Registration as Domestic Partners is Necessary in New Jersey to Avoid Inheritance Tax
In the estate administration and inheritance tax case of Estate of Frappolli vs. Director, Division of Tax action, Tax Ct, 35-5-4132, the issue is the final determination of the Director, Division of Taxation, assessing transfer inheritance tax against the Estate of Marie P. Frappolli. The central question is whether Frappolli and Dorothea G. Angelou, the beneficiary who inherited Frappolli’s assets, should be treated as domestic partners, thereby insulating the inheritance from transfer inheritance tax. Frappolli and Angelou were never registered as domestic partners in New Jersey or any other jurisdiction even though they fulfilled the statutory requirements for a domestic partnership. In addition, the estate contends that even if Angelou is not treated as a domestic partner, only half of the value of the property they held as joint tenants with the right of survivorship should be included in the taxable estate. The court concludes that Frappolli and Angelou may not be treated as domestic partners for tax purposes because they did not execute and file an Affidavit of Domestic Partnership Act in accordance with the New Jersey Domestic Partnership Act and were not registered as domestic partners under the laws of any other jurisdiction. The court further concludes that the Director correctly assessed transfer inheritance tax against the value of the entire property previously owned by Frappolli and Angelou. Angelou’s right to full ownership and possession of the residence is subject to transfer inheritance tax. In N.J.S.A. 54:34-1f, the Legislature determined that when a person acquires the right to ownership and possession of a property previously held as a joint tenant as a result of the death of another joint tenant, the measure of that inheritance is the value of the entire property.
Reference: Case & Analysis, The New Jersey Law Journal, 216 N.J.L.J. 808, (June 16, 2014)
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