax?

Who pays the NJ Inheritance tax? 

INTRODUCTION
    Transfer Inheritance Tax is a “beneficiary” tax, and is based on who specifically receives a decedent’s assets, and how much each beneficiary received. The Estate Tax is based on the size of the entire estate, and does not break down the distribution of assets beyond exemptions for spouses and charities. In New Jersey, the Inheritance Tax is a credit against the Estate Tax; an estate pays only the higher of the two. 

https://www.state.nj.us/treasury/taxation/pdf/other_forms/inheritance/o10c.pdf

        New Jersey has had an Inheritance Tax since 1892 when a 5% tax was imposed on property transferred from a deceased person ("decedent") to a beneficiary. Currently, the law imposes a graduated Inheritance Tax ranging from 11% to 16% on the transfer of real and personal property with an aggregate value of $500 or more to certain beneficiaries. New Jersey first enacted an Estate Tax in 1934. Its purpose was to ensure New Jersey receives the full amount of the Credit for State Death Taxes allowed against the Federal Estate Tax. 

https://www.state.nj.us/treasury/taxation/pdf/other_forms/inheritance/o10c.pdf

Class C: First $25,000 free, then taxed at 11%. Calculate taxable amount, then multiply by 11% to calculate amount due.

Class ”C” - Brother or sister of the decedent, including half brother and half sister, wife or widow of a son of the decedent, or husband or widower of a daughter of the decedent.  -taxed at 11%–16%, with the first $25,000 exempt. 

First $ 25,000

Next 1,075,000 11%  tax

Class “D” - Every other transferee, distributee or beneficiary who is not included in Classes “A”, “C” or “E”. taxed at 15% Class D: taxed at 15%. Multiply amount by 15% to figure out tax due.

Benjamin Franklin famously said nothing in life is certain, except for death and taxes. Had he been alive today, he could have been referring to New Jersey. As of January 1, 2018, it no longer levies an estate tax, but that's not the case for many people who died in 2017 or their beneficiaries. There's also an inheritance tax and understanding the rules governing the NJ inheritance tax will ensure that you make the right financial decisions related to your role as a beneficiary.

              Certain beneficiaries are exempt from the inheritance tax in the state of NJ. Others will be required to pay a tax on the inheritance based on the classification given them by the state.

Looking For Information About Spouses

If you’re married, you can leave all your assets to your spouse free of charge. Spouses are exempt from paying inheritance tax, and if everything you own goes to your spouse in your will, New Jersey won’t tax your estate, either. However, a caveat exists. When you pass away, New Jersey immediately places a tax lien against everything you own so your executor can’t transfer or sell any assets without the state getting its tax cut. Your executor must file Form L-9for any real estate you owned and Form L-8for financial assets with the Division of Taxation to have the liens lifted so your spouse can inherit them.

Obtaining More Information About Other Individuals

Your children, parents, grandparents and grandchildren do not have to pay inheritance tax on anything you leave them. However, bequeathing to them does not avoid your estate having to pay taxes on the assets you leave behind. For those dying in 2017 with an estate worth more than $2 million, estate tax is due in New Jersey. Your stepchildren and adopted children are included among these Class A beneficiaries.

New Jersey places your siblings and in-laws in its Class C beneficiary category. The state now exempts the initial $25,000 of the amount you leave to any of these people, but beyond that, they have to pay a rate that may reach as high as 16 percent.

If you leave everything to the housekeeper who cared for you in your old age, she’s going to pay dearly in New Jersey. She must pay 15 percent of everything worth up to $700,000, and 16 percent on any value over that. She’s considered a Class D beneficiary. This category catches everyone who doesn’t fall into Classes A or C. There is no Class B in New Jersey. Friends, significant others and business associates are all Class D beneficiaries.

   If you leave everything to the housekeeper who cared for you in your old age, she’s going to pay dearly in New Jersey. She must pay 15 percent of everything worth up to $700,000, and 16 percent on any value over that. She’s considered a Class D beneficiary. This category catches everyone who doesn’t fall into Classes A or C. There is no Class B in New Jersey. Friends, significant others and business associates are all Class D beneficiaries.

Of course, if you choose to name the state of New Jersey as one of your beneficiaries, the state doesn't impose a NJ death tax. You can also leave everything to charity free of charge.

https://pocketsense.com/pays-inheritance-tax-new-jersey-1861.html