Bill Text: NJ S1952 | 2010-2011 | Regular Session | Introduced
Bill Title: Clarifies interpretation of certain wills and trusts in accordance with changes to Federal law governing estate taxes.
Sponsorship: Partisan Bill (Republican 1)
Status: (Failed) 2011-01-31 - Withdrawn from Consideration [S1952 Detail]
Download: New_Jersey-2010-S1952-Introduced.html
Sponsored by:
Senator CHRISTOPHER "KIP" BATEMAN
District 16 (Morris and Somerset)
SYNOPSIS
Clarifies interpretation of certain wills and trusts in accordance with changes to Federal law governing estate taxes.
CURRENT VERSION OF TEXT
As introduced.
An Act concerning certain wills and estates and supplementing Title 3B of the New Jersey Statutes.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. a. The provisions of a will, trust or other governing instrument of a decedent who dies after December 31, 2009, and before January 1, 2011, that contains a formula referring to the "unified credit," "estate tax exemption," "applicable exemption amount," "applicable credit amount," "applicable exclusion amount," "generation-skipping transfer tax exemption," "GST exemption," "marital deduction," "maximum marital deduction," "unlimited marital deduction," "inclusion ratio," "applicable fraction," or to any section of the Internal Revenue Code relating to the federal estate tax or generation-skipping transfer tax and that measures a share of an estate or trust based upon the amount that can pass free of federal estate taxes or the amount that can pass free of federal generation-skipping transfer taxes, or that is otherwise based on a similar provision of the federal estate tax or generation-skipping transfer tax law, shall be construed to refer to the federal estate tax and generation-skipping transfer tax laws applicable to estates of decedents dying on December 31, 2009. If the federal estate tax or generation-skipping transfer tax becomes legally effective before January 1, 2011, the reference to January 1, 2011 in this subsection shall refer to the first date on which the federal estate tax or generation-skipping transfer tax becomes legally effective.
b. The provisions of subsection a. of this section shall not apply with respect to a will, trust or other governing instrument that:
(1) is executed or amended after December 31, 2009; or
(2) manifests an intent that a contrary rule shall apply if the decedent dies on a date on which there is no federal estate tax or generation-skipping transfer tax.
c. A fiduciary or any affected beneficiary under a will, trust or other governing instrument may bring a proceeding to determine whether and to what extent the decedent intended that the formula under subsection a. of this section be construed with respect to the law as it existed after December 31, 2009. A proceeding initiated pursuant to this subsection shall be commenced within 9 months following the death of the decedent or grantor.
2. This act shall take effect immediately and shall apply to wills, trusts or other governing trust instruments of individuals dying on or after January 1, 2010 and before January 1, 2011.
STATEMENT
Under the provisions of the "Economic Growth and Tax Relief Reconciliation Act of 2001," Pub.L. 107-16, the Federal estate and generation-skipping transfer taxes expired on December 31, 2009 and will automatically return on January 1, 2011. Congress may take action to change the current law, but at the time of this writing it is not clear if that is their intention. This bill is intended to address the consequences of the repeal of federal estate and generation-skipping transfer taxes with respect to estates of persons dying and taxable transfers occurring after December 31, 2009 and before January 1, 2011.
Certain wills, trusts and other governing instruments use funding formulas based on the federal estate and generation-skipping transfer tax laws in place on December 31, 2009. With the one-year repeal of the federal estate and generation-skipping transfer tax in effect as of January 1, 2010, a literal reading of the formula language in these instruments could have unintended consequences, including potential inadvertent disinheritance, in whole or in part, of a surviving spouse or children. The bill is intended to preserve the manner in which most New Jerseyans expected their estates to be divided and distributed prior to the one-year repeal of the federal estate and generation-skipping transfer taxes.
Under the bill the provisions of a will, trust or other governing instrument of a decedent who dies after December 31, 2009, and before January 1, 2011, that contains a formula referring to the "unified credit," "estate tax exemption," "applicable exemption amount," "applicable credit amount," applicable exclusion amount," "generation-skipping transfer tax exemption," "GST exemption," "marital deduction," "maximum marital deduction," "unlimited marital deduction," "inclusion ratio," "applicable fraction," or to any section of the Internal Revenue Code relating to the federal estate tax or generation-skipping transfer tax and that measures a share of an estate or trust based upon the amount that can pass free of federal estate taxes or the amount that can pass free of federal generation-skipping transfer taxes, or that is otherwise based on a similar provision of the federal estate tax or generation-skipping transfer tax law, would be construed to refer to the federal estate tax and generation-skipping transfer tax laws applicable to estates of decedents dying on December 31, 2009. In addition, the bill provides that if the federal estate tax or generation-skipping transfer tax becomes legally effective before January 1, 2011, the reference to January 1, 2011 would refer to the first date on which the federal estate tax or generation-skipping transfer tax becomes legally effective.
The bill also provides that its provisions would not apply with respect to a will, trust or other governing instrument that is executed or amended after December 31, 2009 or that manifests an intent that a contrary rule should apply if the decedent dies on a date on which there is no federal estate tax or generation-skipping transfer tax.
Because there may be instances where the probable intention of the testator or trust grantor would be contrary to the rule of construction set forth in the bill, the bill provides that a fiduciary or any affected beneficiary under a will, trust or other governing instrument may bring a proceeding to determine whether and to what extent the decedent intended that the formula be construed with respect to the law as it existed after December 31, 2009. The bill requires that this proceeding be commenced within 9 months following the death of the decedent or grantor.
The bill would take effect immediately and would apply retroactively to the estates of decedents dying on or after January 1, 2010.
