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McCurrie McCurrie
& McCurrie, L.L.C.

680 Kearny Avenue
Kearny, NJ 07032-3010
Phone: (201) 467-4180
Fax: (201) 997-9567
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How will New Jersey's estate tax fit into your estate plan?

Currently the federal exemption for the estate tax is $5.25 million for an individual (up from $1 million a few years ago) and $10.5 million for a married couple. That means estates valued below those amounts can avoid the federal estate tax.

But there are other estate taxes to consider when planning ahead. For example, New Jersey and Maryland are the only two states that collect both an inheritance tax (paid by the heirs) and an estate tax (paid by the estate).

New Jersey's estate tax exemption is currently $675,000 -- obviously much lower than the federal exemption -- and amounts higher than the state exemption face a top tax rate of 16 percent. Our state's inheritance tax also comes in at 16 percent.

Some estate owners in New Jersey have homes or property in other states, and for tax purposes, some people choose to make their official home in the state with the lower estate tax. Other states that collect an estate tax have exemptions as high as $2 million.

But aside from owning a home in a more tax-friendly state and establishing residency there, it is also possible to minimize tax liabilities for surviving spouses and heirs by creating a trust. Establishing a trust can also ensure an adequate stream of income for you and your spouse while you retain Medicaid and other benefits.

Trusts and wills are often used in conjunction to tailor a plan according to an estate owner's specific wishes. For more on coordinating estate planning documents, please see our recent post, "Is it time to update beneficiary designations?"

Source: Investment News, "States continue to claim their share through the estate tax," Liz Skinner, Nov. 10, 2013

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