Key Developments in NJ Estate Law

New Jersey estate planning has seen several key developments. One significant change is the elimination of the New Jersey Estate Tax, which has shifted the focus of many clients towards minimizing income tax liability for themselves and their descendants. This change has also affected the use of “bypass” or “credit shelter trusts”. When New Jersey imposed an estate tax, funding such a trust with an amount equal to the maximum federal exemption in effect in the year of death of the first spouse to die would have triggered a New Jersey estate tax payable on the death of the first spouse to die. However, with the elimination of the New Jersey estate tax, this is no longer a concern.

Another development is the use of trusts in estate planning. The case of Estate of Van Riper v. Director, Div. of Taxation highlighted a unique estate-planning strategy where a couple transferred ownership of their marital home to a single irrevocable trust, rather than the more common two-trust method. The couple’s niece was to inherit the property upon the death of the second spouse.

In the case of Rappeport v. Director, Div. of Taxation, the court distinguished between the estate planning of Mrs. Oberhand and the disclaimer by Mr. Rappeport. Mrs. Oberhand had engaged in careful estate planning, and her Will expressly set forth her desire to avoid estate taxes. The decision by Mr. Rappeport to disclaim the bequest to him may or may not have been a form of his estate planning, and his motivation for the disclaimer, particularly the role of tax considerations, is not revealed in the disclaimer document or in any other submission by the parties.

Lastly, N.J.A.C. 7:3-5.5 identifies any cultural resources on the property that merit protection and preservation, including any prehistoric or historic district, site, building, structure, or object listed in the New Jersey Register of Historic Places and/or the National Register of Historic Places. This regulation also discusses any conservation-based estate planning undertaken by the owner.