Estate of Mary Van Riper v. Director, Division of Taxation

NOT FOR PUBLICATION WITHOUT APPROVAL OF
THE TAX COURT COMMITTEE ON OPINIONS
____________________________
:
ESTATE OF MARY VAN RIPER : TAX COURT OF NEW JERSEY
: DOCKET NO: 008198-2016
Plaintiff, :
vs. :
:
DIRECTOR, DIVISION OF
TAXATION,
:
:
:
Defendant. :
______________________________
Decided: February 23, 2017
James J. Curry for plaintiff.
Heather Lynn Anderson for defendant
(Christopher S. Porrino, Attorney General
of New Jersey, attorney).
CIMINO, J.T.C.
I. Introduction and Factual Findings
Under the New Jersey Transfer Inheritance Tax, a tax is
imposed for the transfer of property in three general categories.
First, there is a tax for the transfer of property by will.
N.J.S.A. 54:34-1(a), (b). Second, there is tax on any transfer of
property by operation of law if the decedent does not have a will.
Id. This is referred to as an intestate transfer. Third, there
is a tax on a transfer of property by way of deed, grant, bargain,
Approved for Publication
In the New Jersey
Tax Court Reports

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sale or gift made either: 1) in contemplation of death, or 2)
intended to take effect at or after death. N.J.S.A. 54:34-1(c).
The third type of transfer described above is meant to reach
certain transfers made during one’s lifetime in lieu of a transfer
by will or by operation of law under the intestacy laws. In re
Estate of Lichtenstein, 52 N.J. 533, 575 (1968). This type of
lifetime transfer is commonly referred to as an inter vivos
transfer. Many times, inter vivos transfers are effectuated
through a trust.
In this case, the husband and wife transferors, Mr. and Ms.
Van Riper, established an irrevocable trust in 2007. The marital
home was transferred to the trust for one dollar. The express
purpose of the trust was “to provide a residence” for “the
lifetime” of the transferors. Pl.’s Stmt. of Material Facts, Ex.
A. The trust provided that each transferor could live out their
respective lives in the marital home.1 Id. Three months later,
1 Although the home was not sold, technically the Trust documents
provided that the Trustee could sell the home. Generally, “[a]ny
funds realized as a result of the sale shall be utilized to provide
shelter and housing for the [transferors].” Id. at 2, ¶ Fourth.
Specifically, “[i]n the event that the premises are sold, the
Trustee shall utilize the proceeds of any such sale for the
following purposes: (A) A residence shall be established for the
[transferors]. [Transferor wife] may require custodial care. In
the event that that can be provided for in a residential setting,
then the proceeds of the sale shall be utilized in order to acquire
the premises. Any funds remaining shall be utilized to pay the
carrying charges on behalf of [transferor wife]. Any surplus funds

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husband died and six years later, in 2013, the wife died. Upon
the death of both transferors, the trust provided that the marital
home would go to their niece. Under New Jersey law, a niece is
considered a Class D beneficiary subjecting the transfer to a 15-
16% tax. N.J.S.A. 54:34-2(d).2
At issue here is a seldom discussed 1955 provision which
limits the taxation of at or after death transfers. See L. 1955,
c. 135, § 1 (codified at N.J.S.A. 54:34-1.1). The 1955 provision
provides that some transfers intended to take effect at or after
death are exempt if a complete disposition occurs more than three
years prior to death. Id. The question here is whether the
structure of the transfer created six years prior to death here
satisfies the 1955 exception, thus placing the transfer outside
the reach of the at or after death provision.
shall then be utilized for the carrying charges for any such
residence, including taxes, insurance and utilities. (B) Any
remaining funds shall be held in trust for the benefit of the
[transferors] herein. The Trustee may, in his sole and absolute
discretion, pay either the interest or principal or both for the
benefit of the [transferors]. (C) Upon the death of the
[transferors], any funds remaining in this Trust together with the
proceeds of any substitute residence purchased for the
[transferors], shall be distributed by the Trustee to [niece]. .
.” Id. Thus, the trust would still “provide a residence” for
“the lifetime” of the transferors in accordance with the express
purpose of the trust.
2 The tax is 15% up to $700,000 and 16% above $700,000.

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This matter comes before this court on cross-motions for
summary judgment. Our Supreme Court has indicated that summary
judgment provides a prompt, business-like and appropriate method
of disposing of litigation in which material facts are not in
dispute. Brill v. Guardian Life Ins. Co. of Am., 14 N.J. 520, 530
(1994). Additionally, cross motions for summary judgment
demonstrate to the court the ripeness of the matter for
adjudication. Spring Creek Holding Co. v. Shinnihon U.S.A. Co.,
399 N.J. Super. 158, 177 (App. Div. 2008).
The estate filed transfer inheritance tax returns excluding
the home. After review, the Division included the transfer of the
home to the niece as a transfer subject to the tax. The estate
paid the additional tax based upon the home’s value of $935,000
and filed the instant appeal. The estate now seeks a refund of
the tax paid. The court has jurisdiction over this appeal pursuant
of N.J.S.A. 54:33-2.
II. History and Purpose of the “At or After Death” Provision.
New Jersey imposed an inheritance tax starting in 1892. L.
1892, c. 122. The law taxed the property of the decedent
transferred at death whether by will, intestate law or otherwise.
The tax specifically included a transfer of assets “made or

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intended to take effect in possession or enjoyment after the death
of the [decedent].” Id. at § 1. In 1906, the law was amended to
tax the transfer of the property of the decedent instead of the
property itself. L. 1906, c. 228.
The current legislation has its roots in the 1909 iteration
of this legislation. L. 1909, c. 228. The 1909 version of the
law also provided that a transfer intended to take effect, in
possession or enjoyment, at or after death is subject to the tax.
Id. at § 1.
The modern provisions of the law at issue here are now
codified at N.J.S.A. 54:34-1. In particular, the law now provides
that a “transfer of property, real or personal” or “any interest
therein or income therefrom, in trust or otherwise” “intended to
take effect in possession or enjoyment at or after such death” is
taxable.3,4 Id. This provision applies to the real or tangible
personal property situated within the state and intangible
personal property wherever situated of residents, and the in-state
real or tangible personal property of non-residents. Id.
3 Also included are transfers “in contemplation of death of the
transferor.” Id. The “contemplation of death” and “at or after
death” provisions are two separate and independent bases for
taxation. In re Estate of Lichtenstein, supra, 52 N.J. at 560.
4 The transfer also must be in excess of $500. N.J.S.A. 54:34-
1.

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As discussed, the “at or after death” proviso has been a
mainstay of New Jersey law since the institution of an inheritance
tax in 1892. In fact, “[t]he ‘at or after death’ provision is a
common feature of inheritance tax statutes.” In re Estate of
Lingle, 72 N.J. 87, 93 (1976). The purpose of the provision is to
close avenues of tax avoidance. Id. at 94. The provision is
“quite broad.” Id.
In interpreting the transfer inheritance tax, the courts are
to look “to the substance rather than the form of the scheme, . .
. such as reciprocal trusts and agreements, annuities and the
like.” In re Estate of Lichtenstein, supra, 52 N.J. at 577. To
that end, “highly technical concepts of property law have no proper
place in the very practical field of taxation.” Id. at 581.
III. N.J.S.A. 54:34-1.1 Exemption
Despite the broad reach of section N.J.S.A. 54:34-1, the
estate here argues that the specific statutory language found in
N.J.S.A. 54:34-1.1 (section 1.1) adopted in 1955 exempts the
transfer from taxation since the trust was created more than three
years prior to the death of the decedent.
In particular, section 1.1 provides:

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A transfer of property by deed, grant,
bargain, sale or gift wherein the transferor
is entitled to some income, right, interest or
power, either expressly or by operation of
law, shall not be deemed a transfer intended
to take effect at or after transferor’s death
if the transferor, more than 3 years prior to
death, shall have executed an irrevocable and
complete disposition of all reserved income,
rights, interests and powers in and over the
property transferred.
[Id.]
There are a scarcity of decisions explicitly dealing with
section 1.1. Of the reported decisions, the Supreme Court has
mentioned section 1.1 twice and the tax court once.
In In re Estate of Lichtenstein, supra, the Supreme Court
only mentions section 1.1 in passing. Id. at 585. The Court had
to decide whether the “at or after death” provision applied to
transfers in which a transferor granted a life estate to another
based upon the life of an individual other than the transferor.
Id. at 562. Since the transfer was neither at nor after the death
of the transferor, nor did the transferor hold any “strings,” the
transfer was determined to not be taxable. Id. at 578.
In In re Estate of Lambert, 63 N.J. 448 (1972) the Supreme
Court considered a transferor who held an annuity which paid him
for life. Id. at 450. The annuity was purchased in conjunction
with a life insurance policy. The life insurance policy would not
have been issued but for the purchase of the annuity. Id.

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Generally, life insurance policy proceeds payable to named
beneficiaries other than the decedent’s estate, the executor or
the administrator are exempt from taxation. See N.J.S.A. 54:34-
4(f). However, the exception does not apply if the policy is an
integrated asset with an annuity. See Tilney v. Kingsley, 43 N.J.
289, 298 (1964). Some years after purchasing the annuities and
long before his death, Lambert irrevocably assigned the annuity
proceeds to charity. In re Estate of Lambert, supra, 63 N.J. at
451. Upon Lambert’s death, the Division wanted to tax the life
insurance proceeds as a transfer at or after death. Id. The Court
specifically reviewed section 1.1 and its statutory history and
determined that even though the transfer was at or after death,
the transferor completely and irrevocably disposed of the annuity
to charity more than three years prior to death in accordance with
section 1.1. Id. at 459. The Court held that “by reason of the
1955 act, transfers, as to which either the transferor retained no
interest at inception or, if he did, completely and irrevocably
disposed of the same more than three years before death, are not
subject to transfer inheritance tax as a transfer ‘intended to
take effect in possession or enjoyment at or after’ the death of
the transferor.” Id.
In Gray v. Director, Div. of Taxation, 28 N.J. Tax 28 (Tax
2014), a transferor’s home and other assets were transferred to

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trusts in which the decedent held an income interest for a period
of six years. Almost seven years after the creation of the trusts,
the transferor died. The transfer did not occur at or after death,
but one year prior to death. Id. at 40-48. This court looked to
section 1.1 in reaching the decision.
However, none of the decisions have squarely dealt with the
applicability of section 1.1 to real property transferred more
than three years prior to death, in which the transferor has the
right to live until death.
IV. Elements of Section 1.1
The estate here now urges the court to expand section 1.1 to
transfers of real property in which the transferors have the right
to live until death. The estate alleges that the transferors here
relinquished all power and control more than three years prior by
transferring the home to an irrevocable trust which provided that
the transferors could reside in the home until death. The estate
argues that the “at or after death” provision of N.J.S.A. 54:34-
1(c) is trumped by the transfer provisions of section 1.1 since
the irrevocable transfer to trust was more than 3 years prior to
the death of the transferors.

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Section 1.1 consists of a number of elements that must be
satisfied to overcome the at or after death provision of N.J.S.A.
54:34-1(c). These elements are as follows:
First, there must be a transfer of property by
deed, grant, bargain, sale, or gift;
Second, the transferor is entitled to some
income, right, interest or power in the
property transferred; and
Third, the transferor must three years prior
to death execute an irrevocable and complete
disposition of all reserved income, rights,
interest and powers in and over the property
transferred.
A. Transfer of property
First, there is not any dispute that there was a transfer of
property consisting of the transferors’ residence to the trust.
B. Transferors’ entitlement to some income, right, interest
or power.
The second issue is despite the transfer, did the transferors’
ability to remain in the home until death constitute an entitlement
to some income, right, interest or power in the property
transferred.
It must be remembered that the “fundamental purpose [of the
at or after death provision in N.J.S.A. 54:34-1(c)] is to preclude
avoidance of the transfer inheritance tax by a lifetime transfer
which is, in effect, a substitute for a substantial equivalent of

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a testate or intestate distribution.” In re Estate of Lingle,
supra, 72 N.J. at 93; Estate of Berg v. Director, Div. of Taxation,
17 N.J. Tax 256, 262 (Tax 1998).
“It is a well-established rule, venerable with age, that a
transfer inter vivos by which the donor retains a life estate in
the subject matter is a transfer intended to take effect in
possession or enjoyment at or after death.” Darr v. Kervick, 31
N.J. 476, 483 (1960). “A transfer is, of course, taxable under
the statute even though it be in form absolute, complete,
immediately effective, and direct to the donee, if in substance
and effect the donor retains or gets back for his life, the income
or enjoyment (or the equivalent thereof)”. Id. at 484. “It is
substance, rather than form, which controls, and the transfer is
subject to the transfer inheritance tax even if stated by its terms
to be absolute, if it appears that the donor in actuality retains
a life interest in the property or its income”. Id. “[I]n the
case of transfers in trust, taxability has been found where [] the
settlor retained income or some benefit for his life with remainder
over on his death.” In re Estate of Lichtenstein, supra, 52 N.J.
at 576.
“A careful review of the case law suggests that the following
factors must usually be found in order to bring any inter vivos
transaction within the reach of the statute: (1) the grantor or

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settlor must transfer some property, or interest therein, while
retaining for his lifetime some or all of the economic benefits
therefrom; (2) there must be a consequent postponement of enjoyment
on the part of the grantee, promisee or other beneficiary; and (3)
both the grantor's retention and the grantee's postponement of
enjoyment must be for a period determinable by reference to the
grantor's death.” In re Estate of Lingle, supra, 72 N.J. at 94-
95.
Here, the transferors retained life interests in the property
and the transferors did indeed live in the property until their
deaths. This retention of life interests by both transferors
postponed the niece’s enjoyment of the property until the death of
both transferors. Moreover, both the transferors’ retention and
the niece’s postponement were determined by the death of the
transferors.
“So taxability in this state under the ‘at or after death’
provision has required that the settlor retain in himself some
realistic interest, power or control or some other ‘string’ during
his lifetime, or his death must be the determinative and
indispensable event in the shifting of economic benefits and
burdens.” In re Estate of Lichtenstein, supra, 52 N.J. at 578.

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By holding the “string” of being able to reside in the
property until death, the transferors retained for themselves and
did indeed exercise the right and power to enjoy the property.
Thus, the transfer is clearly contemplated by the at or after death
provision of N.J.S.A. 54:4-1(c) as well as the second prong of
section 1.1 since the transferors here are entitled to some right
and power through possession and use of the marital home until
death.
C. Irrevocable and complete disposition three years prior.
The estate argues that the exemption criteria set forth in
section 1.1 is satisfied since the transfer of the marital home
upon creation of the trust included an irrevocable and complete
disposition of the reserved life interest. Thus, the only issue
remaining is whether transferors’ “transfer” of property to the
trust three years prior to death included an executed irrevocable
and complete “disposition” of the life estate. Both terms
“transfer” and “disposition” appear in section 1.1 and the estate
urges the court to read the terms synonymously. However, the
statutory language, the interpretation of the language by the
Director of the Division of Taxation, and the legislative history
militate against reading the terms synonymously.

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1. Statutory language.
“Ordinarily, a comparative analysis of the language of
contemporaneous statutes may, because of contrasting language
applicable to similar subject matter, be indicative of an intent
or purpose on the part of the Legislature to provide different
treatment.” Malone v. Fender, 80 N.J. 129, 136 (1979), See also,
Great Adventure, Inc. v. Director, Div. of Taxation, 7 N.J. Tax
58, 65 (Tax 1984). If the Legislature intended that a mere
transfer of the life interest be enough, it would have so stated
rather than utilizing the term “disposition.” By using the term
“disposition,” the Legislature signaled that something different
has to be done with the reserved income, rights, interests and
powers for the transfer to not be taxable. That something
different is an irrevocable and complete disposition of the
property.
A court “begin[s] by reading the words chosen by the
Legislature in accordance with their ordinary meaning, unless the
Legislature has used technical terms, or terms of art, which are
construed in accordance with those meanings.” Praxair Technology,
Inc. v. Director, Div. of Taxation, 201 N.J. 126, 136 (2009).
According to West’s Tax Law Dictionary, 1096 (2016 Ed.), a transfer
is the “[a]ct of conveying the title to property from one person
to another.” However, for tax purposes, a disposition is something

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more. [T]he term refers to any transaction which terminates an
interest in property.” Id. at 289. Thus, a disposition is more
than a transfer of legal title, it is the termination of an
interest in the property.
Additionally, courts give words in a statute their “common
acceptance and usage, but particular words may be enlarged or
restricted in meaning by their associates and the evident spirit
of the whole expression.” Sinclair v. Merck & Co., Inc., 195 N.J.
51, 64 (1998). Here, the statute indicates not merely a
disposition, but a complete disposition which signals that the
Legislature meant something more than just a mere transfer of
title.
2. Director’s interpretation.
In interpreting section 1.1, the Director of the Division of
Taxation has adopted regulations. See N.J.A.C. 18:26-5.10. There
are three general principles that must be applied in interpreting
what the Director has done in this case. First is that the
Director’s determinations are entitled to a presumption of
validity. Atlantic City Trans. Co. v. Director, Div. of Taxation,
12 N.J. 130, 146 (1953). The presumption in favor of the taxing
authority can be rebutted only by cogent evidence that is definite,
positive and certain in quality and quantity to overcome the

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presumption. Pantasote Co. v. City of Passaic, 100 N.J. 408, 413
(1985). See also Yilmaz v. Director, Div. of
Taxation, 390 N.J. Super. 435, 440, 23 N.J. Tax 361, 366 (App.
Div.), certif. denied, 192 N.J. 69 (2007). No such evidence has
been provided.
The second general legal principal is that the Director’s
regulations are presumptively valid and should receive deference
from the court unless they are inconsistent with the provisions of
the statute they interpret. Koch v. Director, Div. of Taxation,
157 N.J. 1, 8 (1999). The regulation here is consistent with the
statutory language and provides further clarity as to the statute’s
breadth.
Third, regulations are promulgated by the Director in order
to clarify and interpret a statutory enactment. Prestia Realty
Inc. v. Hartz Mountain Indus., Inc., 303 N.J. Super. 140, 144 (App.
Div. 1997). The regulation provides that a transfer is not at nor
after death if a transferor “completely and irrevocably disposes
of all of his reserved income, rights, interests and powers in and
over the transferred property including any right to possession,
use and enjoyment of the property.” N.J.A.C. 18:26-5.10. In
conformity with the statute, the regulation explains the necessity
for something more than a mere transfer of an interest and instead
requires that the transferor “disposes” of his or her “possession,

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use and enjoyment of the property” in order for the transaction
to not be considered occurring at or after death. This
interpretation and explanation of the statute is in full
conformance with the statutory purpose and is entitled to
deference. In this case, the transferors did not dispose of their
possession, use and enjoyment until vacating the property upon
death. Thus, under the regulation, the section 1.1 exemption does
not apply.
3. Legislative history of section 1.1.
“[I]f the text [of a statute] is susceptible to different
interpretations, the court considers extrinsic factors, such as
the statute’s purpose, legislative history, and statutory context
to ascertain the Legislature’s intent.” Aponte-Correa v. Allstate
Ins. Co., 162 N.J. 318, 323 (2000). “The judicial goal [when
interpreting a statute] is to carry out fairly the legislative
purpose and plan, and history and contemporaneous construction may
well furnish important light as to that purpose and plan.”
Bernhardt v. Alden Café, 374 N.J. Super. 271, 279 (App. Div. 2005).
“Statutes cannot be read in a vacuum void of relevant historical
and policy considerations and related legislation.” Borough of
Matawan v. Monmouth Cnty. Bd. of Tax., 51 N.J. 291, 299 (1960).
Helfrich v. Township of Hamilton, 182 N.J. Super. 365, 370 (App.
Div. 1981).

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The legislative history of section 1.1 confirms that the
purpose of the law is not to take transfers three years prior to
death in which the transferor retains a life interest outside the
realm of taxability. Rather, the purpose of the section 1.1 is to
except from taxability at or after death transfers in which the
transferor has relinquished all benefit of the property including
a life interest or life estate at least three years prior to death.
Prior to 1955, any transfer occurring at or after death, even
one in which the transferor had no interest, was subject to the
transfer tax. As then expressed by the New Jersey Supreme Court
in 1950, “[t]he test for determining when the transfer takes effect
in order to fall within the [at or after death] theory for taxing
purposes is whether possession or enjoyment of the property is
intended to take effect at or after the transferor’s death,
irrespective of the time when title is to vest. The important
question is whether the shifting of the possession and enjoyment
of the subject matter of the succession is dependent upon the
settlor’s death. Is his death a determining factor in the
devolution of the possession and enjoyment of the estates granted?
The thing taxed under our transfer inheritance tax statute is the
transfer of the interest or property withheld from possession and
enjoyment until the transferor’s death.” Schroeder v. Zink, 4
N.J. 1, 5-6 (1950).

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The law prior to 1955 further provided that “a separately and
specifically expressed remainder interest, where such remainder
interest is expressed to commence at a time at or after the death
of the donor, is taxable under our statute; notwithstanding that
by the very same act or instrument of transfer the donor
simultaneously transfers all other interests in the same property
and thereby completely and presently divests himself of all
interest or possibility of interest in the property as a whole.”
In re Estate of Hollander, 123 N.J. Eq. 55, 56 (Prerog. Ct. 1938).
In Hollander, supra, a trust was created by a husband which
paid the income to the wife for the husband’s lifetime, and then
the principal to the wife upon the husband’s passing. Id. at 53-
54. There the court held the transfer of the principal which was
tied to the husband’s death was a taxable transfer despite the
fact that the husband previously divested himself of all interest
in the property. Id. at 56.
In other words, the law prior to 1955 provided that “[t]he
criterion of taxability . . . is whether there is an estate passing
at or after the death of the donor.” Hartford v. Martin, 122
N.J.L. 283, 286 (E. & A. 1939). In Hartford, the decedent owned
shares of stock he conveyed to a trust to pay the income to him
for life and after death to his children. Hartford v. Martin, 122
N.J. Eq. 489, 490 (Prerog. Ct. 1937), aff’d, 120 N.J.L. 564 (Sup.

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Ct. 1938), aff’d, 122 N.J.L. 283 (E. & A. 1939). Two years later,
he assigned the income to his children. Id. The prerogative court
determined that the separately stated remainder interest which
passed at the death of the decedent would come within the express
terms of the statute as being a transfer taking effect in
possession or enjoyment after the death of the decedent. Id. at
493-94.
That is where the law stood on the eve of the 1955 amendment
which became section 1.1. In the early 1950’s, a wealthy New
Jersey family had five inter vivos trusts. In re Estate of
Lambert, supra, 63 N.J. at 456. In four of the trusts, the grantors
retained an income or other interest. Id. Later, the grantors of
the four trusts assigned their retained income or other interest
to either charities or to a person not otherwise entitled to the
remainder. Id. With the fifth trust, the grantor retained no
interest with the income payable to one person until death of the
grantor and then the remainder would pass to another person. Id.
Thus, the wealthy family with five trusts not only wanted to
avoid federal estate taxation, which at that time was recently
amended to preclude taxation in such circumstances, but also wanted
to avoid the New Jersey Transfer Inheritance Tax as well. Id. at
454-456. After some hand-wringing, the Director of the Division of

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Taxation supported the measure which was to become Section 1.1.
Id. at 457.
The statement annexed to the bill indicated:
This bill is designed to cure a discrepancy
between the New Jersey Transfer Inheritance
Tax Law and the Federal Estate Tax Law and the
Estate Tax Laws of many of our sister states;
notably New York and Pennsylvania. New Jersey
now taxes trusts merely because the death of
a grantor causes a shift in beneficial
interest from one person to another. The tax
is asserted even though the grantor has
retained no beneficial interest in, and no
power over, the property. Such trusts are
exempt under Federal and New York statutes and
under the Pennsylvania Statute as construed by
the cases. The proposed act eliminates this
unfairness to residents of New Jersey in
comparison to residents of neighboring states.
[Id. at 452.]
The Legislature’s intent in adopting this provision was to
exempt transfers occurring at or after the transferor’s death in
which the transferor had given up any and all interest at least
three years prior to death. In other words, the only involvement
of the transferor was that his or her death served as a trigger as
to when an interest would transfer. The Legislature certainly was
not considering by any stretch of the imagination that it was
exempting at or after death transfers in which the transferor
retained a life interest. Transfers in which a transferor kept a
life interest had long been subject to taxation. See e.g., Carter

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v. Bugbee, 92 N.J.L. 390 (E. &. A. 1919). The Legislature merely
sought to fix the situation in which the transferor had actually
given all interest away and had not retained any “strings”. In re
Estate of Lichtenstein, supra, 52 N.J. at 578. The Legislature was
of the opinion that once the strings were cut by the transferor
with a complete and irrevocable disposition of retained interests,
that taxation would not occur.
Overall, based upon the plain language, the Director’s
regulation and the legislative history, the death of the
transferors here resulted in an at or after death taxable transfer
that was not exempted by section 1.1.
V. Transfer of Husband’s Interest.
The estate in the alternative argues only half the interest
in the home is taxable. The trust was created in 2007. With the
creation of the trust, there were three interests. The remainder
interest which the niece received at or after the death of both
husband and wife, the life interest of husband and the life
interest of wife. Husband passed in 2007 and his interest
extinguished. Wife passed in 2013 and her interest extinguished.
Thus, per the express terms of the trust, the niece did not take

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the property until after the death of husband and at the death of
wife.
Thus the transfer to the niece is fully taxable under the at
or after death provision of N.J.S.A. 54:34-1(c). As to the section
1.1 exemption, the trust was established only a few months prior
to husband’s death. Without looking any further, section 1.1’s
requirement that any disposition must be three years prior to death
results in section 1.1 not being applicable. Moreover, even though
wife created the trust more than three years prior to death, the
transfer to the niece is not exempt for the reasons stated
elsewhere in this opinion.
VI. Conclusion.
In conclusion, for the foregoing reasons, this court
determines that the transfer of the marital home which was placed
in trust is subject to the New Jersey Transfer Inheritance Tax.
The motion for summary judgment of the estate is denied and
the motion for summary judgment of the director is granted. An
order will follow.