Topic #1

Why do I need a NJ Inheritance Tax Waiver to sell real estate owned by the estate?

The waiver acts as proof that the NJ inheritance tax is paid . By way of example, if an estate has assets such as real estate and the realty will be sold to a buyer, the title company, or the attorney for the buyer will usually require a waiver before closing. Otherwise, at closing a large escrow may be held from the proceeds until the waiver is recorded by the county clerk where the realty is located.

If the beneficiaries of the estate are Class A (such as a parent, child, grandchild, etc.) no tax may be due, however, you still need to provide a waiver. Some waiver applications are obtained by submitting a formal Inheritance Tax Return (download Form ITR) and others are obtained by filing a "streamlined" form such as Form L-9. Form L-9 can only be issued if all the beneficiaries are "Class A".

Topic #2

Why are funds in bank accounts and brokerage accounts frozen?

Half the funds in bank accounts and brokerage accounts are frozen until the executor provides either a waiver or Form L-8. If all the beneficiaries are Class A (such as a parent, child, grandchild, etc.) you may usually file Form L-8 with the bank or brokerage company, and they will release the frozen funds.

Topic #4

Should the executor retain a lawyer or a tax accountant to file the Inheritance Tax Return?

Some law firms are very good at preparing certain inheritance tax returns such as NJ Form ITR. However, many law firms delegate the preparation of the form to paralegals or secretaries and many times this causes delays, errors, and miscalculation of the tax. Having a qualified and licensed tax accountant that has extensive experience in tax representation before the NJ Division of Taxation is usually the best approach when engaging professionals for the submission of the Form ITR.