Nj.com’s recent article entitled “Will N.J. or Florida’s tax laws affect this inheritance?” notes that first, the fact that the individual from Florida is not legally married is important.
However, if she is a Florida resident, Florida rules will matter in this scenario about the vacation condo.
Florida does not have an inheritance tax, and it does not matter where the beneficiary lives. For example, the state of New Jersey will not tax a Florida inheritance.
Although New Jersey does have an inheritance tax, the state cannot 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” is not 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 is not married to her friend, she does not 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?”
Sims & Campbell, LLC – Annapolis and Towson Estate Planning Attorneys