Why Repeal of the NJ Estate Tax Means Married Couples Should Update Their Wills

As of the first of 2018, New Jersey repealed its state estate tax – but the federal estate does still applies. Many people do not need to adjust or update their wills, including those that are not married but have living descendants, you do not have children and plan to leave your assets to other such as siblings, family members, etc., or you are married couples with children and you plan to leave everything outright to your surviving spouse. Note, however, that New Jersey did not repeal its inheritance tax, so siblings or family members will still be required to pay that tax.

The repeal of the state estate tax, however, can dramatically affect married couples who set up a trust for the surviving spouse. Now clients have the ability to be even more tax efficient for income tax and capital gains tax purposes as they do not have to worry about the New Jersey estate tax.

An easy solution when the estate isn’t very large or complex would be to eliminate the trust and leave all the assets to the surviving spouse outright. However, if you are in a second marriage situation or if you are concerned about the surviving spouse getting remarried or spending away the children’s inheritance this may not be the wisest option. A smarter choice may be to get with a your attorney to revise the formulas in the Will or Trust so that it gets a step-up in basis when the surviving spouse dies.

See Kevin A. Pollock, Why Repeal of the NJ Estate Tax Means Married Couples Should Update Their Wills, Kevin A. Pollock BLAWG, October 3, 2018.