GeordieinJersey

I post this as an awful warning. We have lived in NJ for 18 years as green card holders, we should have got citizenship but have always intended to move back to UK . Our dear friends also from the UK have been here 25 years also on Green Cards . Our friend suddenly died mid 50s and a little piece of NJ TAX law came into play .If you die in the great state of New Jersey as a resident Alien you are liable to death duties.His poor wife had to pay over $60,000 in death taxes. If she had lived 5 miles away over the Delaware river in Pennsylvania she would not have had to pay this. The solution is to become a citizen or per her accountant they could have set up a trust fund of some sort to off set this, but of course none of us new this tax existed and NJ is not the only state that has it. So just a heads up .

Jerseygirl

NJ has all sorts of nasty taxes. Inheritance taxes is one of the reasons we became USCs.

Steve_

New Jersey estate tax applies to everyone, alien or otherwise: New Jersey EstateTax | Nolo.com

Are you saying that the marital exemption doesn't apply because she's an LPR? That sounds unconstitutional to me. Equal protection of the law under the 14th Amendment. Use of a trust shouldn't be necessary for transfers to a spouse.

Pulaski

This was big news about 12 or so years ago, with at least one WTC widow, whose very well paid husband had been killed and it had left her with a large six if not seven figure tax bill! It's a pity that the folk memory of the expat community in NJ isn't longer.

scrubbedexpat091

So I guess it's best to enjoy your money while alive and die poor so the tax man can't have any.

MidAtlantic

No, it's best not to live in NJ for this and other reasons.

scrubbedexpat091

Yes that to.

I don't see a point to amassing wealth and assets and then just die with it all and of no use to you, may as well use it to the max advantage while alive so you can enjoy it.

Suppose if you have kids its different, when we die, unless a kid appears, anything we have will end up to whoever happens to get stuff when people die and have no family to take it.

Nutmegger

As the person cited in this thread was in his mid-fifties, I'm sure he thought he had a long time left to do just that.

Steve_

Well New Jersey is notorious for wacky laws, doesn't necessarily mean they'd stand up in court though. There's plenty of case law on laws where the law says: "you must be a US citizen" and the court holds it applies to LPRs under the 14th Amendment.

First hit I got in Google.

So if I was said person, I'd go to court, it's worth it for $60,000. Pretty straightforward case really, although NJ courts are also known for their wackiness. But you could go to federal court and apply for summary judgement.

Steve_

Well it's just another example of why you should apply for US citizenship. I'm sure this law is unconstitutional but it would have saved a lot of hassle of going to court.

My personal view is if you live country X you should always become a citizen of country X if it is possible. Even if you live in the Schengen Area, because I'm sure there's a lot of people living in Switzerland who didn't think Switzerland would vote to leave it.

MidAtlantic

I agree with you, but you said in#3 above that this law applies to everyone, so having citizenship would not help in this instance.

SanDiegogirl

This law is nothing new and certainly does not apply just to New Jersey.

I have pointed this out several times to people who are thinking of whether to take out naturalisation and or/when they are intending to do wills/estates.

If neither of the couple is a US citizen then Uncle Sam wants his death duties at the time of one of them dying, so that the other does not leave the country taking their assets with them.

No transfer of assets - with no taxes - to the remaining spouse for them.

robin1234

Don't most married couples hold the largest part of their assets jointly, such as a house and bank accounts? And what about a brokerage account (for instance) that is classified as "transfer on death", that is, doesn't have to go through probate. Or your 403b account, where your spouse is your beneficiary.

Would those types of assets be exempt from the NJ inheritance tax? (Just curious, I'm a citizen and live in New York!)

tom169

Are there any lists of States / laws that don't play nicely with LPRs?

Pulaski

As I understand the law in question, it isn't directly the issue of inheritance, it the removal of assets from within the scope of the IRS. The idea that someone might inherit something, and then remove it from the US where it can't be taxed in future is the issue. With the IRS's global reach for USC's that isn't an issue that USC's experience, but LPRs can up and leave the IRS's umbrella.