Estate, Income & Inheritance Tax Lawyer in Lawrenceville, New Jersey

As a Lawrenceville, NJ estate, income and inheritance tax lawyer, I understand that safeguarding your financial future requires more than just thoughtful planning. It demands strategic legal guidance tailored to your unique needs. 

Based in Lawrenceville, New Jersey, my law firm—James P. Manahan— offers experienced and results-driven counsel in income, inheritance, and estate tax law, helping individuals and families preserve wealth, minimize tax liabilities, and create a smooth transfer of assets. With over three decades of experience, you can count on me.

Whether you're planning your estate, administering a loved one's estate, or sorting through tax matters, I can provide the clarity, confidence, and legal insight you need to move forward with peace of mind. With a commitment to personalized service and legal excellence, I stand ready to protect what matters most: your legacy. Give me a call today.

Estate Tax in New Jersey

One of the first questions clients ask me is, “Do we have to worry about estate tax in New Jersey?” The short answer is: it depends. New Jersey doesn't currently impose a state estate tax. However, that doesn’t mean you're off the hook entirely. The federal estate tax still applies to estates that exceed a certain value threshold.

In my practice, I help clients assess their risk and implement planning strategies that can legally and efficiently reduce or even eliminate their estate tax exposure.

Income Tax Considerations for Estates and Beneficiaries

Estate tax is just one piece of the puzzle. Income tax issues often arise during estate administration and trust management. Whether you're an executor, trustee, or beneficiary, it's crucial to understand how income taxes can impact your responsibilities and distributions.

As an estate and income tax lawyer, I provide guidance on:

• Filing final income tax returns for the decedent

• Preparing fiduciary income tax returns (Form 1041)

• Managing income generated by estate assets

• Allocating income between beneficiaries and the estate

• Understanding the step up in basis and capital gains implications

• Planning for IRAs and other retirement account distributions

When not properly managed, income taxes can significantly erode the value of an estate or trust. My job is to help you make smart, informed decisions that preserve wealth and avoid unnecessary tax burdens.

The New Jersey Inheritance Tax

While New Jersey no longer has an estate tax, it still imposes an inheritance tax, which can come as a surprise to many families.

The inheritance tax in New Jersey is based on the relationship between the deceased and the beneficiary. Spouses, children, and grandchildren are exempt, but more distant relatives and unrelated individuals can face varying tax rates depending on the amount received.

Here’s a simplified breakdown of how the inheritance tax works in New Jersey:

• Class A beneficiaries (spouse, children, parents, grandchildren): Exempt. No inheritance tax is owed, regardless of the amount received. This exemption helps assure that immediate family members can inherit without facing a tax burden. Even large inheritances between Class A members aren't subject to state taxation.

• Class C beneficiaries (siblings, daughters- and sons-in-law): Exempt up to $25,000, then taxed at 11% to 16%. The tax rate increases as the inheritance amount rises beyond the initial exemption. For example, amounts between $25,000 and $1.1 million are taxed at 11% to 14%, and anything above that may be taxed at 16%. Proper planning can help reduce the tax owed by spreading assets strategically.

• Class D beneficiaries (friends, cousins, unmarried partners): Taxed at 15% to 16%. There is no exemption amount for Class D, so the entire inheritance is subject to tax. The first $700,000 is taxed at 15%, and any amount above that is taxed at 16%. This group often ends up with the highest tax liability, which can significantly reduce the inheritance they receive.

• Class E beneficiaries (charitable organizations): Exempt. Gifts to qualifying nonprofits or charities aren't subject to New Jersey inheritance tax. This exemption encourages charitable giving and estate planning that supports philanthropic causes. However, it’s important to verify that the organization qualifies under New Jersey’s tax code to avoid unintended consequences.

If you're a beneficiary or executor facing an inheritance tax situation, I can help you understand your obligations and file the necessary returns. In many cases, there are opportunities to structure inheritances in ways that reduce or delay tax liability.

Estate Planning With Tax Efficiency in Mind

I believe that good estate planning is about more than just having a will; it's about building a comprehensive strategy that aligns with your personal goals, protects your loved ones, and minimizes taxes wherever possible.

Early planning doesn’t just reduce tax exposure; it assures that your wishes are clearly defined and legally enforceable. Many people are surprised at how much they can save simply by organizing their assets strategically and understanding how estate tax laws apply to their unique circumstances.

Even modest estates can benefit from tax planning tools that help to make sure more of your wealth reaches the people and causes you care about most. The sooner we begin the conversation, the more options you'll have available. Some of the tools and techniques I regularly use with clients include:

Revocable Living Trusts

These help avoid probate and allow for more flexible estate tax planning, especially for married couples who want to maximize their federal exemption limits.

Irrevocable Trusts

Used to remove assets from your taxable estate, an irrevocable trust can be a powerful tool for high-net-worth individuals concerned about future estate tax exposure.

Gifting Strategies

New Jersey doesn't have a gift tax, but the federal government does. I work with clients to develop lifetime gifting strategies that take full advantage of annual and lifetime gift tax exclusions.

Charitable Planning

Donor-advised funds, charitable remainder trusts, and other tools can help you support causes you care about while reducing your taxable estate.

Each client’s situation is unique. My goal is to tailor a plan that’s customized to your life, your values, and your financial picture.

Helping Executors and Trustees Manage Tax Responsibilities

If you’ve been named an executor or trustee, you’re likely facing a steep learning curve. In addition to distributing assets and settling debts, you’re responsible for making sure that all tax filings are completed properly and on time.

If this sounds like you, my law firm can help. I offer hands-on legal support for:

• Estate and inheritance tax return preparation and review

• Federal and state income tax filings

• Coordination with accountants and financial advisors

• Tax elections and disclaimers

• Asset valuation and liquidity planning

By working with my firm, you gain a trusted legal partner who understands the intricate tax obligations and can help you avoid common mistakes that lead to penalties, delays, or disputes.

Why Work With Me?

I offer something that many larger firms can’t: direct, personal attention from an experienced tax attorney. When you work with me, you’re not passed off to a junior associate or paralegal. You get my full attention and over three decades of legal and tax experience.

Clients choose my firm because I offer:

• Clear, practical guidance: I don’t speak in legal jargon. I explain your options in plain English so you can make informed decisions.

• Proactive planning: Whether you’re setting up a plan or settling an estate, I work to anticipate issues before they become problems.

• Local insight: I’ve lived and practiced law in New Jersey for decades. I understand the ins and outs of our tax laws and court systems.

• Responsiveness and reliability: I pride myself on being accessible and attentive to every client. You can count on me to return your calls, answer your questions, and follow through.

When you work with me, you’re not just hiring an attorney; you’re gaining a trusted advisor who’s committed to your success every step of the way.