Q. My mother-in-law passed away last December and left a small estate for the family to share. After reading the tax forms, I’m not sure if the estate requires a filing. All of the beneficiaries are Class A. The gross assets are classified as personal property according to Schedule B-1 totaling approximately $32,000. The largest asset was her mobile unit, which was sold in March 2021. Estate settlement costs were approximately $9,000 according to what is allowable on Schedule D, including funeral expenses, post-deceased medical expenses, decedent debt settlements, court fees, personal property appraisal fees and realtor commission. So is the filing for the inheritance tax required?
— Trying to figure
A. We’re sorry to hear of your loss.
Here’s what you need to know.
There is no inheritance tax when all of the beneficiaries are Class A beneficiaries, which include a spouse, domestic partner, grandparents, parents, children, grandchildren and step-children, said Catherine Romania, an estate planning attorney with Witman Stadtmauer in Florham Park.
When a return is required, she said, you would file Form IT-R, New Jersey Inheritance Tax Resident Return within eight months of the date of death, or within 14 months if validly extended, although extensions can only be requested if timely filed before the due date of the return.
One reason a return may be required is to obtain a waiver of the lien the state has on a decedent’s estate for any potential tax due, she said.
“In the case of real property, the waiver may be obtained instead by filing Form L-9, Affidavit for Real Property Tax Waiver; Resident Decedent,” Romania said. “Financial institutions are permitted to release funds to Class A beneficiaries upon receipt of Form L-8 — Self Executing Waiver — where all the funds from the account are being released to Class A beneficiaries.”
Waivers are not required for personal property such as household goods and automobiles, she said.
Romania said a mobile or manufactured home is taxed as real property when it’s affixed to land by a foundation and connected to utility systems. Otherwise, a mobile home is titled and treated similarly as a motor vehicle.
“Presumably, the mobile home in your mother-in-law’s estate was not treated as real property as the buyer did not ask for the waiver,” she said. “In sum, Form IT-R is not necessary if all the beneficiaries are Class A beneficiaries — and not in trust — and if waivers are not required or if Forms L-8 and L-9 are sufficient.”
Email your questions to [email protected].
Karin Price Mueller writes the Bamboozled column for NJ Advance Media and is the founder of NJMoneyHelp.com. Follow NJMoneyHelp on Twitter @NJMoneyHelp. Find NJMoneyHelp on Facebook. Sign up for NJMoneyHelp.com’s weekly e-newsletter.