New Jersey Lawyers Blog

Published on: December 11, 2012

The Federal Gift Tax Annual Exclusion is Increased for 2013

The Internal Revenue Service increased the annual gift tax exclusions for 2013. The annual gift tax exclusion amount will increase from the 2012 amount of $13,000 to $14,000 in 2013 for gifts made to anyone other than a person’s spouse. New Jersey does not impose a gift tax, with the limited exception that gifts made within three years of a person’s date of death are subject to tax upon the death of the giver.

Individual annual gift tax exclusions can be combined with gifts of spouses to give up to $28,000 to any person each year and no gift tax will be due. There is no limit as to the number of gifts which may be made to different people. Additionally, there is no limit to the marital deduction for taxpayers who make gifts to their U.S. citizen spouses. The annual gift exclusion for gifts made to non-U.S. citizen spouses is being increased to $143,000 in 2013.

If an annual gift is made during 2013 which exceeds $14,000 to any one person, or if it exceeds $143,000 to a non-US citizen spouse, it is a taxable gift and the giver must file a U.S. Gift Tax Return with the IRS on Form 709. Each person is afforded a lifetime gift tax exemption. At present, the lifetime gift tax exemption amount is $5,120,000. However, that amount is scheduled to decrease to $1,000,000 when the county hits the “fiscal cliff” in 2013 unless Congress acts to change the law. Even if you make an annual gift to an individual over of the applicable annual exclusion amount, the giver will have to file a gift tax return, but will not owe gift tax unless they have exceeded the lifetime gift tax exemption.

Published on: November 30, 2012

New Jersey Employee Handbooks

by Boris Peyner

Businesses, regardless of size, can benefit from an employee handbook. Similarly, an employee handbook can provide benefits to people working in New Jersey.

Generally, an employee handbook (also an employee manual) is a written record of a company’s policies and procedures. A well written employee handbook can provide clear guidelines and procedures for all employees and can help avoid lawsuits and other legal actions for employers. However, handbooks can also create contracts of employment which can bind employers if they are not careful.

Business owners can save time and money by having an experienced employment attorney draft its employee handbook providing employees with answers, explaining business rules, and allow the employer to comply with state and federal laws. A handbook should be drafted both to help the employee and prevent litigation. A poorly written employment handbooks could contain provisions that violate New Jersey or federal law, opening an employer up to liability.

An experienced employment attorney should review all employee manuals. An employment manual can under some circumstances create a employment contract with an employer. This can be detrimental to a company that intends to hire employees on an “at-will” basis. New Jersey is an “employment-at-will” state. This means that an employer can generally terminate an employee at any time for virtually any reason. Having an employment handbook that creates an employment contract could change a company’s outlook on its operations, and ability to hire and fire in its business judgment.
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Published on: November 26, 2012

Post Sandy: FEMA Extended To All Residents of New Jersey

by Boris Peyner

Recently New Jersey was impacted by a storm the likes of which has never been seen before in this area. In fact, the storm was so powerful and damaging that it was nicknamed Frankenstorm. Hurricane Sandy’s destruction was unimaginable, causing many of its victims to lose power for days and many others to lose everything. Hurricane Sandy’s victims will now have to start the recovery process. This will require rebuilding, for which they will need dedication, resilience, and financial assistance.

Many will seek financial assistance from their insurance companies. Filing insurance claims will therefore be the first step for most people who were affected. Sadly, many will find themselves uninsured or underinsured. Many other will be denied coverage because of policy exclusions. Another problem that will plague many New Jersey residents is that their damages were caused by a flood in areas that were never prone to flooding. These homeowners therefore did not carry flood insurance. All hope, however, is not lost.

New Jersey residents who do not have sufficient insurance coverage or were denied coverage should seek assistance from the Federal Emergency Management Agency (“FEMA”), assistance was recently extended to all twenty-one New Jersey counties. FEMA will cover losses which include damage to homes, personal property, and vehicles.

FEMA, however, will provide coverage to people who do now have insurance coverage or have insufficient insurance coverage to provide safe, sanitary, and functional housing. Additionally, FEMA will not provide financial assistance for homeowners who are making claims for secondary homes.
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Published on: November 23, 2012

New Jersey’s Highlands Water Protection and Planning Act

by Pauline M.K. Young

The Highlands Water Protection and Planning Act is a relative new law, signed by New Jersey’s then-Governor McGreevey on August 10, 2004. The Highlands Act seeks to protect the ecological integrity of the highlands region in northwest New Jersey. In short, the Act, under the New Jersey Department of Environmental Protection’s supervision, regulates and restricts development in the area. Indeed, it aims to protect and preserve not only the area’s animal and plant life but also a large source of fresh water for human consumption.

The New Jersey Highlands covers a vast span of the state covering over 1,250 square miles, and is home to nearly nine hundred thousand residents primarily in the counties of Warren, Morris, Hunterdon, Passaic, and Sussex.

Of the over eight hundred thousand acres of the Highlands region, nearly four hundred thousand acres have been designated as the Highlands Preservation Area. The remaining acres are designated as the Highlands Planning Area.
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Published on: November 19, 2012

Mortgagees, Tenants and Tax Sale Certificate Holders May Have Standing to Appeal New Jersey Property Tax Assessments

by Jennifer C. Meusel

Under New Jersey law, a taxpayer feeling aggrieved can appeal a property tax assessment. Obviously, the owner can qualify as a “taxpayer feeling aggrieved.” However, it is not well known that others can also qualify under the statute. Tenants, mortgagees, tax sale certificate holders and even non-owner spouses of a marital residence can, under certain under certain circumstances, qualify as aggrieved taxpayers and thus are permitted to file an appeal of a property tax assessment.

The word “taxpayer” has been interpreted by New Jersey courts to include not only the owner of record of a property but also tenants, mortgagees and holders of tax sale certificates under certain circumstances. The courts have often based their findings upon the belief that the “taxpayer feeling aggrieved” means anyone with a legitimate interest in the property and who pays the property taxes, and is thus adversely affected by an incorrect assessment.

If a lease requires a tenant to pay all taxes for a full tax year, the Tax Court has held that the tenant qualifies as an aggrieved taxpayer. However, the Tax Court required that because the appeal of the assessment could result in an increased assessment, the owner of the property must also be a party to the action. The Tax Court noted that the lease was silent on the issue of whether the tenant was permitted to file a tax assessment appeal.
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Published on: November 13, 2012

New Jersey’s New LLC Law

by Pauline M.K. Young

Since the entity known as a Limited Liability Company, or “LLC” came along in New Jersey in 1993, it has quickly become one of the most common business forms. LLCs are popular largely because of their flexibility, limited liability, and tax advantages.

For example, as long as they meet the requisite qualifications, an LLC may elect to be taxed as a sole proprietor, partnership, C corporation, or S corporation, which means it may avoid the double taxation of a C corp wherein both the owners and the company are taxed. Also, although an LLC is not incorporated, in many instances, LLC owners – called “members” – are protected from personal liability for the company’s debts the way a corporation is.

New Jersey’s Limited Liability Company Act was enacted in 1993, and while it has been revised in 1996 and 2006, revisions have been minor until recently. On September 21, 2012, Governor Christie signed the Revised Uniform Limited Liability Company Act which is scheduled to go into effect for new LLCs on March 20, 2013. (For existing LLC’s it will become effective in March of 2014.)

The new law will include several revisions and additions, including the following:

Duration: Under the prior law, an LLC has a default duration period of thirty years unless the members designate otherwise on the certificate of formation. Under the new law, an LLC will have an unlimited or perpetual duration period unless otherwise indicated on the certificate, which is more like a corporation which is also considered to have perpetual existence.

Not-for-Profit: The new law allows LLCs to be formed for any lawful purpose regardless of whether they are for profit or not-for-profit or formed to own non-income-producing property.

Published on: November 9, 2012

Hurricane Sandy Insurance Claims

by Maurice W. McLaughlin

Hurricane Sandy has inflicted unprecedented damage on New Jersey. Homes have been destroyed. Businesses, homes and schools have lost power. Tens of thousands of people in New Jersey are homeless. Homes and buildings were destroyed by fire, trees, waves and other casualties. Many homes, especially in the evacuated Shore communities, have been looted. Losses in the Tri-State area expected to exceed fifty billion dollars.

That, of course is the big picture. On the ground, however, the storm had a devastating impact on individual homeowners, renters, and small businesses. The first thing each of these homeowners, renters and small businesses should do is make a claim with their insurance companies.

This first question is, will there be coverage? This depends on two things: First, the type of insurance policies you have and, second, the type of damages you incurred. For instance, many homeowners and business policies exclude coverage for damage caused by flooding. However, flood insurance should obviously cover this.

Therefore, you should get a copy of your insurance policy, including the declaration page. The declaration page is a one or two page summary of the types of coverage you have, the amounts of coverage, and the amounts paid for each type of coverage. The policy itself, to which the declaration page is usually attached, is much larger, often twenty pages or more. If you do not have a copy of your policy, or if your policy was destroyed in the storm, you should contact your insurance agent or broker, or the company with whom you have the insurance.
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Published on: November 5, 2012

New Jersey’s Teacher Effectiveness and Accountability for the Children of New Jersey (TEACHNJ) Act Adopts New Procedures for Fighting New Jersey Tenure Charges

by Maurice W. McLaughlin

The Teacher Effectiveness and Accountability for the Children of New Jersey (TEACNJ) Act was recently enacted by the New Jersey Legislature and signed by New Jersey Governor Chris Christie. The TEACHNJ Act creates drastic changes to the process for fighting tenure charges by New Jersey teachers and other public school “teaching staff members.” In short, the TEACHNJ Act eliminates the hearing process before the Commissioner of Education and places the decision in the hands of an arbitrator.

When a New Jersey “teaching staff member” achieves tenure, she receives protections that most other New Jersey employees do not. Tenured teaching staff members can be dismissed or reduced in compensation “during good behavior” only for “incapacity,” “inefficiency,” or “conduct unbecoming” a teaching staff member, or some other “just cause.” However, they can be laid off for budget reasons or enrollment losses at any time as long as their seniority is honored.

For the purposes of tenure, “teaching staff members” includes a wide range of employees, including: Assistant superintendents, teachers, principals (but not administrative principals), vice-principals, assistant principals, school nurses, athletic trainers, business administrators shared by more than one school district, and other employees requiring appropriate certificates.

Left unchanged are the initial procedures. Tenure charges are instituted by the local board of education. They are filed in writing with the board’s secretary together with a sworn statement of evidence. The employee is promptly given a copy and the opportunity to submit a written statement in response. The board will then consider the charges in closed session and decide by majority vote if the evidence supports probable cause for the charges, and whether the charges are sufficient to warrant dismissal or reduction in salary. If so, it then forwards the charges to the Commissioner of Education. If the board does not make a determination within 45 days, the charges are dismissed.
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Published on: October 26, 2012

Minimizing New Jersey Estate Taxes by Utilizing a Disclaimer Trust Provision in a Will

by Jennifer C. Meusel

New Jersey imposes an estate tax on assets passing to any beneficiary other than a surviving spouse. The New Jersey exemption amount is $675,000, meaning that a decedent whose estate exceeds $675,000, and whose assets are to be inherited by any individual other than a surviving spouse, is subject to New Jersey State estate tax. While both spouses are entitled to an exemption amount of $675,000, careful planning is required to take full advantage of both spouses’ exemption amount and shield $1,350,000 from taxes when it is passed to the next generation.

A disclaimer trust is an excellent vehicle for married couples to ensure that their heirs can maximize their exemptions. This trust can be included as a provision in both spouses’ wills. It provides that the trust will on be funded upon the death of first spouse if the surviving spouse executes and files a valid and proper disclaimer within nine months of the spouse’s death. It is important that the surviving spouse does not exercise any control over the assets being disclaimed after the decedent’s death. There are a number of factors to consider when deciding whether to disclaim assets and thereby fund the disclaimer trust, including the value of the estate, the age of the surviving spouse, the health of the surviving spouse and the current status of estate tax law. A disclaimer trust provision in a will is flexible and allows the surviving spouse to decide whether or not to fund the trust. However, if the decedent’s will does not contain the necessary provisions, the surviving spouse does not have the option to fund the trust and minimize future New Jersey estate taxes for the next generation.

The terms of the disclaimer trust are usually that the surviving spouse is entitled to all of the income from the trust during her lifetime, and the surviving spouse also has the right to access the trust principal for her health, education, support and maintenance. Distributions in excess of that are not automatic and require the agreement of the co-trustee. Typically, upon the surviving spouse’s death, the couple’s children become the trust beneficiaries.
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Published on: October 22, 2012

Fighting Traffic Tickets in New Jersey

by Boris Peyner

New Jersey’s traffic laws protect people and provide safety to motorists and pedestrians. Alleged violations of traffic laws are when people most often come into contact with the court system. McLaughlin & Nardi’s New Jersey attorneys regularly represent people fighting traffic tickets in New Jersey’s municipal courts.

Once you are issued a ticket you should never argue with a police officer. A police officer’s responsibility is to issue a summons, commonly referred to as a ticket, when the police officer believes that you committed a violation of the law. You should wait until your day in court when a judge or will decide if you did, in fact, violate the law. Your court date will typically be just days from the date you receive your summons.

The first scheduled court date is known as the arraignment. The arraignment is when the Court will inform you of the charges that have been filed against you and ask you how you plead. The typical answer is not guilty, guilty or no contest (typically in non-criminal matters.)

In most cases you should plead “not guilty” and consult with an experienced New Jersey attorney who can obtain discovery (i.e., evidence) which the state and the prosecutor will rely upon to prove that you are guilty (that you committed the offense you were charged with.)
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