Nj.com’s recent article titled “Will N.J. or Florida’s tax laws affect this inheritance?” notes that first, the fact that the individual from Florida isn’t legally married is important. However, if she’s a Florida resident, Florida rules will matter in this scenario about the vacation condo.
Florida doesn’t have an inheritance tax, and it doesn’t matter where the beneficiary lives. For example, the state of New Jersey won’t tax a Florida inheritance. Although New Jersey does have an inheritance tax, the state can’t tax inheritances for New Jersey residents, if the assets come from an out-of-state estate. If she did live in New Jersey, there is no inheritance tax on “Class A” beneficiaries, which include spouses, children, grandchildren, and stepchildren.
However, the issue in this case is the fact that her “daughter” isn’t legally her daughter. Her friend’s daughter would be treated by the tax rules as a friend. You can call it what you want. However, legally, if she’s not married to her friend, she doesn’t have a legal relationship with her daughter. As a result, the courts and taxing authorities will treat both persons as non-family.
The smart thing to do with this type of issue is to talk with an experienced estate planning attorney who is well-versed in both states’ laws to determine whether there are any protections available.
Reference: nj.com (July 23, 2020) “Will N.J. or Florida’s tax laws affect this inheritance?”
