In its recent decision, Rucksapol Jiwungkul, as Executor of the Estate of Maurice R. Connolly, Jr. v. Director, Division of Taxation, 450 N.J. Super. 257 (App. Div. 2017), the New Jersey Superior Court Appellate Division affirmed the holdings of the Tax Court, which sided with the Division of Taxation (“Division”) and upheld its determination that domestic partners are not eligible for the estate tax marital deduction available to couples who marry or enter into civil unions.

The appeal involved a claim for refund filed on behalf of the estate by appellant Rucksapol Jiwungkul (“Jiwungkul”). Jiwungkul and the decedent were same-sex domestic partners, having registered as such under New Jersey’s Domestic Partnership Act (“NJDPA”) years before the decedent passed away. The two opted not to enter into a civil union but intended to marry. Unfortunately, the decedent passed away before they could wed.

Following the decedent’s passing, Jiwungkul filed New Jersey inheritance and estate tax returns with the Division on behalf of the estate. As the decedent’s domestic partner, Jiwungkul claimed the spousal exemption under the New Jersey inheritance tax but, consistent with the terms of N.J.S.A. 26:8A-2(c)-(d) of the NJPDA, did not claim a marital deduction for the New Jersey estate tax and instead paid $101,040.72 in estate tax.

Shortly after filing both returns, Jiwungkul filed an amended estate tax return. This time, however, Jiwungkul claimed the estate tax marital deduction for all of the property he inherited and sought a full refund of the estate tax previously paid.  The Division denied Jiwungkul’s claim for refund, stating, “Please be advised that a Domestic Partner receives the Class A exemption for Inheritance Tax purposes [,] however, a Domestic Partner does not receive the Marital Deduction for Estate Tax purposes.” Consequently, Jiwungkul filed suit in the Tax Court.

The Tax Court affirmed the denial of the refund, and Jiwungkul appealed.

On appeal, Jiwungkul argued that the NJPDA violates the equal protection afforded by Article I, Paragraph 1 of the New Jersey Constitution and that there was no rational basis for different marital deductions under New Jersey’s inheritance and estate tax laws.

The court rejected Jiwungkul’s arguments. Adopting the reasoning of the Tax Court, the Appellate Division concluded that while the legislature extended certain tax benefits to same-sex registered domestic partners under the NJDPA the estate tax marital deduction was not one of those benefits.  The court further observed that, absent “extraordinary circumstances,” its job was to enforce the NJDPA as written, not rewrite it, especially where Jiwungkul and the decedent had access to and other same-sex couples continue to have access to all the benefits and rights of marriage through marriage and civil unions.  Therefore, the NJDPA passed constitutional muster.

Should you have any questions regarding the holdings in Jiwungkul or the New Jersey estate or inheritance taxes and how they may or may not impact your estate, please feel free to contact our office.

By: Tim Horn, Esquire
Associate at Brown & Connery, LLP