For residents of New Jersey, there is a law currently on the books that means that an inheritance can be taxed by the government when it is left to a person's descendants. It is known as the Transfer Inheritance Tax, and it happens during the transfer of the wealth and assets.
While New Jersey is not the only state to have a tax like this, it is also true that some states do not impose such taxes. In these states, wealth can be easily moved from one person to another without a loss that is based on a percentage of the total. If some government officials have their way, though, New Jersey may be able to join those states.
The group is headed up by Christopher J. Connors, a state senator, and it has put together legislation to repeal the tax. The two bills are known, at this time, as A-3794 and S-2505.
In order to avoid a drastic loss of revenue that would have a huge impact on government budgets, the group has set things up so that if the bills pass, they would create a phasing-out process. This would last for five years, slowly decreasing the tax until it was entirely gone. The hope is that the government would be able to adjust accordingly during that time so that the tax would not be missed.
If you are doing estate tax planning in New Jersey, this is huge news that you must pay attention to. Changes to the tax of this nature could massively change the way that you transfer funds to your children and other beneficiaries.
Source: The Shore News Network, "Connors, Rumpf & Gove Move to Eliminate Inheritance Tax and Estate Tax" Dec. 13, 2014