N.J. Admin. Code § 18:26-8.10 - Life estate in real property held by the entirety

(a) When real property is devised or transferred to spouses/civil union couple/domestic partners as tenants by the entirety each having a vested life estate in common with the other for their joint lives with a vested estate in fee in the entire remainder subject to defeasance, as to the one first dying, the value of such property for New Jersey transfer inheritance tax purposes, is ascertained as follows:

1. A life estate is computed on the basis of the lesser life expectancy of the devisees or grantees and the value so determined is considered as immediately vested in equal shares, and subject to tax accordingly.

2. The remainder is treated as contingent and a compromise tax is suggested in accordance with N.J.S.A. 54:36-6, based upon the following alternatives:

i. The tax chargeable if the devisee or grantee against whom the lower rate of tax would apply survives;

ii. The tax chargeable if the devisee or grantee against whom the higher rate of tax would apply survives; or

iii. The tax chargeable determined on the basis that the devisees or grantees will share the remainder equally as the result of a sale of the real property or the entry of a judgment of divorce.

Notes

N.J. Admin. Code § 18:26-8.10

Adopted by 50 N.J.R. 1624(a), effective 7/16/2018