Inheriting real estate in New Jersey can be a financial boon or a bust, a long-coveted dream or a financial headache. Key to making good decisions relative to bequeathed property is to know what laws govern the conveyance and how to make the best of them.
New Jersey is a state where the laws pertaining to wills, trusts and estates can appear complicated. While retaining a seasoned attorney, expert in this specialty, is highly advisable, the beneficiary serves him or herself well by understanding the basics of inheritance, the rights and the responsibilities. This knowledge helps when screening lawyers and calculating financial costs.
When Do I Actually Take Possession of My Inheritance?
When a homeowner dies, New Jersey law stipulates that the executor (appointed by the deceased person) or administrator (appointed by the court) must refrain from submitting the will for probate for at least 10 days. Probate serves to confirm the authenticity and correctness of the will. Probate is not necessary in all cases yet when the testator (or decedent) is the sole owner on the deed, this process is almost always mandatory. The surrogate court in the county where the decedent lived is the designated probate authority, regardless of the property location. Unless discrepancies arise, the beneficiary assumes control of the house in less than one year.
Who Do I Talk To About Initiating Probate?
The executor specified in the will is the contact of first recourse. If the decedent neglected to assign this role, an administrator must be appointed by the surrogate court. Either can initiate the probate process.
Am I Responsible for Property Taxes?
The estate–as represented by executor or administrator–should be paying the quarterly property tax while probate is ongoing. Once the house passes into the hands of the beneficiary or beneficiaries, certain taxes will kick in.
For any New Jersey decedent who passed away after January 1, 2018, the estate tax is abolished. However, an inheritance tax remains in place. The difference between the two is that the estate tax is imposed on the, well, estate while the inheritance tax is levied against the beneficiaries. The inheritance tax must be filed and paid within eight months after the death of the testator.
Spouses, children, grandchildren, step-children, domestic partners and parents are exempt from inheritance taxes in New Jersey. Siblings, sons/daughters-in-law or civil union partners of children are subject to the tax at graduated rates based on house value: 11 to 16 percent. Religious and charitable institutions named as recipients are also exempt.
To Sell or Not To Sell
A beneficiary essentially has three options:
- Live in the house
- Sell the house
- Rent the house out for income
If there are multiple beneficiaries, the simplest option is to sell and split the proceeds. Alternatively, one beneficiary could buy the others out and either occupy or rent. The decision should be based on personal finances and mutual consensus among all parties concerned.
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