Estate of Van Riper v. Director, Division of Taxation, 241 N.J. 115 (2020). The taxpayers in this case lost their argument, on summary judgment, before the Tax Court and then the Appellate Division. The Supreme Court granted review, as discussed here, and today the Court unanimously affirmed the decisions below. Justice Solomon wrote the Court’s opinion.
The issue was whether a transfer inheritance tax assessment of the decedents’ residence at full value was proper under the circumstances of the case. The property had been held by the decedents, husband and wife, in tenancy by the entirety. As Justice Solomon observed, the case was unusual in that married couples generally deed property into two trusts, which are taxed in phases on the death of each spouse. Here, however, the decedents transferred their marital home to a single irrevocable trust.
The courts at all three levels concluded that it was proper to tax the full value of the home. The Supreme Court said that “[t]he different estate-planning mechanisms have different consequences reflecting the grantors’ differing goals and intentions. In short, there is no reason to treat the single trust created here the same as the more common grant creating two separate trusts”.
Justice Solomon found that result to be “clear under the plain language of the statute [N.J.S.A. 54:34-1(c) and 54:34-1.1] itself,” as well as under caselaw that he discussed in detail. He said that “any other holding would introduce an intolerable measure of speculation and uncertainty in an area of law in which clarity, simplicity, and ease of implementation are paramount.”
The Estate relied on three cases. One of them, Justice Solomon noted, “dealt with the equitable distribution of property held as joint tenants with a right of survivorship, not the very different application of the transfer inheritance tax statute to property held as tenants by the entirety.” The other two precedents were federal decisions under the federal tax code that the Court found inapplicable here.