The Future of Death Taxes

The last few months have brought dramatic changes in the taxation of an individual’s assets upon his or her death. For many, there will no longer be any need to plan for the minimization of death taxes.

Residents of the State of New Jersey are subject to three death taxes: (1) the federal estate tax, (2) the New Jersey estate tax, and (3) the New Jersey Transfer inheritance tax. Residents of the Commonwealth of Pennsylvania are subject to the federal estate tax and their own version of the inheritance tax. Practically speaking Pennsylvania does not have an estate tax, as its law provides that it would absorb any credit, or sponge tax, allowed from the federal estate tax, but that concept has been repealed for years.

In 2017, the New Jersey Estate tax exemption will increase to $2,000,000. In 2018, the New Jersey estate tax will be no more.

In 2017, the exemption from the federal estate tax will increase to $5,490,000 per person, and, if portability is properly used, $10,980,000 per couple. Although the intentions of an incoming president are not always translated into legislative action, President-Elect Trump seeks to eliminate the federal estate tax altogether. With Republicans controlling both the House and the Senate, that objective may well be realized. In exchange for repealing this tax, the step-up in basis for capital assets would be eliminated for estate assets in excess of $10,000,000.

The gift tax exemption will remain at $14,000 per person per year.

There is no adjustment from either New Jersey or Pennsylvania for its inheritance taxes. Both remain alive and well.

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Thomas D. Begley, III

About the Author

Thomas D. Begley, III is the co-chair of the Trusts & Estates Group at Capehart Scatchard. He is a Certified Elder Law Attorney (CELA) who earned both his undergraduate and law degrees from Georgetown University, located in Washington, D.C. He concentrates his practice in the areas of estate and tax planning, estate administration, small business representation, elder law, and probate litigation. He is an accomplished author and lecturer who has frequently spoken on behalf of the National Academy of Elder Law Attorneys and the New Jersey Institute for Continuing Legal Education as well as other professional organizations. He has been named a “Super Lawyer” as voted by his peers and facilitated by New Jersey Monthly in the area of Trusts and Estate Litigation on numerous occasions. He has attained the prestigious AV rating by Martindale-Hubbell.

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