Selling a parent's or relative's home is often one of the hardest real estate decisions a family makes. Alongside the emotions, there is paperwork that doesn't come up in an ordinary sale. In New Jersey, one item in particular, the inheritance tax waiver, can affect when a closing can happen. Here is a plain-English overview of the steps, so you know what to ask your attorney and accountant.
This is general information, not legal or tax advice. Every estate is different, and an estate attorney should guide the specifics.
Step One: Who Has Authority to Sell?
Before anyone can list or sign a contract, someone needs the legal authority to act for the estate. If there is a will, the named executor brings it to the county Surrogate's Court to be probated. Once the will is admitted, the Surrogate issues letters testamentary, which confirm the executor's authority. If there is no will, the process is called administration, and the court appoints an administrator with letters of administration. In Somerset County, the Surrogate's office is in Somerville and also accepts filings online.
How a home was titled matters too. A house held by spouses as tenants by the entirety generally passes to the survivor. Property held in a trust is handled by the trustee under the trust's terms. Your attorney will confirm who signs.
Step Two: Understand the Inheritance Tax
New Jersey no longer has an estate tax for people who died on or after January 1, 2018. It does still have an inheritance tax, which depends mainly on who receives the property.
The Division of Taxation groups beneficiaries into classes:
- Class A, including a spouse or civil union or domestic partner, children, grandchildren, parents, grandparents, and stepchildren, pays no inheritance tax.
- Class C, including siblings and a child's spouse, is taxed at graduated rates after an exemption.
- Class D, everyone else, such as nieces, nephews, and friends, is taxed at graduated rates.
- Class E, qualified charities and certain public and nonprofit institutions, is exempt.
Even when no tax is due, the paperwork still matters.
Step Three: The Tax Waiver
Under New Jersey law, the inheritance tax is a lien on the decedent's property. To transfer New Jersey real estate out of a decedent's name, the estate generally needs a tax waiver, Form 0-1, issued by the Division of Taxation's Inheritance Tax Branch. It isn't a form you fill out yourself. The Division issues it after the right return or affidavit is filed.
For a New Jersey resident whose beneficiaries are all Class A, and where no tax or return is due, the executor, administrator, or a surviving joint tenant can usually file Form L-9, an affidavit requesting the real property waiver. It goes to the Division with copies of the will and any trusts, the deed, the letters testamentary or administration, and the death certificate. If any beneficiary is outside Class A, a full inheritance tax return is typically required instead. A separate version, Form L-9NR, applies to New Jersey real estate owned by someone who lived in another state.
Why Timing Matters
The waiver is something title companies and closing attorneys look for. Starting the filing early, often as soon as the executor is appointed, can keep it from holding up a closing. If you are selling before the waiver arrives, your attorney and the title company can explain how they plan to handle it.
Other Practical Steps
- Keep the house insured and maintained. Tell the insurance agent the home is vacant, and keep heat and utilities on. Our earlier post on winterizing a vacant home covers this in detail.
- Clear out thoughtfully. Give family time to choose keepsakes before an estate sale or donation pickup.
- Gather records. Tax bills, utility accounts, permits, and service records help with pricing and disclosure.
- Talk to an accountant. Ask how the home's value at the date of death affects any federal tax on the sale, and which closing forms apply to the estate.
The Takeaway
An inherited home can be sold smoothly when the order of steps is clear: authority first, then the tax waiver, then the sale. With a good estate attorney and a patient plan, families can take the time they need.
If your family is preparing to sell an inherited home, call Fahey Realtors at 908.204.0600 or stop by 61 Claremont Road in Bernardsville, NJ 07924. We would be glad to help you plan the next steps.
