Hammonton Estate Tax Planning Lawyer
Hammonton Estate Tax Planning Lawyer
Too many people ignore the importance of estate planning in their lives, leaving their loved ones to deal with the confusion that often follows a death. Even when individuals do make the necessary arrangements, they often overlook the tax consequences of their plan. Both federal and state laws dictate the taxes imposed on estates and when people do not consider both, it can have serious consequences. A Hammonton estate tax planning lawyer can help individuals minimize these harmful impacts so the entire family is protected.
Federal Estate Taxes
The federal government will impose taxes on any property or income of the estate that is considered taxable. This will include any property or income that is held in a will or trust to be distributed in the future. To determine the federal estate tax, the cost of administering the estate is deducted from the gross estate. This includes any compensation given to the executor. Still, any property, money, or other compensation was given to an executor will be taxable to that individual. When executors are given bequests in place of compensation, these are not considered taxable income.
Estate Taxes in New Jersey
New Jersey also places a tax on the transfer of personal or real property that has a value of at least $500. Any income or interest on the personal or real property can also be taxed, even when the property is placed in a will or trust, or if it is transferred according to state laws when a person passes away without a will.
Within the state, any property that is transferred to a trustee or executor in place of commission is considered taxable in the amount that exceeds what is considered the amount of reasonable compensation. The amount that is determined reasonable is determined by the Superior Court. Beneficiaries are most commonly required to pay a state inheritance tax. The only exception to this is when the will indicates that the tax is to be paid using another source of payment.
When a property is jointly owned, it is also considered taxable when one of the joint tenants passes away. However, there are some exceptions to this law, as well. Those include when the surviving joint tenant is a spouse or domestic partner of the deceased. Also, if the joint tenant can establish that they solely owned the property and that it was never the possession of the deceased, the property will not be taxed, even if the survivor was not a spouse or domestic partner.
The state of New Jersey has many other exceptions to the rules of taxation as well. These include when a property is transferred for public purposes, or when the part of the estate is transferred to the church, educational institutions, or hospitals. Any portion of the estate transferred to pensions, beneficiaries, or retirement allowances from qualified plans are also exceptions to the state tax laws.
The Purpose of Estate Tax Laws
Estate tax laws, both those on the state and federal level, are designed to prevent people from evading paying legitimate taxes, such as attempts that are known as inter vivos gifts. These are gifts that are transferred to someone else while the transferor is still alive but deprive the person who transfers the ownership of enjoyment of the gift, or when the individual retains ownership during their lifetime.
Still, the courts will usually acknowledge transfers during a person’s lifetime if the retention of benefits to the grantor is not determined in regards to the duration of their life or when the grantor has given up their right to the transferred property. In these instances, the property is not usually subject to inheritance taxes.
How Can a Hammonton Estate Tax Planning Lawyer Help?
Individuals need to protect their assets against unnecessary taxation. Doing so will ensure that the majority of a person’s estate is distributed to their loved ones and named beneficiaries and not government entities. Individuals need to speak to a Hammonton estate tax planning lawyer that will create a strong estate tax plan that will protect a person’s assets. A lawyer will also sit down with individuals that wish to create a comprehensive plan to ensure the estate is protected after death. Some of the considerations an attorney will consider will include:
- Federal estate tax
- Federal income tax
- Federal capital gains tax
- Federal gift tax
- New Jersey estate tax
- New Jersey income tax
- New Jersey inheritance tax
New Jersey’s Inheritance Tax
New Jersey imposes an inheritance tax on inheritors of any tangible or real property in New Jersey that was owned by a resident of New Jersey before their death. Beneficiaries, or inheritors, are divided into different classifications. Class A beneficiaries refer to the spouse and lineal descendants and ancestors of the deceased individual. New Jersey no longer includes Class B beneficiaries. Class C inheritors are other family relatives close to the deceased, which are usually siblings. The designation of Class E inheritors is reserved for governments and charities. Any other type of beneficiary is considered a Class D beneficiary.
The classes of beneficiaries are important, as the taxes on gifts and inheritances will differ between them. For example, Class A or E beneficiaries are not taxed any amount on inheritances. Class C beneficiaries, on the other hand, are given an exception of $25,000 before they are taxed on inheritances. The details of inheritance tax and the amounts involved are very nitty-gritty, so it is always important to speak to a Hammonton estate tax planning lawyer that can advise on the law and how it affects any given case.
Our Estate Tax Planning Lawyer in Hammonton Can Help
The state and federal tax laws that govern estates are extremely complex and difficult to understand. At Scott Counsel, P.C., our skilled Hammonton estate tax planning lawyers bring years of expertise and experience to every case and can help with unresolved concerns or issues. Call us today at (856) 485-4585 or contact us online to schedule a consultation with one of our knowledgeable attorneys.
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