New Jersey estate facts · Taxes
Is life insurance subject to New Jersey inheritance tax?
The short answer
Not when it's paid directly to a named beneficiary. That's true even for siblings, nieces, nephews and friends.
The details
Life insurance proceeds paid directly to a named beneficiary are exempt from New Jersey inheritance tax, whatever that beneficiary's class.
That's different from a house or a bank account left to a Class C or D beneficiary through a will, which may be taxed.
Life insurance paid to the estate, rather than to a named person, can be treated differently, so it's worth checking how a policy was set up.
Related estate facts
Other questions families ask.
Do nieces and nephews pay New Jersey inheritance tax?
Yes. Nieces, nephews, cousins and friends are Class D: 15% on amounts up to $700,000 and 16% above, with no exemption beyond $500.
Read the answer → TaxesDo siblings pay New Jersey inheritance tax?
Yes, above $25,000. Brothers and sisters are Class C beneficiaries: the first $25,000 is exempt, and the rest is taxed at 11% to 16%.
Read the answer → TaxesDo children pay New Jersey inheritance tax?
No. Children are Class A beneficiaries, and Class A beneficiaries owe no New Jersey inheritance tax, however large the inheritance.
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