New Jersey's recognition of same-sex marriage has resulted in significant changes to the rights of same-sex couples. Married same-sex couples now have the same rights as all married couples. As a result, there are changes with retirement benefits and Individual Retirement Accounts ("IRA") and how they are taxed to beneficiaries that inherit these funds. The recognition of same sex marriage means that same-sex married couples have greater options when it comes to the inheritance of IRAs and most retirement benefits. It is important to note that in order for same-sex couples to have these different options, they must actually be married. A civil union or domestic partnership does not qualify as marriage for federal tax purposes.
To marry, or not to marry? While the obvious answer can usually be found in one's heart, many couples also look to the pros and cons of marriage- in terms of things like healthcare benefits, retirement benefits and tax implications. Until recently, however, many of these benefits to marriage did not apply to same-sex couples in New Jersey- even though several states (currently 19) already recognized their marriage as valid.
For numerous New Jersey residents, estate planning does not end with wills and trusts. Most retirement accounts -- including IRAs -- life insurance policies and annuities are not governed by those documents. They require the account owner to fill out a beneficiary designation, but if an individual is not careful, beneficiaries may not receive the inheritance intended for them.
Virtually every parent in New Jersey wants to see his or her children grow up, and most will get that chance. However, there are no guarantees in life, and estate planning becomes crucial for parents who have minor children. Without any plan in place, family members could spend a significant amount of time and money in court in certain circumstances.
Virtually everyone in New Jersey and nationwide has heard of the Kennedy family, which was made infamous through the political aspirations and tragedies surrounding the children of the family's patriarch, Joe Kennedy. Another thing for which the Kennedys are known is their vast wealth. It was the foresight of Joe Kennedy and the trusts he founded that may keep Kennedy heirs wealthy for decades to come.
The simple fact is that many New Jersey couples will never have to worry about federal estate taxes. This is because the federal estate tax exemption is $5.34 million per person, and a marital exemption from estate tax exists. For this reason, many couples' estate planning does not necessarily need to focus on avoiding these taxes.
Many New Jersey residents consult someone knowledgeable in estate planning to draft even a basic estate plan consisting of a will, powers of attorney for health and finances and trusts. However, fewer people consult anyone when they fill out beneficiary designations for accounts such as insurance policies, bank accounts or retirement accounts. These forms are just as important -- and in some cases even more important -- in estate planning as any other document.
By: Nancy Rice, Esq.
By: Andrew Mackerer, Esq.; Pamela Quattrone, Esq.; and Daniel Del Collo, Esq.