When a NOTICE TO CREDITORS is published, the executor/trix, administrator/trix shall mail a copy of the NOTICE TO CREDITORS to each creditor of the estate of which the personal representative knows or which can be ascertained by reasonable inquiry, by ordinary mail to the creditor's last known address.

TAXES THAT INFLUENCE YOUR WILL

Three kinds of taxes can influence the provisions of your will: inheritance, estate and gift. An inheritance by will, by law, by surviving joint owner, or from life insurance is not income and is not subject to income tax.

New Jersey Inheritance Tax Inheritance Tax is a tax payable by an heir or beneficiary for the right to acquire the property of a deceased person or to receive a gift in anticipation of death. The tax is determined by the amount inherited and by the relationship of the individual to the deceased. In New Jersey, no one is taxed for receiving property, including money, worth up to $499.99.

Inheritance Tax Rates Spouses: All property passing to a spouse from a deceased spouse who died since January 1, 1985 is free of New Jersey inheritance tax. Forms for proving the exemption on checking accounts, savings accounts, Certificates of Deposit, etc. may be obtained from the institution holding the funds. Parents, grandparents, children, grandchildren, adopted children, or stepchildren: The first $50,000.00 is exempt where the decedent died between July 1, 1985 and July 1, 1986. The exemption is raised to $150,000.00 for decedents dying between July 1, 1986 and July 1, 1987; to $250,000.00 for decedents dying between July 1, 1987 and July 1, 1988. After July 1, 1988 all property passing to such persons is exempt. Brother, sister, daughter-in-law, or son-in-law: If the inheritance is $500.00 or more, the tax is 11 percent of the entire amount up to $1,100,000.00 and increases gradually thereafter. For persons dying after July 1, 1988 the exemption is $25,000.00. Every other beneficiary pays 15 percent on the total amount up to $700,000.00. Tax is 16 percent on remainder. Charitable, religious, or benevolent institutions: Each beneficiary in this class is tax exempt entirely. Money or property left the State of New Jersey, a municipality, or a nonprofit educational institution is exempt from inheritance tax.

Filing New Jersey Inheritance Tax Returns A substantial number of estates remain taxable and even some on which no tax is due require the filing of a New Jersey Inheritance Tax Return. Tax forms and instructions are furnished by the District Supervisor of the Transfer Inheritance Tax Bureau in the county where the decedent (a deceased person) resided at the time of death. The Executor, administrator or a personal representative files the completed inheritance tax return with the District Supervisor of the Transfer Inheritance Tax Bureau.

Clearing Title and Transferring Property For those estates that are taxable, unpaid inheritance taxes are a lien on New Jersey real estate and shares and stocks of corporations and financial institutions organized under laws of New Jersey. If there is no tax, the Transfer Inheritance Tax Bureau sends waivers that are required to clear title to the land and transfer ownership of bank accounts or securities.

If there is a tax, a bill is submitted and the waivers sent when the tax is paid. To clear title to real property, a waiver is filed with the county clerk in the county where the land is located. Land held by husband and wife as tenants by the entirety need not be reported and may be transferred without a waiver in the estate of the one first dying. To transfer stocks, shares, and securities of financial institutions and New Jersey corporations, the executor, administrator or personal representative sends waivers to them when asking transfer.

Inheritance tax returns must be filed and the tax paid within 8 months after decedent's death to avoid interest, charged at the rate of 10 percent per year. Although the interest penalty cannot be waived beyond this 8-month period, the time for filing may be extended on application to the bureau. This tax information is general and may not apply to each estate; therefore, it is advised that the inheritance tax supervisor be contacted for further information before the estate is settled.

Gift Tax New Jersey does not levy a tax on gifts, except in anticipation of death. Any gift made within 3 years of death is presumed to be in anticipation of death and may be subject to New Jersey Inheritance tax. An individual may give an amount up to $10,000 to any one person during the calendar year, exempt from tax. A married couple can give up to $20,000 to a person yearly without tax. Any number of tax- free gifts may be made during the year. If you make gifts to one person of more than $10,000 during the calendar year, file a Federal Gift Tax Return with the District Director of Internal Revenue. Gifts between husband and wife are exempt from Federal Gift Tax. Federal Marital Deductions An unlimited amount of real and personal property can be transferred between spouses without Federal Estate Tax. For proper application of the marital deduction, contact your attorney or trust officer at your bank.

SELF PROVING WILLS RECOMMENDED USE SELF PROVING WILLS TO SPEED UP PROBATE

Prior to 1978, New Jersey Probate Rules required one of the two witnesses to a will to travel and appear in the surrogate¹s office and sign a paper to certify they were a witness. This often created problems when the witness was deceased, moved away, or simply could not be located. Some witnesses would require a $500 fee to simply sign a surrogate paper.

In 1978, the New Jersey Legislature passed a law to create a new type of will called a ³Self-Proving Will.² In such a will, the person for whom the will is made will sign. Then two witnesses sign. Then the attorney or notary must sign; with certain statutory language to indicate the will is self proving. When done properly, the execution will not have to locate any witnesses. This usually saves time and money. If your will is not ³self-proving² or if you are unsure, schedule an appointment with an elder law attorney.

GLOSSARY

* Administrator, Administratrix (also known as Personal Representative) -- Person or institution appointed by the court to manage and distribute the estate of a person who dies without a will. * Beneficiary -- Person named to receive property or benefits. * Codicil -- An addition or supplement made to change or add provisions to a will. * Contingent beneficiary -- Receiver of property or benefits if first-named beneficiary dies before receiving all benefits. * Contract -- Legally enforceable agreement. * Decedent -- A deceased person. * Devise -- To give real or Personal Property. * Estate -- Everything a person owns, all real and personal property owned. * Executor, Executrix (also known as Personal Representative) -- A person or institution named in the will to carry out the provisions and directions of the will. * Intestate -- A person who dies without making a valid will. * Legatee -- Person who receives personal property under a will. * Levied -- To collect by assessment. * Lien -- A charge upon property, real or personal, for the satisfaction of a debt. * Personal property -- Intangible property, such as stocks, bonds, or bank accounts; and tangible property such as Furniture, Automobile, and Jewelry. * Probate -- Official proof of the genuineness of a will. * Real property -- Land and buildings. * Surrogate -- A judicial officer who has jurisdiction over the probate of wills in the absence of a contest and acts as the Clerk of the Probate * Court in the settlement of estates, guardianships, and trusts. * Tenants in common -- Two or more persons owning individual interests in property. * Testator, Testatrix -- The person who makes a will. * Trust -- Property owned and managed by one person for the benefit of another. * Trustee -- Person or institution holding property in trust. * Waiver -- A legal instrument relinquishing a right or lien. * Will -- A legal declaration of the manner in which a person wishes his * estate divided after death. * Witness -- Person who observes the signing of a will and also attests to * the signatures.

Part of the above information from the website of the Surrogate of Cumberland County.

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