Tomorrow is a New Day in New Jersey

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New Jersey. The Garden State. The land of extremely high taxes, corrupt politicians, and (often) broken roads. But at least we have the second cheapest gas in the coun–wait, what?

Is our gas tax going up tomorrow?

On October 23, 2016, Chris Christie signed legislation which raises our gas tax by 23 cents per gallon. If you live in the Garden State, then your gas bill will go from the second lowest in the country to the seventh highest.

Why do we live here again? It must be the weather!

There is a saving grace to this legislation, and it directly impacts your estate plan.

First, let’s discuss the new law. The “gas tax bill” calls for a 23 cents per gallon increase. In total, our gas tax will be 37.5 cents a gallon. The tax increases are supposed to generate $1.23 billion a year for the Transportation Trust Fund.  According to the American Automobile Association, this will cost the average driver about $170 more a year.

That’s the bad news. And for people like me who drive all the time, it’s very bad news.

But for my estate planning clients, it’s a Game Changer.

In exchange for the gas tax increase, our governor negotiated a raise to the estate tax. As I’ve written before, New Jersey currently has the worst estate tax in the country, with an exemption of $675,000. This means that for estates over $675,000, the amount of tax owed to New Jersey could get as high as 16% (in the most extreme cases). If you own a home and an insurance policy and a few retirement assets your kids will probably have to pay something to New Jersey.

However, that seems to be changing. In exchange for the raise in the gas tax, the New Jersey estate tax exemption will be raised from $675,000, to $2,000,000 in 2017, and eventually fully repealed in 2018.

This is huge. I can’t tell you how many times I meet with clients who do not want to leave New Jersey, but they feel compelled to leave because they do not want our legislature getting their hard-earned money.

According to NJ.com, about 3,500 estates are subject to the estate tax each year. The richest 94 estates paid an average of $1.2 million. The non-partisan New Jersey Office of Legislative Services has estimated that the estate tax elimination should decrease the budget by $16 million in 2017, $116 million in 2018, and $320 million in 2019.

What those numbers do not account for are all the people (many of my clients included) who have left the state because of our crazy estate tax. My hope is that, what New Jersey loses in estate tax, it will gain in income tax. I can personally think of dozens of clients who will now stay in New Jersey because of estate tax change.

There is more good news. The Earned Income Tax Credit will get a rise from 30% to 35% (the federal level). For retirees, the news is also positive. Currently, a married couple who files jointly can exclude the first $20,000 in retirement income from state income taxes. The gas tax bill increases that number to $100,000 for married filing jointly, $75,000 for individuals, and $50,000 for married filing separately. There is also another tax exemption for veterans.

A question I’ve been getting a lot – do I need to change my documents? Yes, and no. If your estate plan is older than 10 years, you probably should have someone look at your plan immediately. Older plans often forced people to set aside money (in a Credit Shelter Trust) to save on New Jersey estate taxes after the death of the first spouse. But if there is no New Jersey estate tax, then there is no reason to make your money harder to access.

On the other hand, none of my clients have to change their plans because we made setting aside the money in a Credit Shelter Trust an option, but not the only option. Many other attorneys have done the same thing, which is why you may or may not be OK. If you would like me to take a look at your plan (for free) send me an email and I’ll let you know if you’re covered.

As I write this on October 31, 2016, I know that tomorrow we will all wake up to a new day in New Jersey. If you drive you will suffer, but your children and heirs will not. Just another day in the Garden State!

If you or someone you know wants to make sure your estate plan is prepared for the estate tax situation, please feel free to call us at (908) 236-6457, or email me at alec@bmcestateplanning.com.

Five Unusual Will Requests

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Five Unusual Will Requests

A will is simply a document that explains your final wishes. Most last will and testaments leave instructions such as how earthly remains should be handled, what assets should go to whom and what will become of the deceased’s estate.

However, while these will requests are common, many testators leave very specific and sometimes unusual instructions for the living.

Following are five will requests that are anything but ordinary:

1. William Shakespeare — When the playwright passed away in 1616 he bequeathed in his will something a bit odd to his wife — his second best mattress/bed. Now, in the 16-1700s, good beds were hard to find (think bedbugs, hay, lice) and leaving a bed or mattress to an heir was commonplace. But leaving your second-best bed? Strange.

2. Janis Joplin — With her unmistakable blues voice and reputation for heavy drinking and drug use, Janis Joplin was truly a rock star. In fact, a mere two days before her death she updated her will and set aside $2,500 to be exclusively used on a posthumous party for her friends at her favorite bar in San Anselmo, California.

3. Fredric Baur — Once you pop, you can’t stop! Fredric Baur invented the Pringles can for Proctor & Gamble in 1966 and he was so proud of his creation that he requested his cremated remains be buried inside of one. When Baur passed away in 2008 after a long battle with Alzheimer’s disease, his sons honored his wish and filled an original flavor Pringles can with their father’s ashes.

4. Robert Louis Stevenson — Perhaps one of the most interesting will requests was made by Treasure Island author Robert Louis Stevenson. Stevenson had a longtime friend who frequently lamented that her birthday was the same day as Christmas and therefore, she felt cheated out of her birthday. To spare her any more years of grief, Stevenson left his birthday, November 13 to his friend Annie H. Ide.

5. Mark Gruenwald — Unless you’re a Marvel Comics fan, you’ve probably never heard of Mark Gruenwald. Yet unless you’ve been living in a cave, you undoubtedly know of the two superheroes he dedicated his life to — Captain America and Ironman. When he passed away in 1996, Gruenwald’s will requested that his ashes be mixed with ink and used to print new comics. It is said that Marvel fulfilled his wish.

These are only a few of the many creative and unusual will requests that people have made. If you live in Hunterdon or Union Counties and need assistance drafting your unique will or handling any other aspect of estate planning, contact Alec Borenstein, Esq., by email at alec@bmcestateplanning.com, or call 908-236-6457 today.

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