NJ Laws Email Newsletter E265
Kenneth Vercammen, Attorney at Law January 3, 2008
In This Issue
1. Happy New Year!
2. FREEZING COLD HASH RUN: details and free T shirts and fun for volunteers.
3. New Year's Resolution- Put your estate planning in order.
4. Recent cases. After DV and Firearm Seized. No Firearm Purchaser Card Can Issue.
5. Local Ordinance Can Prohibit Rat Balloon.
6. Qualified Disability Trust.
1. Happy New Year
I would like to thank my friends for another banner year in 2007. This year was our single best year for referrals. So many of you were kind enough to tell others about our services.
Since 1985, I have helped individuals and businesses with legal matters. With changing laws, it is important that your estate planning documents are updated to reflect your most valuable investments. As you know, all business must grow, and one of the safest ways to grow is to get referrals from satisfied clients.
Thank you for referring friends and family.
May 2008 bring happiness and good health to you and those you love.
2. FREEZING COLD HASH RUN: details and free T shirts and fun for volunteers. Sat. Jan. 5, 2008 10:00am
4-6 MILE GROUP RUN
START: Ken Vercammen Law Office, 2053 Woodbridge Ave., Edison, NJ 08817 [near the Nixon Post Office]
COST: NO FEE TO RUN. Please bring a canned food donation for the St. James Food Bank. You must be over 21 years old to participate. No awards are given and no times are recorded. A sense of humor is a must.
Wear Yellow. We need 3 volunteers to help set up at 8am and pass out trail running instructions. You can volunteer even if you are not running. Free Yellow T-Shirt and beers for volunteers!
PLEASE PASS THIS ALONG TO OTHER RUNNERS.
PLEASE REMIND THEM OF CANNED FOOD DONATIONS TO THE ST. JAMES FOOD BANK.
3. New Year's Resolution - Put your estate planning in order.
You need a Power of Attorney and Living Will/ Advance Directive. Modern medicine and machinery can keep a person alive for long periods of time.
Unfortunately, a person is often kept alive in great pain or under circumstances that render him or her unconscious as to everything around them, while causing pain and anguish to the family.
Our state has passed a "Living Will" law, often called a "Death with Dignity" law, which allows a person to direct that heroic measures not be taken to prolong life in these unhappy situations.
This "Living Will" is not a substitute for a regular Will, which affects property rights. The "Living Will" is an independent document to be signed in addition to your regular Will.
Please let us know if you want a Living Will/ Advance Directive prepared.
4. Recent cases. After DV and Firearm Seized. No Firearm Purchaser Card Can Issue. M.S. v. Millburn Police Department 395 NJ Super. 638 (App. Div. 2007)
The prohibition set by N.J.S.A. 2C:58-3c(8) that a Firearms Purchase Identification card shall not be issued "[t]o any person whose firearm is seized pursuant to the 'Prevention of Domestic Violence Act of 1991'...and whose firearm has not been returned," survives even if, as in the case here, the domestic violence restraining order is vacated.
5. Local Ordinance Can Prohibit Rat Balloon. State v. DeAngelo ___ NJ Super. ___ (App. Div. Decided June 28, 2007) A-4229-05T3.
The focus of this appeal is the enforceability of a municipal ordinance that prevents the display of a large balloon in the shape of a rat during a labor dispute. The court held that the ordinance, which does not affect the parties' rights in the labor dispute, is not preempted by the National Labor Relations, Act (NLRA) 29 U.S.C.A. §151-69, nor does it abridge any party's freedom of expression. The ordinance is not void for vagueness. It is content-neutral and the record does not support a claim that it was selectively inferred.
Judge Sabatino dissents in part. He perceives a lack of content neutrality in the ordinance because it allows balloon grand opening signs.
6. QUALIFIED DISABILITY TRUST
By Thomas D. Begley, Jr., Esquire c (2008)
A Qualified Disability Trust is a form of Special Needs Trust that allows the trust to take advantage of a personal exemption for income tax purposes. The trust must meet the requirements set forth in the Internal Revenue Code and the trust must be designed to meet the requirements of 42 U.S.C. §1396p(c)(2)(B)(iv).
A Qualified Disability Trust must be a non-grantor trust.
A Self-Settled Special Needs Trust is always a grantor trust.
A Qualified Disability Trust must be a third party trust.
Qualified Disability Trust Requirements
To satisfy the requirements of the Code a Qualified Disability Trust must be an:
· irrevocable trust
· established "solely for the benefit of"
· an individual under age 65
· who is disabled as defined in the Social Security Act 42 U.S.C. §1382c(a)(3).
The "sole benefit" requirement is met only if no other person or entity can benefit from the transferred resources at the time of the transfer or for the remainder of that person's life. The sole benefit of requirement cannot be met unless the trust is irrevocable.
The disability test is met if the beneficiary is disabled for some portion of the tax year for which the exemption is claimed. However, there must be a determination of disability by SSA.
A Qualified Disability Trust is allowed a deduction equal to the personal exemption.
A Qualified Disability Trust is defined as any trust if:
· The trust is a disability trust described in 42 U.S.C. §1396p(c)(2)(B)(iv) discussed above and all of the beneficiaries of the trust as the close of the taxable year are determined by SSA to have been disabled within the meaning of 42 U.S.C. §1382c(e)(3) for some portion of such year.
The trust does not fail to meet the requirement that all beneficiaries must be disabled merely because the corpus of the trust may revert to a person who is not so disabled after the trust ceases to have any beneficiary who is disabled.
Effect of a Qualified Disability Trust
Generally, a trustee must file an income tax return for a trust that has:
· any taxable income for the year;
· gross income of $600 or more; or
· a beneficiary who is a non-resident alien.
A Qualified Disability Trust is granted a personal exemption by the I.R.S. Net income retained by the trust up to the amount of the personal exemption is not taxed. The trust pays income tax on any retained income in excess of the personal exemption amount. The personal exemption amount is determined as follows:
· If the trust is required to or actually distributes all of its income, the personal exemption is $300
· If the trust accumulates income, the personal exemption is $100.
· The Qualified Disability Trust receive a personal exemption in the same amount as an individual. For 2007, that amount is $3,400.10.
The ability of the trust to use the personal exemption is significant because trust marginal income tax bracket rise steeply. For 2007, a trust pays tax at the marginal federal rate of 35% on net income over $10,450.
To the extent that income is distributed from the trust, it is taxable to the beneficiary at the beneficiary's lower income tax rate. A Qualified Disability Trust enables the trust to retain some income and have it offset by the trust personal exemption.
The ability to retain income in the special needs trust makes it an attractive tax advantaged savings vehicle. If the accumulated tax-free income is distributed in the later year, it will be a tax-free principal distribution.
Whether capital gains income is considered income for trust accounting purposes is left to the discretion of the trustee. The only restriction is that the trustee must be consistent from year to year.
Begley & Bookbinder, P.C. is an Elder & Disability Law Firm with offices in Moorestown, Stone Harbor and Lawrenceville, New Jersey and Oxford Valley, Pennsylvania and can be contacted at 800-533-7227. The firm services southern and central New Jersey and eastern Pennsylvania. Tom Begley Jr. is one of the speakers with Kenneth Vercammen at the NJ State Bar Association's Annual Nuts & Bolts of Elder Law Seminar and co-author with Kenneth Vercammen, Martin Spigner and Kathleen Sheridan of the 400 plus page book on Elder Law.
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KENNETH VERCAMMEN & ASSOCIATES, PC
ATTORNEY AT LAW
2053 Woodbridge Ave.
Edison, NJ 08817
Admitted to practice law in New Jersey, New York, Pennsylvania, US Supreme Court and Federal District Court