When you're writing your will in New Jersey, you must take into account the state's estate tax laws and how they can impact the money you're leaving behind. A small mistake or oversight could cost your family a lot.
For instance, one man became sick and decided to draft a will. At the time, his sisters were the ones providing him with daily care and assistance, so he opted to leave his money to them instead of his mother.
However, all siblings -- like that man's sisters -- count as Class C beneficiaries. As such, New Jersey law dictates that the estate has to be taxed. The maximum tax rate is a full 16 percent. That has a fairly large impact on the financial assets being left behind.
Parents, on the other hand, count as Class A beneficiaries. Any assets left to them are not taxed at all.
Had the man instead left the money and assets to his mother, she could then have put those assets in her will and given them to her daughters that way. Doing so would have avoided the estate tax yet again. Plus, she would also have had the option of turning over the assets as a gift.
It may seem like a small difference -- leaving the money directly to the sisters or leaving it to the mother and having her pass it on to the sisters -- but it's not. In a case like this, it could have saved that family as much as 16 percent on the total inheritance, all because of the way the will was set up.
If you're thinking of writing a will and you want to avoid simple mistakes, our website offers a lot of helpful information.