In different states, different rules apply. That is why a local estate planning attorney is the best resource for these kinds of questions.
Here’s a somewhat complicated scenario, but one that is not uncommon today. A man marries three times. Two children are born to his first wife, he next marries a woman with two children who become his stepchildren, and then, in his third trip down the aisle, he marries a woman with no children. What, if any obligations do his stepchildren (from the second marriage, if case you’ve lost track) have, when it comes to his estate?
In New Jersey, his stepchildren are considered Class A beneficiaries, even though he has remarried. That’s the answer from nj.com’s recent article, “I've had three marriages. Will my stepchildren owe the inheritance tax?” As Class A beneficiaries, they can receive transfers at death with no inheritance tax.
The inheritance tax is levied on some inheritances, but not all of them. Whether you’re subject to the tax is based on your relationship to the decedent (the person who died).
Only six states still have an inheritance tax: New Jersey, Nebraska, Iowa, Kentucky, Maryland, and Pennsylvania.
Class A beneficiaries include a spouse, civil union or domestic partner, parents, grandparents, children (including adopted children), and their descendants, stepchildren and a mutually-acknowledged child as defined in the statute.
However, step-grandchildren aren’t Class A beneficiaries. There is some legislation that’s been introduced to make them Class A beneficiaries.
A stepchild is defined by New Jersey statute as "a child of the surviving, deceased or former spouse who is not a child of the decedent."
The law doesn’t say the decedent must not remarry in order for the child of the former spouse to remain a stepchild. Unlike other states like Iowa—where the stepchild's status derives from the marriage and thus ends on divorce—New Jersey’s definition says that the child of a former spouse remains a stepchild and thus a Class A beneficiary.
Therefore, based on the scenario at the top, it looks like the children from Marriage No. 2 are still considered Class A beneficiaries.
Consideration should also be given to qualification as a mutually-acknowledged child, if the decedent, for not less than 10 years prior to the transfer, stood in a mutually acknowledged relation of a parent, as long as the relationship started prior to the child's 15th birthday and was continuous for 10 years thereafter.
Inheritance taxes can become a complicated depending upon your state of residence. You’ll definitely want to sit down with an estate planning attorney every time you marry, especially if there are children involved. The estate planning attorney will be able to advise you about the inheritance and estate tax obligations for your spouses, children and stepchildren.
Reference: nj.com (February 21, 2019) “I've had three marriages. Will my stepchildren owe the inheritance tax?”