New Jersey Supreme Court Holds Estate Tax Constitutional but Unjust

The following is from Tom Hester, Supreme Court rules estate tax was unjust, NJ.com, Feb. 28, 2008, discussing a New Jersey case Oberhand v. Director, Div. of Taxation, A-106-06 (N.J. Feb. 27, 2008).

The state Supreme Court ruled yesterday an attempt by the state to collect taxes on portions of the estates of two people who died was legal, but unjust.

At a time when the Corzine administration is scraping for every dollar for the state budget, the decision is expected to force the Division of Taxation to refund more than $2 million in taxes and interest in 40 estate tax cases in which the executors have gone to state Tax Court to regain the money.***

In a 5-2 decision, the Supreme Court upheld a state Tax Court decision that the amendment applied to the estates is constitutional. But the justices found the amendment should not be applied to the Ober hand and Seider estates because it would be “manifest injustice” — a legal doctrine designed to prevent unfair results that do not necessarily violate the Constitution.***

“When the decedents executed their wills and at the time that each died, the trust formulae were framed in such a fashion that no federal or state taxes would be due[.]”***

This case is also discussed by Michael Rispoli, Court partially overturns estate tax law, courierpostonline.com, Feb. 28, 2008.

Special thanks to Neil E. Hendershot, Esq. (Attorney at law, Goldberg Katzman, P.C., Adjunct Professor, Widener University School of Law) for bringing these articles to my attention.