How Do I Access a Deceased Owner’s Account? Part 3

How Do I Access a Deceased Owner’s Account? Part 3

In last week’s blog post, I explained the process of accessing a deceased  owner’s account both when there is a Will and when there is not. But as I said last week, once that is accomplished the financial institution may still not release all the funds without one additional step.  That is because of something called a tax waiver which relates to the payment of New Jersey’s inheritance tax.  I’ve written about the tax waiver in past posts but I will summarize here again.

While New Jersey eliminated its estate tax back in 2018 it still has an inheritance tax which is based on the relationship of the heirs to the person who died. Children, grandchildren and spouse are exempt from the tax but other more distant relatives and non-relatives are subject to the tax.

Although there are certain assets that are exempt from inheritance tax, such as life insurance payable to a named beneficiary (even if that beneficiary is in a category which would otherwise cause there to be inheritance tax), contrary to common belief the tax is not limited to assets that pass by way of the will – what are called probate assets.  Assets that pass outside of probate – such as jointly held accounts or payable on death accounts- may also be subject to inheritance tax if they are left to heirs who are subject to the tax.

Inheritance tax is due 8 months after death and the State is aggressive about collecting the tax.  It has a system devised to insure that the tax gets paid.  Enter the tax waiver.  I’ll explain what I mean next week.