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I just inherited $20,000 from my aunt; I am a resident of NJ and so was she. Is it correct that I am going to be taxed 15%?

Mine Hill, NJ |

My aunt left each niece and grandniece a specific amount of money; I was under the impression that there was not tax to be paid. Help me.

Attorney Answers 5

Posted

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

it appears that you are category "D" which appears to be taxed by the state at 15%. There may be exclusions...Please contact either a tax advisor.

The above is not intended to be legal advice, but may be used for general information. Please contact an attorney for specific help tailored to your needs. www.figgardenlaw.com

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Posted

Class "D" - Every other transferee, distributee or
beneficiary not otherwise classified.
Rate for Each Beneficiary
First $700,000 @ 15%

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Posted

Lets assume that this is subject to state inheritance tax. The second part of your question suggests another important point, which is that if this is taxed, you may yet be entitled to have your inheritance taxes paid by the estate-- rather than come out of your specific bequest. Get a copy of the will and read it and consider asking the executor what is planned in this regard. If it sounds bad hire a NJ lawyer who knows about estates to protect your interests.

No legal representation exists by virtue of this answer. Consult your attorney. Licensed to practice law in Indiana and Illinois. Circular 230 Disclosure: any U.S. tax advice contained in this communication is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code, or (ii) promoting, marketing or recommending to another party any matters addressed herein.

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Posted

Probably -- depends on what the will said and whether the estate is paying your bequest on gross basis or after-tax. If the will does not specifically state that you are receiving your $20K and the estate pays for the inheritance tax then by default your $20K will be reduced by the tax due (remitted by the estate executor to NJ on your behalf) which will be 15% on the amount in excess of $500 .... meaning $2,925 leaving you a net distribution of $17,075. You are a Class D beneficiary as per NJ distinctions made among different classes of beneficiaries.

My answer is not intended to be giving legal advice and this topic can be a complex area where the advice of a licensed attorney in your State should be obtained. Please click "helpful" or "best answer" if my answer added any value or add a "comment" if you have more info for me to help you get a better answer.

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Posted

It is possible that you will not have to pay the NJ Inheritance Tax. If the will has a tax apportionment clause that says that all estate and inheritance taxes are paid out of the residuary estate, and if the will left each niece and grandniece a specific bequest, then you may be in luck. Depends on the value of the rest of the estate and other factors. My office is in Randolph, NJ if you need assistance.

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