NJ Executor Guide

When Part of an Estate Can’t Be Valued Yet

Some assets refuse to hold still: a royalty stream, a trailing commission, a share that depends on something that hasn’t happened. New Jersey has a specific answer for them, and almost nobody writes about it.

Short answer: when a transfer is subject to a contingency that makes a definite tax calculation impossible, New Jersey doesn’t make the estate guess or wait forever. The Division will suggest a compromise — one negotiated payment that finally disposes of the tax — and the return has dedicated lines for it: the contingent amount on Line 8, the compromise on Line 15, and tax on anything that has actually vested on Line 16.

The problem this solves

Inheritance tax is calculated on value passing to a person at a rate set by their relationship. That works when you can answer two questions: how much, and to whom. Some assets won’t answer either one at the date of death:

An income stream that keeps paying — trailing commissions, residuals, royalties — with no way to know the total.
A remainder interest that only vests if some future event happens.
A transfer subject to a power of appointment, where the eventual recipient (and therefore the rate) isn’t settled.

An executor facing one of these is stuck between two bad options: guess at a number and risk being wrong, or leave the estate open indefinitely waiting for certainty that may take years.

New Jersey’s answer: the compromise

The Division’s instructions address it directly. Where a transfer is “subject to a contingency or condition which renders a definite determination of the Transfer Inheritance Tax due impossible,” the Division “will suggest a compromise of the tax based upon immediate payment and final disposition of the tax” (N.J.A.C. 18:26-2.14; N.J.S.A. 54:36-5 and 54:36-6).

Read the phrase final disposition carefully — that’s the whole value of the mechanism. It converts an open-ended, unknowable exposure into one settled number, so the estate can actually close.

How it appears on the return

Line	What goes there
Line 8	The contingent amount included in the net estate. Because Line 9 (Balance of Estate) is Line 7 minus Line 8, the contingent slice is deliberately carved out of the ordinary class-rate math.
Line 15	The compromise tax on that Line 8 amount. An estate may propose its own figure — the instructions say to “include a rider setting forth full computations and details” and note that following this procedure “may speed the auditing of the decedent’s return.”
Line 16	Contingent tax, where all or part of the contingent amount has actually vested in a beneficiary. Again with a rider showing the details and the computation.

The rider is the part worth noticing. The state is inviting a documented proposal rather than waiting to impose one — the same “show your work” posture that makes deductions and the rest of the return go through in one pass.

Two interest rules that cut opposite ways

Contingent interests have their own interest clock, and it contains one genuine trap:

The trap. On a transfer subject to a contingency or power of appointment, a payment made more than two months after the contingency occurs or the property vests carries interest at 10% per year, running from the vesting date — not from when anyone got around to telling the estate. If you are holding a contingent interest, the day it vests starts a short clock.
The relief. Where a contingent remainder vests after the decedent’s death but before the statutory interest period runs out, interest on the contingent tax “does not start to accrue until eight months from the date of death of the original decedent” — the same 8-month line that governs the rest of the return.

Why an executor should know this exists

Most estates never touch these lines. But an executor who has one of these assets and doesn’t know the machinery exists tends to do one of two costly things: hold the estate open for years waiting on a number, or distribute anyway and inherit a tax problem that surfaces later. Knowing there is a defined path — carve it out on Line 8, propose a compromise with a rider, close the estate — changes the question from “how do I wait this out?” to “what number do I put in front of the Division, and who helps me build it?”

This is where you hire someone. Everything above is what the state provides. Valuing a contingent interest and proposing a compromise figure is genuine professional work — an estate attorney or a CPA experienced with New Jersey inheritance tax should build the rider and the number. Bring them the asset, the documents, and this vocabulary; don’t bring them a figure you guessed at.

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Frequently asked questions

What is the New Jersey compromise tax?

It is the mechanism the Division of Taxation uses when a transfer is subject to a contingency or condition that makes a definite determination of the inheritance tax impossible. Rather than leaving the tax unresolved, the Division will suggest a compromise based on immediate payment and final disposition of the tax, under N.J.A.C. 18:26-2.14 and N.J.S.A. 54:36-5 and 54:36-6.

What is a contingent interest in an estate?

Broadly, a share whose amount or recipient cannot be determined at the date of death — for example an ongoing income stream such as royalties or trailing commissions, a remainder that vests only if a future event occurs, or a transfer subject to a power of appointment where the eventual recipient and therefore the tax rate is unsettled.

Where do contingent amounts go on the IT-R?

Line 8 of the Summary Page carries the contingent amount included in the net estate, and because Line 9 subtracts Line 8 from Line 7, that portion is carved out of the ordinary class-rate calculation. Line 15 carries the compromise tax on the Line 8 amount, and Line 16 carries contingent tax where all or part of the contingent amount has actually vested in a beneficiary.

Can an estate propose its own compromise figure?

The instructions contemplate it. If you wish to compute a compromise for the Division's review, you include a rider setting forth full computations and details and enter the proposed amount on Line 15 — and the instructions note that following this procedure may speed the auditing of the return. Building that figure is professional work for an attorney or a CPA experienced in New Jersey inheritance tax.

When does interest start on a contingent interest?

Two rules apply in opposite directions. On a transfer subject to a contingency or power of appointment, a payment made more than two months after the contingency occurs or the property vests bears interest at 10% per year running from the vesting date. Separately, where a contingent remainder vests after the decedent's death but before the statutory interest period expires, interest on the contingent tax does not begin to accrue until eight months from the original decedent's date of death.

Why would an estate want a compromise rather than waiting?

Because the compromise is described as a final disposition of the tax. It converts an open-ended and unquantifiable exposure into one settled number, which lets the estate close instead of remaining open while everyone waits for a contingency to resolve — something that can take years.

General information, not advice. ExecutorPilot is an educational resource — not a law firm or a tax advisor — and this page describes a procedure the State of New Jersey provides; it does not evaluate your estate or recommend a course of action. Contingent interests are among the most technical areas of inheritance tax. This page reflects the NJ Division of Taxation's published IT-R form and instructions as reviewed August 2026. Valuing a contingent interest or proposing a compromise figure should be done with a licensed New Jersey attorney or a CPA experienced in New Jersey inheritance tax.