SENATE BUDGET AND APPROPRIATIONS COMMITTEE

STATEMENT TO

SENATE, No. 1633

STATE OF NEW JERSEY

DATED: JANUARY 27, 1997

      The Senate Budget and Appropriations Committee reports favorably Senate Bill No. 1633.

      Senate Bill No. 1633 gives a will contest settlement agreement that has been incorporated into a consent judgment the same effect as a will for purposes of the transfer inheritance tax.

      The New Jersey transfer inheritance tax is imposed on the recipients of decedent transfers. Recipients are divided into categories based on their relationship to the decedent, and each category is taxed pursuant to its own marginal rate scale and exemptions. Transfers to charity or to close lineal relatives are exempt from tax; transfers to distant relatives or unrelated parties may be taxed at rates of up to 16 percent.

      Currently, the tax is assessed based on strict compliance with the recipients named under the will. Under current law, a settlement of a will contest directing distributions different from those in the will, is disregarded for taxation purposes. Under this bill, taxation of decedent transfers will give due regard to a settlement incorporated into a consent judgement in a will contest.

FISCAL IMPACT

      No data are available to the Office of Legislative Services to estimate the impact of this bill, if enacted, on transfer inheritance tax collections.