Uniform Trust Code Enacted
On January 19, 2016, Governor Christie signed the new Uniform Trust Code into law as P.L. 2015, c. 276. The new law will take effect on July 17, 2016. The new law, based in part on model legislation prepared by the Uniform Law Commission, supplements and revises New Jersey’s existing laws concerning trusts. Many of the provisions of the new Uniform Trust Code are default rules that will only apply if the provisions of the trust instrument fail to adequately address a particular issue. Some important new provisions include: specification of the rules of trust that are not subject to override in the trust’s terms, detailed rules in connection with the representation of beneficiaries, rules concerning trust modification and termination which allow greater flexibility and an article containing special rules relating to revocable trusts.
Renewed Interest In Making Changes to New Jersey Estate and Inheritance Taxes
Governor Christie’s recent call for a repeal of New Jersey’s estate tax in his January State of the State address is expected to trigger debate over state tax policy that will probably intensify once Christie proposes a new state budget later this month. New Jersey’s estate tax is levied on a resident’s amassed wealth upon death if the estate is larger than $675,000. New Jersey also has an inheritance tax the applicability of which depends on how closely the heir is related to the decedent and the size of the inheritance. Many believe that New Jersey’s estate tax is too onerous, impacting even modest, middle-class families. Others believe the estate tax prevents the rich from hoarding wealth and fear that a change would lead to funding reductions for state programs that benefit the poor. Some even want to see a repeal of the inheritance tax as well, believing the tax is discriminatory and regressive. Recently, Assemblyman Joe Lagana has introduced a bill, A611, that would boost the current threshold for the estate tax from $675,000 to $1.5 million and that would limit the application of the inheritance tax. There has also been talk about a bipartisan deal whereby Republication lawmakers would support an increase in the gas tax if Democrats either agree to cut or eliminate estate and inheritance taxes. We could see changes to these taxes shortly. Stay tuned!
Modest Estate Procedure Changes
Two laws were recently enacted in connection with modest estates. The first provides that assets from an estate where there is no will (an intestate estate) valued up to $50,000 may be transferred to a surviving spouse or partner without having to go through the administration process (up from $20,000 under previous law). In the absence of a surviving spouse or partner, the value of the intestate estate that can be transferred without an administration has been raised from $10,000 to $20,000. The second law requires nursing homes to encourage residents to designate a beneficiary to accept any remaining money in their personal needs allowance (PNA) accounts. The beneficiary form applies to any remaining balance in a deceased residents' account that does not exceed $1,000, which may also help avoid probate or administration for modest estates.
