How Do I Access a Deceased Owner’s Account? Part 5

In the past 4 blog posts, I have been discussing how to access a deceased owner’s bank or brokerage account.  In part it depends on whether the account is a probate asset – controlled by a will or state intestacy laws when there is no will – or a non-probate asset.  But after that determination is made there is still a hurdle to clear because of the State’s automatic lien after death.

By law the State has a lien on all accounts in New Jersey banks and financial institutions and on stock in New Jersey companies to insure it will receive the inheritance tax it is owed.  The lien is released by obtaining a tax waiver which the State issues when it is satisfied that the correct amount of tax has been paid.  Until then (the tax is due 8 months after death and if unpaid accrues interest at 10% per year) 50% of the account may be withdrawn according to something called a blanket waiver.  Withdrawing the rest must wait until the tax waiver process is completed.

When there is no inheritance tax due, the State does have an abbreviated process to the obtain the waiver without the need to file an inheritance tax return.  A self executing waiver may be completed which will allow the financial institutions to release the full account balance.  The financial institution will ask for and then submit the completed form – known as an L-8 – to the State to obtain the tax waiver.

When the account is owned jointly or has a payable on death designation and the co-owner or beneficiary is a spouse, child or grandchild not subject to inheritance tax then the L-8 form may be used.  Otherwise a complete inheritance tax return must be filed.  Once the State reviews the return and is satisfied that the correct amount of tax has been paid (or no tax is due) it will issue the tax waiver.  The waiver must then be presented to the bank in order to release the balance of the funds in the account.