A woman who dated her beau for 44 years and was on the verge of finally marrying him lost a case recently in New Jersey tax court that cost her beau’s estate $214,000 in state taxes. That’s money that would have otherwise gone to her and the man’s niece and nephew.

When it comes to death taxes, sometimes – that is, all the time – it’s not about your intentions, but only the cold hard facts. In a case recently showcased in Forbes, the intention was to wed, but the cold hard facts were that they just couldn’t get there. Result: A $214,000 tax bill.

It’s the story of a New Jersey couple who was in a relationship from the 1960’s and weren’t planning on cutting that streak short anytime soon. No, in fact they were planning to retire and move into a condo in Florida where they also intended to finally tie the knot.

Peter, the boyfriend, never made it and died in New Jersey, but not before leaving shares of some valuable stock worth more than $1 million. Unfortunately, that’s when the New Jersey inheritance tax kicks in with a vengeance, as any amount over $500 to someone other than a spouse or direct family member triggers a 15 percent tax. Ouch!

Indeed, Peter gave his girlfriend the stock long before his untimely passing, but not before the extra tricky part of New Jersey law kicks in. Why? Because any gift made within 3 years of passing is assumed to be “in contemplation of death” and incurs taxation regardless (i.e., the dreaded “clawback”).

The Forbes article contains more of the details of the story. However, here are a couple quick lessons to glean. First, the power of marriage from an estate planning perspective is huge and, second, understanding your legal environment now (and the wrinkles you’ll face) later is essential to proper estate planning.

We always talk about the federal level of taxation. Nevertheless, depending upon your state of residence at death, there are a host of landmines to avoid.

For more articles and information on estate planning and elder law issues please visit our website and sign up for our free monthly e-newsletter.

Reference: Forbes (December 23, 2011) “Delayed Nuptials Cost Couple $214,000 In State Death Tax”

A woman who dated her beau for 44 years and was on the verge of finally marrying him lost a case recently in New Jersey tax court that cost her beau’s estate $214,000 in state taxes. That’s money that would have otherwise gone to her and the man’s niece and nephew.

When it comes to death taxes, sometimes – that is, all the time – it’s not about your intentions, but only the cold hard facts. In a case recently showcased in Forbes, the intention was to wed, but the cold hard facts were that they just couldn’t get there. Result: A $214,000 tax bill.

It’s the story of a New Jersey couple who was in a relationship from the 1960’s and weren’t planning on cutting that streak short anytime soon. No, in fact they were planning to retire and move into a condo in Florida where they also intended to finally tie the knot.

Peter, the boyfriend, never made it and died in New Jersey, but not before leaving shares of some valuable stock worth more than $1 million. Unfortunately, that’s when the New Jersey inheritance tax kicks in with a vengeance, as any amount over $500 to someone other than a spouse or direct family member triggers a 15 percent tax. Ouch!

Indeed, Peter gave his girlfriend the stock long before his untimely passing, but not before the extra tricky part of New Jersey law kicks in. Why? Because any gift made within 3 years of passing is assumed to be “in contemplation of death” and incurs taxation regardless (i.e., the dreaded “clawback”).

The Forbes article contains more of the details of the story. However, here are a couple quick lessons to glean. First, the power of marriage from an estate planning perspective is huge and, second, understanding your legal environment now (and the wrinkles you’ll face) later is essential to proper estate planning.

We always talk about the federal level of taxation. Nevertheless, depending upon your state of residence at death, there are a host of landmines to avoid.

For more articles and information on estate planning and elder law issues please visit our website and sign up for our free monthly e-newsletter.

Reference: Forbes (December 23, 2011) “Delayed Nuptials Cost Couple $214,000 In State Death Tax”