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Do you want to live or die in New Jersey?

Several years ago after my dad died in New Jersey, my brother and I were shocked when we realized how much money we were going to have to pay to the state in inheritance and estate taxes. The percentage was huge, especially compared to almost any other state in the US. Evidently, we were not alone in being shocked by New Jersey’s tax rules.

According to a study recently commissioned by Charles Steindel, chief economist of the New Jersey Department of the Treasury (and former senior vice president of the New York Federal Reserve Bank), 25,000 people moved away from New Jersey between 2004 and 2009. Why? In 2004, the state’s highest income tax rate was raised from 6.37% to 8.97% for those making $500,000 or more, and in 2009 a one year 10.75% tax rate was assessed on those making $1 million or more.

In addition to such high income tax, New Jersey is one of only two states (Maryland is the other) with both a state estate tax and a state inheritance tax; this is a problem for those who would like to leave at least the majority of their wealth to their loved ones when they die.

Steindel also conducted a survey of subscribers to the state’s online newsletter Tax Notes, which keeps professionals such as financial advisers, accountants and attorneys up to date on changes in law, rules and court decisions governing tax matters. Subscribers include advisers to high-wealth clients.

More than half of the respondents said that clients had recently left or expressed interest in leaving the state. Respondents said the top three reasons that clients gave for leaving were state income taxes (85.4 percent), local property taxes (77 percent) and estate taxes (67 percent). The next two reasons most-often cited were retirement (47.6 percent) and housing costs (43.7 percent).

So if you live in New Jersey and you have any assets, consider moving to a more tax friendly, or non-taxing, state like Florida.

It’s Donate Life Month

This is Donate Life Month. It’s a good time to think about how you can help others. Just pledge to donate your organs, tissues and corneas to others when you die; by doing so, you may save up to eight lives and enhance the lives of many others.

Did you know that as of March 2012, there were 113,115 patients waiting for an organ donation or tissue or cornea transplant? More than 1,800 of them were children. (Source: organdonor.gov)

In 2011 there were:
14,144 organ donors
28,535 organ transplants
More than 46,000 cornea transplants

Each day, an average of 79 people receive organ transplants. However, an average of 18 people die each day waiting for transplants that can’t take place because of the shortage of donated organs.

To learn more about how and why you should help or to sign up, go to organdonor.gov today.

Isn’t great to think that you can save others, even after you’re gone?

To find out more about end of life planning, check out diesmart.com.

Digital Assets – Few Laws Legislate Access to Them after Death

If you own digital assets like a Facebook page or a Google email account, what happens to them when you die? Assuming that your next of kin knows your passwords, he or she can easily delete them. However, if your passwords are not available, shutting down these accounts can prove problematic. Each email or social media company has specific rules governing the disposition of its accounts and refuses to vary from those rules. Some allow an executor or next of kin with suitable proof of death to close an account. Others do not, making this writer wonder if those accounts will just float around cyberspace forever.

Many people feel that there should be laws governing all digital assets in the same way that other personal property is currently legislated. However, even though digital assets have become a big part of our lives, there are only five states that have even begun to legislate what happens to them after your death – Connecticut, Rhode Island, Indiana, Oklahoma and Idaho.

Here’s a summary of what the current laws cover:

1. Connecticut’s law, enacted in2005, only covers email. That’s not too surprising considering that the explosion of social networking sites hadn’t occurred when the bill was being formulated. Facebook didn’t start until 2004, when it was launched as a site for use only by students attending specific colleges and Twitter began in 2006. The law states that an email service provider must give the executor or administrator of the estate access to or copies of the contents of the account if the deceased lived in Connecticut at the time of his death.

2. Rhode Island, in its 2007 law, also limited itself to email and is very similar to Connecticut’s.

3. Indiana’s law focuses on electronically stored documents of the deceased. This could include email as well as many other digital assets. The 2007 law says that the “custodian” of the electronically stored documents will provide to the personal representative of the deceased’s estate (if the deceased was living in Indiana at the time of death) access to or copies of any stored documents or information.

4. Oklahoma’s 2010 law is much more comprehensive. It says that the executor or administrator of an estate will have the power to “take control of, conduct, continue, or terminate any accounts of a deceased person on any social networking website, any microblogging or short message service website or any email service websites.”

5. Idaho’s law, which became effective in 2011, is virtually identical to that of Oklahoma.

On January 5, 2012, Senator John Wightman of Nebraska introduced a bill in his state legislature that would be similar to that of Oklahoma and Idaho. However, according to Wightman, the methodology of how the government would access account information and forward it to an estate representative has not yet been determined. In addition, several people have asked whether anyone but the owner of an online account should have the right to view and control its content. Wightman agrees that the bill may have to “be modified in some way to take account of the privacy issues as to whether or not they’ll be able to view the content.”

Why do you think so few states have tackled this issue so far? Do you think your state should have legislation that would control access to your digital assets after your death?

To find out more about digital assets and what currently happens to them when someone dies, pick up a copy of our book, Grave Robbers…How to Prevent Identity Theft of the Deceased, or check out the information at https://diesmart.com/

Social Security numbers – will online access be cut off?

Last week, Representative Sam Johnson of Texas introduced a bill in the House of Representatives that, if passed, will limit access to Social Security numbers available online.

The act, entitled “Keeping IDsSafe Act of 2011” (KIDS Act), is intended to end online access to the Social Security Death Master File. This file currently enables anyone to easily locate the Social Security number of a deceased person. The File has been used for more than ten years by identity thieves to, among other things, file bogus tax returns to the IRS and collect refunds.

The bill was introduced two days after senators met with the Social Security Administration Commissioner, Michael Astrue, to ask the agency to limit information currently released in the death file.

As reported in a recent Scripps Howard News Service article, the need for access to this file to be limited was graphically illustrated when the parents of Benny Watters of Lake Forest, Illinois filed a tax return in August of this year. Benny died at age 5 in September 2010 and the Watters tax return was rejected. Why? Someone else had stolen the boy’s identity and claimed him as a dependent!

There have been recent news reports that say the IRS flagged 350,000 potentially fraudulent 2010 tax returns requesting $1.25 billion in refunds using information gathered about the dead.

The bill introduced by Johnson would limit access to the death file to law enforcement. Tax administrators and government researchers.

To find out more about this topic and other online identity thefts, check out “Grave Robbers…How to Stop the Identity theft of the Deceased.”

Everyone needs a will. Do you have one?

It is critically important for everyone to have a will. If you don’t have one, your wishes may not be carried out. Why?

First of all, every state has laws covering what is called “dying intestate” (without a will). These rules strictly dictate who will receive what from your estate.

Let’s look at one example. You have two children. The first child worked his way through college and didn’t take any money from you. You paid all of the fees associated with the second child getting a degree and consider that money an advance on that child’s future inheritance. So you would like the first child to receive 75% of your assets and the second to get only 25%. However, when you die, you do not have a will which specifies this. According to the laws in many states, both of your children will share equally in your estate.

You may feel sentimental about some of your possessions. Maybe you have a few special pieces of jewelry and know to which member of your family you wish to give each one. Without a will, your wishes don’t count.

A will is also a good place to specify what you want your family to do with your body after you die. Perhaps you wish to be buried; however, they may not know and this and may cremate your body instead.

This week, I read two interesting blogs which reminded me of how important a subject this is. Both, interestingly enough, come from outside of the United States.

The first comes from Ghana and begins by talking about the late Colonel Momar Khadafi You may not care what Khadafi’s wishes were or that they were not carried out despite the fact that he had a will. However, later the blog talks about the writer’s father and how he set the precedent for everyone in his village to have a will.

The second was written by a woman in British Columbia and is a sad story about a man who told his former doctor, and later friend, about his wishes. However, he didn’t write them in a formal will. When he died, the doctor contacted the coroner to try to ensure that the wishes were carried out. Instead, the man’s body was turned over to the Public Guardian and Trustee (a government group) and his wishes were disregarded.

Consider getting your will written today. Not only will it make it easier for your wishes to be carried out but will remove an extra burden from your family members when you die.

For more information about this subject and other related topics check out our book “Die Smart, 11 Mistakes That Cost Your Family Money When You Die”.