The New Jersey Senate and General Assembly have passed bills phasing out the New Jersey estate tax over a period of 15 months.  Beginning January 1, 2017, the estate tax exemption, currently the lowest in the nation at $675,000, will rise to $2 million.  Estates of persons dying on or after January 1, 2018 will not be subject to estate tax.  The Governor is expected to sign the legislation. 

The New Jersey inheritance tax will remain in effect.  The inheritance tax does not apply to transfers at death to a spouse, parent, child, grandchild or great-grandchild, or to a charitable organization.  Tax is imposed on most other transfers.

Existing wills and trusts for most married couples include planning to minimize New Jersey estate tax.  In many cases, revisions will be advisable.

Posted
AuthorAndrew DeMaio

In a case of first impression, the New Jersey Appellate Division recently clarified the circumstances in which a parent can be statutorily barred from receiving the parent's intestate share of a child's estate.  The case is IMO Estate of Michael D. Fisher, II, Docket No. A-0878-14T2. (App. Div. December 11, 2015).

 

In response to the horrific facts of the case M.W. and to fill a statutory gap, the New Jersey Legislature enacted N.J.S.A. 3B:5-14.1, which sets forth certain circumstances that can lead to a parent losing his or her right to intestate succession.

 

N.J.S.A. 3B:5-14.1(b)(1) provides in pertinent part:

b. A parent of a decedent shall lose all right to intestate succession in any part of the decedent's estate ... if:

(1) The parent refused to acknowledge the decedent or abandoned the decedent when the decedent was a minor by willfully forsaking the decedent, failing to care for and keep the control and custody of the decedent so that the decedent was exposed to physical or moral risk without proper and sufficient protection, or failing to care for and keep the control and custody of the decedent so that the decedent was in the care, custody and control of the State at the time of death....

 

In Fisher, Michael D. Fisher, Sr. ("Fisher") and Justina Nees ("Nees") were married and had a child, Michael D. Fisher, Jr. ("Michael").  Fisher and Nees were divorced and a restraining order was placed on Fisher after he attempted to remove Michael from school without notifying Nees.  Fisher was only allowed supervised visitation with Michael and he was later ordered to undergo anger management counseling.  Fisher did not comply the court-ordered counseling and from January 2002 until Michael's death at the age of fifteen on September 24, 2010, Fisher never had any legal visitation with Michael.

 

Fisher saw Michael on a public beach once and attempted to talk to him but Nees reminded Fisher of the restraining order and threatened to call the police; Fisher left.  According to Fisher, about two months before Michael's death, Fisher had some limited communications with Michael via Facebook but shortly thereafter Fisher was blocked from communicating with Michael through Facebook.

 

Fisher was also in arrears on child support as of Michael's death.  Importantly, Fisher certified that in the context of the prior divorce proceedings, Nees offered to forego child support if Fisher agreed to give up his parental rights to Michael.  Fisher certified that he rejected Nees's offer and that he wanted to have a relationship with Michael.  Nees did not contradict that statement in her written submissions.

 

After Michael passed away, Nees filed a Verified Complaint to bar Fisher from receiving a share of Michael's estate under N.J.S.A. 3B:5-14.1.  On the return date of the order to show cause (and without a trial), the trial court granted Nees's application to bar Fisher from receiving a share of Michael's intestate estate.  Fisher appealed that decision.

 

The Appellate Division reversed.  Based on the Appellate Division's analysis, there are essentially four circumstances in which a parent of a decedent will lose all right to an intestate share of the child's estate.  The first circumstance, not at issue in the Fisher case, is where the parent refused to acknowledge the decedent child.  There was no evidence that Fisher refused to acknowledge Michael.

 

The latter three circumstances, those at issue in Fisher are set forth as follows:  a parent may lose his or her right to intestate succession if the parent abandoned the decedent when he or she was a minor by:

(1) "willfully forsaking the decedent";

(2) "failing to care for and keep the control and custody of the decedent so that the decedent was exposed to physical or moral risk without proper and sufficient protection"; or

(3) "failing to care for and keep the control and custody of the decedent so that the decedent was in the care, custody and control of the State at the time of death...."

 

The latter two tests were inapplicable to the Fisher case because there was no indication that Michael was exposed to physical or moral risk without proper and sufficient protection or n the care, custody and control of the State at the time of death.  Thus, the analysis turned on whether Fisher had "willfully forsake[n]" Michael.

 

The Appellate Division held that "in order for a court to conclude that a parent has abandoned his or her child 'by willfully forsaking' him or her under N.J.S.A. 3B:5-14.1(b)(1), the court must find that the parent, through his or her unambiguous and intentional conduct, has clearly manifested a settled purpose to permanently forego all parental duties and relinquish all parental claims to the child."

 

The Appellate Division held that Fisher's conduct did not fit within that standard because, though he was in arrears, Fisher did pay approximately two-thirds of the child support he was ordered to pay.  In addition, the Appellate Division relied on the facts that Fisher rejected Nees's offer to forego all parental rights in exchange for not having to pay child support and that Fisher had made at least some limited attempts to communicate with Michael over the years.  The Appellate Division analyzed these facts under a preponderance of the evidence standard and held that the facts showed Fisher's actions were not consistent with those of a parent whose "settled purpose" was to permanently forego all parental duties and relinquish all parental claims to the child.

 

The Appellate Division held that the statute does not apply and Fisher should be allowed to share in his son's intestate estate.

 

Posted
AuthorKenneth Lackey

On Thursday, December 17, 2015, Ken Lackey will present at a continuing education seminar entitled, "Probate Boot Camp."  Mr. Lackey's topics will include probate litigation and post-mortem planning.  The link for the seminar is here.

Posted
AuthorKenneth Lackey

The New Jersey “Senior Freeze” homestead property tax reimbursement program provides valuable property tax relief to those who qualify. Eligible homeowners jealously guard their right to the benefit.  Sometimes they go to ill-considered extremes, a recent New Jersey Tax Court opinion illustrates.

Posted
AuthorAndrew DeMaio

In an opinion approved for publication, the New Jersey Appellate Division denied a widow's request to "adopt a 'bright-line' rule that marriage creates a 'presumptive right' to a spouse's life insurance benefits, thereby revoking any contrary premarital beneficiary designation made by the deceased spouse."

Posted
AuthorKenneth Lackey

Until recently, upon death a Facebook member's account was frozen.  On occasion, Facebook fought surviving family members in court to block the family members' access to the deceased member's Facebook page. 

For example, Facebook successfully quashed a subpoena by the family of a woman who died after falling from the twelfth floor of an apartment building.  A coroner determined that the cause of death was suicide.  The family disagreed and wanted to access the woman's Facebook page because they believed it would contain evidence of her state of mind indicating that she did not commit suicide.  In an opinion available here, a federal court in California sided with Facebook, finding "that civil subpoenas may not compel production of records from providers like Facebook [and that] [t]o rule otherwise would run afoul of the 'specific [privacy] interests that the [federal law] seeks to protect.'"

With the new "legacy contact" policy, Facebook users are given the option of naming a person who will have some ability to manage the account post-death.  The policy is optional.  If a Facebook user does nothing, the account will be frozen, which Facebook refers to as "memorialization."  A legacy contact will have the ability to write post-death posts, change the deceased's profile picture, and respond to new friend requests.  The legacy contact will not be able to edit content created by the deceased while he or she was still alive.

Users can select a legacy contact by going to Settings and then Security and then choosing Legacy Contact.  In addition, Facebook has stated that it if a member executes a Will giving someone rights to digital assets the company will treat that person as the "legacy contact" even if that designation was not confirmed on the company's website.  For more information on rights to digital assets see this post on the Uniform Fiduciary Access to Digital Assets Act.    

Posted
AuthorKenneth Lackey

In July, the Uniform Laws Commission completed its work on a model act allowing executors, administrators and other fiduciaries to control digital assets. The Uniform Fiduciary Access to Digital Assets Act (UFADAA) is a comprehensive legislative proposal that ensures that fiduciaries have access to and the ability to manage digital assets such as social media accounts and blogs, websites, and photographs stored on cloud-based servers. 

Posted
AuthorAndrew DeMaio

The State of New York has good news for those with estates larger than $1,000,000.  As of April 1, 2014, New York more than doubled its estate tax exemption from $1,000,000 to $2,062,500.  The exemption will continue to rise incrementally each year until it caps out in 2019 to match the Federal exemption amount.  Before April 1, 2014, the amount an individual could leave at death without owing state estate tax in New York was $1 million.  That meant you would pay New York estate tax on your assets above $1 million at a tax rate up to a 16%.  

Posted
AuthorMelissa A. Terranova