Last year, New Jersey collected approximately $400 million in estate taxes. Starting in 2018, New Jersey will stop collecting estate taxes. So, what will come of that $400 million in unexpected wealth going forward? What if we challenged ourselves as New Jerseyans to devote, say, 50 percent of this savings to New Jersey communities to fight hunger, safeguard our environment, shore up our schools or benefit other causes dear to our hearts?
The estate tax restructuring has its proponents and critics, but everyone recognizes that, with more money available to give away, charitable New Jersey families have a unique opportunity to expand and deepen their philanthropy.
At the Community Foundation of New Jersey, we are already seeing increased interest in charitable bequests and large, long-term legacy gifts. We are optimistic that a new wave of New Jersey philanthropy will emerge as more families choose to not only remain in our state, but also give back through their estates to the communities they care about.
Increasing the estate tax exclusion from $675,000 to $2 million in January 2017 and then eliminating the estate tax entirely in January 2018 will dramatically change the context in which families make important estate and charitable planning decisions.
For more than a decade, New Jerseyans have planned their estates with the knowledge that the estate tax would reduce the amount they could leave to their families. Faced with that prospect, real or imagined, many people felt as if they were choosing between their family and their community.
It may help explain why from 2006 to 2012, the growth in charitable giving in New Jersey was the third lowest in the country.
The elimination of the New Jersey estate tax creates the potential for an explosion in legacy giving. People are understandably most willing to make large and, in some cases, transformative charitable gifts at death, after day-to-day financial concerns cease to exist. At that moment, when all of a person’s accumulated wealth is in transition, it is often easier to imagine devoting a portion of that wealth to leaving a charitable legacy.
Among the charitable bequests to the Community Foundation of New Jersey are funds designed to help the vision-impaired, support survivors of domestic violence, and expand small theater, to name just a few. These end-of-life donations enable the Community Foundation to act upon a donor’s wishes in perpetuity, extending the family’s legacy for generations and matching their goals to current community needs.
We hope that more New Jersey families will use the elimination of the estate tax to think big or bigger about their community, the causes that engage them, and their individual or family’s charitable legacy.
New Jersey philanthropists and their advisors often work collaboratively with the Community Foundation or other organizations to develop charitable plans that provide income tax or federal estate tax savings while achieving a meaningful and satisfying charitable impact.
Now, with the elimination of the New Jersey estate tax, there is a new and wonderful opportunity for our state’s residents to imagine the kind of communities and world that they would like to help create – and to more powerfully act on it.
Frederick K. Schoenbrodt II is chair of the Estate Planning and Administration practice at Bressler, Amery & Ross P.C. and a member of the Community Foundation of New Jersey’s board of trustees. Hans Dekker is president of the Community Foundation of New Jersey.