On December 17, 2010 President Obama signed into law the “Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010.” The new law cuts federal estate and gift taxes for two years. The temporary federal estate and gift tax law, in place since 2001, was set to expire on January 1, 2011. The new law extends and modifies the federal estate and gift tax for two years by establishing a $5 million estate, gift and generation skipping tax exemption and setting the estate tax rate at 35%. On January 1, 2013 the law is scheduled to revert to a $1 million estate tax exemption and 55% maximum tax rate of pre-2001 law.
As 2009 drew to a close, most trust and estate practitioners believed that Congress would freeze the estate tax threshold at the 2009 exemption and rate structure of $3.5 million. This “fix” never happened! As a consequence, for individuals who pass away in 2010 there is presently no estate tax and new complicated rules for computing gain and loss from the sale of property inherited after 2009 have become effective.
The New Jersey Division of Taxation has proposed new rules for title insurance companies holding escrow amounts from real estate closings for the payment of transfer inheritance and/or estate taxes. New N.J.A.C.18:26-11.21 would require title companies to notify the Division in writing, within 10 days of receipt of the transfer inheritance and/or estate tax related escrow monies and to forward to the Division a copy of any HUD-1 RESPA statement and deed that issued from the transaction.
