The New Jersey Division of Taxation has readopted and amended the state’s inheritance tax regulations under N.J. Admin. Code 18:26, introducing several notable updates that affect estate administration and beneficiary classifications. The readopted regulations became effective November 17, 2025, with additional amendments taking effect December 15, 2025. The regulations are scheduled to remain in effect through November 17, 2032. Martin D. Hauptman, Esq., Partner in our Tax, Trusts, and Estates Groups breaks down the readopted regulations.
Expanded Definition of Class A Beneficiary
One of the most significant updates is the expansion of the definition of a Class A beneficiary. The regulations now expressly include non-biological children conceived through any form of assisted reproduction. This change reflects evolving family structures and clarifies inheritance tax treatment for children who may not be biologically related to the decedent but are legally recognized as descendants. As Class A beneficiaries are exempt from New Jersey inheritance tax, this clarification may have meaningful tax implications for affected estates.
Changes to Waiver Requirements
The amended regulations also modify the requirements for obtaining inheritance tax waivers. A waiver from the Division of Taxation is now required for transfers made by financial institutions to beneficiaries. Previously, this requirement applied only to banking institutions, trust companies, and deposit companies. In addition, the longstanding ten-business-day waiting period for the issuance of a waiver has been repealed, potentially allowing for faster administration and distribution of estate assets.
Clarification Regarding Executor’s Commissions
The Division also amended the regulations to clarify that no deduction may be taken for an executor’s commission related to the transfer of real estate to a specifically devised beneficiary. This clarification is particularly important for estates that include real property subject to specific bequests, as it affects how deductions are calculated for inheritance tax purposes.
Moving Forward
These regulatory changes underscore the importance of reviewing estate plans and administration procedures considering updated inheritance tax rules. Expanded beneficiary definitions, revised waiver requirements, and clarified deduction limitations may all affect how estates are administered and taxed in New Jersey. Executors, trustees, and advisors should ensure they are applying the revised regulations correctly to avoid delays, compliance issues, or unexpected tax exposure.
Next Steps
Individuals engaged in estate planning, as well as executors and fiduciaries administering New Jersey estates, should review these changes carefully to determine how they may affect current or future matters. Early planning and informed administration can help ensure compliance with the updated regulations and reduce the risk of complications during the transfer of assets.
For guidance on how these amended inheritance tax regulations may affect your estate planning or administration responsibilities, contact Martin D. Hauptman, Esq. at mhauptman@mblawfirm.com or 973-243-7912.