Publications — Page 7 of 47 — Lindabury, McCormick, Estabrook & Cooper, P.C. Firm News & Events

Advantages of a Revocable Living Trust for Residents of NJ

Published on: June 7, 2022 | by Mary Patricia Magee

It has been a routinely held belief among estate planners that a Revocable Living Trust is not necessary for New Jersey residents. The purpose of this article is to identify those situations in which a Revocable Living Trust can be beneficial for residents of New Jersey.

Most commonly, we hear that assets held in a Revocable Living Trust during one’s lifetime, will, at the time of death, avoid probate. Fortunately for New Jersey residents, probate is not an onerous, time-consuming, or expensive prospect. The probate process in New Jersey, which gives legal significance to the will and clothes the executor with court-approved authority, is a straightforward process often costing less than $300 and requiring little paperwork. It takes about two to three weeks to obtain Letters Testamentary, which formally authorize the executor to transact business on behalf of the estate. Other reasons often cited as benefits of a Revocable Living Trust (RLT) are privacy regarding one’s estate, and the elimination of death taxes. These reasons do not apply in New Jersey, because our probate process does not require an inventory disclosing estate assets, nor an accounting with the court listing estate income, expenses, and distributions to the beneficiaries. As for the assertion that RLTs save death taxes, this is simply not true, as all assets in an RLT are considered to be in the control of the grantor (the person who created the trust), and therefore includible in the grantor’s taxable estate.

There are, however, circumstances where an RLT is appropriate for a New Jersey resident. For example, an RLT can be a better way to:

A Basic Introduction To Charitable Giving

Published on: June 7, 2022 | by David G. Hardin

A number of firm clients are interested in charitable giving, whether made during lifetime or upon death. The reasons behind the differing approaches are varied.

One of the benefits of a lifetime gift to charity is the immediate income tax deduction that may be available.¹ Unlike lifetime gifts to charity, deathtime gifts are not deductible for income tax purposes, although they may be deductible for estate tax purposes.² The federal estate tax is applicable to taxable estates in excess of $12.06-million, and as a result, generally taxpayers will benefit more from a lifetime gift to charity than a deathtime transfer.

Despite the potential tax benefits available to taxpayers through life gifts, there is a reason why taxpayers might prefer to make a gift at death rather than during lifetime. During lifetime it is difficult for an individual to predict how much they will need to support themselves. For that reason alone, many clients opt to provide their charitable gifts after death.

Karolina Dehnhard Speaks to the New Jersey Morning Show About Efforts to Help the Ukrainian Orphan Issue in Poland

Published on: April 8, 2022 | by Lindabury, McCormick, Estabrook & Cooper, P.C.

While the war in Ukraine rages on, Good Samaritans are doing everything they can to help its people. Karolina A. Dehnhard, partner in Lindabury’s Family Law Group, speaks about her involvement with efforts to help Ukrainian orphans in Poland as a return guest on the New Jersey Morning Show.

As a Divorce Lawyer, I deal with family law issues all the time and some of the sensitive issues the we deal with are those of children, parenting, adoption, what happens with the kids. Imagine how lucky children are when they have even one parent. Now think about a situation where you have hundreds, if not, thousands of children living in over 650 orphanages in Ukraine, some of which have now been destroyed by the war, who have no one. So what we found over the last several weeks, is that many of these orphans have come into Poland and are now in our orphanages or care centers in our country but with that comes all these questions. Who’s responsible for these kids? Where’s the jurisdiction? Is it with Ukraine? Is it with Poland? We have now learned that adoptions have been suspended until the Russian war is over. So there are so many things to talk about, and one of the things we are going to do as lawyers, as judges, as philanthropists, is heading over there to lend a helping hand.

New Jersey’s Amendments to the Law Against Discrimination Protect Private Sector Workers Over the Age of 70

Published on: April 4, 2022 | by Lindabury, McCormick, Estabrook & Cooper, P.C.

New Jersey has one of the most comprehensive statutes protecting employees against discrimination in the workplace. On October 5, 2021, Governor Murphy signed legislation expanding these protections even further by amending New Jersey’s Law Against Discrimination (“NJLAD”) to prohibit private-sector employers from discriminating against employees over the age of 70. Specifically, the legislation eliminates a provision of the NJLAD that previously permitted employers to refuse to hire or promote workers over the age of 70. It further expands the remedies available to an employee who is forced to retire due to age.

History of the NJLAD

The NJLAD, originally enacted in 1945, prohibits an employer from refusing to hire or employ, fire, or otherwise discriminate against an individual in compensation or other terms, conditions or privileges of employment based on the individual’s protected status. While not included in the original list of protected classes, in 1962 the NJLAD was amended to recognize age as a protected status. In 1985, the NJLAD was amended again to clarify that while employers were prohibited from terminating or demoting employees based on their age, they were nonetheless allowed to “refus[e] to accept employment or to promote any person over 70 years of age.” The 1985 amendment also limited the remedies available to employees forced to retire as a result of age to back pay only. While New Jersey continued to broaden the NJLAD and expand protections to a number of groups over the following years, the limited protections against age discrimination were never modified, thereby placing it on separate, inferior footing to the State’s other protected categories.

New Jersey Continues Its Aggressive Crack Down on Misclassification Through the Issuance of Stop-Work Orders

Published on: March 21, 2022 | by Kathleen M. Connelly

Since early 2020, New Jersey has passed a series of legislation aimed at identifying and penalizing businesses for misclassification of employees as independent contractors. On July 8, 2021, New Jersey enacted A5890, which empowers the Commissioner of the Department of Labor and Workforce Development (“DOL”) to issue broad stop-work orders to employers in violation of wage and hour laws that extend across “all of the employer’s worksites and places of business.” As set forth more fully below, we are beginning to see the DOL invoking this extraordinary power to effectively shut down an employer’s business in its entirety.

A5890 Stop-Work Orders and Injunctions

Prior to the passage of this bill, the Commissioner’s shut-down orders could only extend to the specific location where the wage and hour violation occurred. Under A5890, however, the Commissioner may now issue stop-work orders that extend across “all of the employer’s worksites and places of business.” Moreover, these stop-work orders can remain in effect until the Commissioner determines that the employer is compliant and has paid any penalties due. Employers must pay workers affected by a stop-work order for the first ten days of work lost due to the order, and the DOL can impose up to $5,000 in civil penalties for each day the employer continues to operate the business in violation of the stop-work order.

Lindabury Attorneys Named 2022 New Jersey Super Lawyers® and New Jersey Rising Stars®

Published on: March 18, 2022 | by Lindabury, McCormick, Estabrook & Cooper, P.C.

We are proud to announce 4 of our attorneys have been selected to the 2022 New Jersey Super Lawyers® list, and 2 have been selected to the 2022 New Jersey Rising Stars® List. This recognition in The Super Lawyers© 2022 and Rising Stars® 2022 lists, identifies each attorney for their leading legal talent in their corresponding practice areas.

The following Lindabury attorneys were named as Super Lawyers honorees:

David G. Hardin – Estate & Probate

The Impact of Divorce on Estate Planning and Wealth Management – Webinar

Published on: March 17, 2022 | by Lindabury, McCormick, Estabrook & Cooper, P.C.

Smaldino v. Commissioner, an Estate Planning Cautionary Tale

Published on: February 22, 2022 | by Lindabury, McCormick, Estabrook & Cooper, P.C.

A recent Tax Court case, Smaldino v. Commissioner, T.C. Memo. 2021-127 (November 10, 2021) emphasizes the need to ensure that the phases of transactions are completed properly, and certain formalities are observed in order for an estate planning strategy to be successful. It is important to be careful even (and perhaps especially) in the case of emergency planning (i.e., planning because of health scares or impending tax law changes).

In the Smaldino case, rushed planning caused a tax deficiency that may have been avoided with a team of advisors working together to ensure that Mr. and Mrs. Smaldino’s plan was properly implemented.

Mr. and Mrs. Smaldino were married in 2006. Mr. Smaldino had 6 children from a prior marriage and 10 grandchildren. Mr. Smaldino was a CPA turned real estate investor, with a real estate portfolio worth approximately $80 million. Mrs. Smaldino held a master’s degree in economics and had worked in her husband’s business for many years.

Increased Tax Exemptions for 2022

Published on: February 22, 2022 | by Anne Marie Robbins

The federal estate and gift tax exemption (known as the “basic exclusion amount”) has increased to $12.06 million per taxpayer in 2022. The exemption in 2021 had been $11.7 million. The increase means that in 2022, an individual can make gifts during life or at death totaling $12,060,000 without incurring gift or estate tax; a married couple can transfer $24,120,000 of assets. The annual gift tax exclusion has also increased, to $16,000 per donee (or $32,000 if spouses elect gift-splitting).

The gift tax annual exclusion for gifts to non-citizen spouses has also increased in 2022, to $164,000.

Note that the estate and gift tax exemption is slated to be reduced to $5 million, indexed for inflation, as of January 1, 2026. With this known reduction in the exemption approaching, we recommend consulting with your estate planning attorney to discuss possible strategies to take advantage of the large exemption presently available.

Disability Planning with ABLE Accounts Made More Attractive in 2022

Published on: February 22, 2022 | by Elizabeth Engert Manzo

While many may be familiar with Special Needs Trusts, some are still not familiar with tax-free Achieving a Better Life Experience (ABLE) savings accounts which were created under a 2014 federal law and currently available in New Jersey (and 46 other states). Funded correctly, ABLE accounts permit disabled individuals and their families to save money for disability-related expenses without compromising eligibility for needs-based benefits such as SSI, Medicaid, and other education, housing, health and food stamp benefits (such as FAFSA and SNAP). To establish an account, the designated beneficiary (and owner) of an ABLE account must be legally blind or have a medical disability that occurred prior to age 26. While interest earned on the account is tax-free, ABLE accounts with assets up to and including $100,000 are disregarded as a resource for SSI purposes. Distributions from the ABLE account may be made only to or for the benefit of the disabled individual for “qualified disability expenses,” which broadly include education, housing, transportation, assistive technology, health and wellness, legal and funeral expenses, etc. Starting in 2022, and for the first time in four years, annual contributions to an ABLE account increased to $16,000 (matching the 2022 annual gift tax exclusion amount). While ABLE account balances are subject to Medicaid estate recovery upon the death of the disabled beneficiary, in certain disability planning circumstances the utilization of an ABLE account, either alone or in conjunction with a Special Needs Trust, may be an integral part of smart disability planning.