By Lauren Wanko
Correspondent
It’s harvest season at Sharrott Winery. Owner Larry Sharrott prefers to focus on the grapes, but he’s got something else on his mind too — the estate tax his children may be saddled with after they inherit his vineyard.
“In 20 years you know when they might be getting, receiving this land, who knows what the property will be, the value of the business. At that point in time, the tax burden could be too much for them to continue farming the land,” Sharrott said.
New Jersey imposes both an estate and an inheritance tax, which applies to the transfer of assets given after someone dies. Certain beneficiaries are exempt from the inheritance tax depending on their relation to the deceased — like spouses, parents and children — but Larry’s kids would have to pay an estate tax for any assets they inherit over $675,000.
“There could be major dollar signs. Farms in the state of New Jersey have a particular problem because land has value and it’s not necessarily liquid, it’s not cash. Nine months after the date of death, estate taxes are due to the state of New Jersey and you have to have the cash to make that payment,” said attorney Andrew Mackerer.
Since property is valued on the day of death for estate tax purposes, Mackerer says there’s no telling what that amount will be.
“If you have 40 acres of land, that land’s gonna have a value that may be higher for development reasons, not for agricultural reasons, and so for tax purposes, it could be valued very high relative for the value it has for farming,” said Mackerer.
Sharrott Winery’s sprawled across 34 acres in Winslow Township.
“We’re lucky enough here that we’re actually in an agriculturally zoned area, but really if it doesn’t get passed down to my children or remain as an active farm, it could become houses,” Sharrott said.
The grape-grower worries about the Garden State’s farms.
“Farmland is disappearing in the state at a rapid pace. The taxes on the lands when they’re passed is just another reason that farmland is going away,” he said.
Sharrott says if farmland disappears in New Jersey, it could slowly destroy the Garden State’s wine industry because so many growers rely on each other for grapes.
Sharrott Winery’s Vidal Blanc and Cabernet are grown on or in nearby vineyards.
“Bottom line if these two vineyards didn’t exist, we’d have a difficult time having both of these varieties for sale in our tasting room,” Sharrott said.
Mackerer insists estate planning is vital.
“There are absolutely legal ways to avoid both the inheritance tax and the estate tax. Certain methods work for one tax and not the other. There’s gifting, trusts, 529 plans,” said Mackerer.
Sharrott just recently began planning his own estate in the hopes the winery will become a family tradition for generations to come.