The Domestic Partnership Act which was approved on January 12, 2004 made significant changes to the New Jersey Inheritance Tax which applies to decedents dying on or after July 10, 2004. All transfers made by will, survivorship or contract to a surviving domestic partner as defined in section 3 of P. L. 2003, c.246 (C.26:8A-3) were made exempt from the Inheritance Tax. Included are membership certificates or stock in a cooperative housing corporation and the value of any pension, annuity, retirement allowance or return of contributions.
The inheritance tax exemption for transfers made to a domestic partner applies to domestic partnerships entered into in New Jersey as well as to domestic partnerships entered into in other jurisdictions.
N.J.A.C. 18:26-2.6(b) provides that a claim of a domestic partnership relationship must include such proof and supporting official documentation as may be required by the Director. This would normally be a copy of the Certificate of Domestic Partnership issued by the local registrar bearing the seal of the State of New Jersey or an equivalent document issued by another jurisdiction.
Tax waivers are required for transfers to domestic partners. Form L-8 (Affidavit and Self-Executing Waiver) and Form L-9 (Affidavit of Resident Decedent Requesting Real Property Tax Waiver may be used. Form L-8 is used to secure the release of bank accounts, stocks, bonds and brokerage accounts. Form L-9 is used to secure the release of realty.
The New Jersey Estate Tax is not affected by the Domestic Partnership Act. The New Jersey Estate Tax is based upon the Federal Estate Tax credit for state death taxes allowable under the provisions of the Internal Revenue Code. The Internal Revenue Code does not provide a Federal Estate Tax deduction for property passing to a domestic partner.
For additional questions regarding this issue please contact the Inheritance and Estate Tax section at 609-292-5033.