Author: Rekha Rao

We launched a new program!

Posted on | by Rekha Rao

How this program may help ensure your estate plan will never let you & your family down at the critical moment

 

We hear it all the time when talking about estate plans—“I already have an estate plan in place, so I don’t have to worry.” But there are a few major things people don’t realize about estate planning that can put them at risk of not being prepared when the time comes. Plans need to be constantly updated, monitored and maintained on an ongoing basis. What was set up many years ago may not necessarily be current today. Asset changes, law updates and family changes can cause a well designed plan to fail when the time comes to “test” the plan much later.

 

If your plan includes Revocable Living Trusts (“RLT”) that were established to avoid probate, then were the trusts fully funded (i.e. were the relevant accounts titled to the name of the trust)? If you had planned for your beneficiaries to inherit in trust upon your (or your spouse’s) death, were beneficiary designation forms updated to make the trust(s) a beneficiary? We advised you during your signing that your asset spreadsheet should be updated by you every year, but do you understand when the documents themselves must be changed by the law firm? To ensure the documents work properly, you will need to keep in mind the changes in the law, purchases of new assets, changes in family structure such as marriage or divorce, births or deaths, relocations of your fiduciaries, and more. If you met with your attorney to draft and sign documents, received a nice looking binder filled with those vital documents, but then put it away in a safe place never to be thought of again during your lifetime, you may be at risk that your documents won’t accomplish what was originally intended. Failing to address critical life or asset changes by updating your new documents will jeopardize the entire plan you put in place. The number one reason estate plans fail is because they are out of date.1

 

Many good estate planning attorneys are concerned about how to ensure clients’ objectives are fulfilled and how to address ongoing updates long after the representation with the client has ended—we’ve joined an exclusive group of firms who have come up with an answer! We understand that your estate plan isn’t completed when you sign your documents and leave our office; rather, your estate plan is completed when your heirs are able to carry out your wishes set forth in the documents after you are gone. Therefore, we, as your estate planners, need to be available to you on an ongoing basis and remain involved throughout your lifetime to ensure that we maintain the integrity of your plan. This is why we are offering our Annual Membership Program (or AMP) to continue to take on the responsibility of monitoring and tailoring the plans that we have set up for you for the duration of your lifetime.

 

So if you are an existing client of ours and you created an estate plan with us, consider calling us so we can explain the benefits of AMP and how it can ensure that your plan still functions the way you intended. Additionally, please join us at our office on February 6th, 2020 at 6:00 pm for an AMP workshop where you can get more details of this program and find out how it can help you achieve peace of mind for you and your loved ones. But if you haven’t created your estate plan as yet—we hope you will choose us as your estate planning firm, as we will not only prepare superior quality documents but also stand behind our plans long after they are first created.

 

1. Bonazzoli, V. E. (2017). How an ordinary lawyer creates and sustains an extraordinary client care program. Parker, CO: Outskirts Press.

Gift-Giving and Taxes

Posted on | by Rekha Rao

‘Tis the season of giving—this December, countless gifts have been and will be exchanged between families, friends, coworkers and neighbors. In America, even many people who don’t celebrate gift-giving holidays like Christmas exchange gifts at the end of the year in accordance with the traditions of their friends and families. The last thing any of us want to be thinking about while selecting or opening gifts, is taxes, and normally, we don’t have to. But, if the end of the year has inspired you to think about bigger gifts—like property, or perhaps a new car for your loved one—here are some things you may want to be aware of before you actually write out that check.

 

Every individual currently has a lifetime estate and gift tax exemption which can either be gifted during your lifetime or left to one or more individuals as part of your estate after your death. There is no gift or estate tax owed to the federal government for gifts below the exemption amount. In 2019, the exemption is $11.4 million per person ($22.8 million for a married US citizen couple). However, this amount is not set in stone and a lot may depend on who is at the helm running the country. For example, before the 2019 tax law changes went into effect, the estate and gift tax exemption was $5.25 million and prior to 2012, it was at $3.5 million per person. If we listen to the media right now, there are talks that we may very well be going back to the $3.5 million amount even as early as next year. Since the IRS has clarified that those individuals making gifts now in order to take advantage of the current exclusion amounts will not be adversely affected should there be a decrease in the future, making large gifts now may not be a bad idea.

 

Keep in mind, the lifetime exemption exclusion amount is not the only amount to consider when gifting—in addition to your lifetime estate and gift tax exemption, there is a $15,000 annual gift tax exclusion (2019 amounts). This amount is per donor per year, so a joint gift from spouses to a child and the child’s spouse can add up to as much as $60,000 per year gift to your child and his or her spouse. Once you exceed that amount, the excess gift will be deducted from the overall lifetime exclusion amount. There is no gift tax, but the excess gift needs to be reported on a gift tax return the following year along with your income tax filing.

 

A few points to note: In your haste to see the surprise and joy on your loved one’s face, do not gift away highly appreciated property. We have a lot of families who deed over their primary residences or gift stock that they had purchased several years ago that have accumulated significant gain. This could result in an unexpected and adverse capital gains tax at the time of sale. Finally, if you or your loved one is a non-US citizen, be careful to consider the specific nuances associated with gift giving, as the rules slightly differ here: see what I have written about previously in New Jersey Law Journal.

 

There are few things better than the warm feeling you get from seeing a loved one enjoy a gift you have given them—but it will benefit both of you in the long run if you are intentional about your gift-giving and plan out ways to avoid tax inefficiencies in doing so. When making gifts, speak to your estate planning attorney, your CPA and your financial advisor to make sure that you approach gift-giving the right way and you can begin the New Year with your right foot forward.

Why the Sensational Administration of Leona Helmsley’s Estate Matters For You

Posted on | by Rekha Rao

Leona Helmsley, a hotel owner and real-estate investor known by many as “The Queen of Mean,” died in 2007, leaving behind over $4 billion in assets. At first, it would seem like she did everything to leave her estate organized the way one is supposed to; she left a 14-page Will behind with little ambiguity as to how her sizable assets would be divided upon her death, neatly packaged into individual testamentary trusts for her grandkids to be set up after her death and to be paid out over time. And yet, the final Court ruling did not conclude until earlier this year in 2019—a full 12 years since her passing—due to various disputes by disgruntled beneficiaries.1 She had a Will, so why did the probate process take so long?

 

The answer comes back not only to the unusual size of her Estate, but also to the language of Mrs. Helmsley’s Last Will and Testament. While it was explicit in reflecting who would receive what amount of money and how, her intentions guiding such declarations were less clear. She had disinherited two of her four grandchildren, and yet her Will’s only mention of them was as follows:

 

“I have not made any provisions in this Will for my grandson CRAIG PANZIRER or my granddaughter MEEGAN PANZIRER for reasons which are known to them.” 2

This declaration was in stark contrast to the $12 million dollars left to her dog, Trouble, who she wished to have buried beside her (an impossibility due to New York State laws barring animals from being interred alongside human remains). This significant apparent inequity in pay-outs caused a foreseeable Will contest by the disinherited heirs, leading to a Court settlement on this issue in 2008.3 It’s possible that despite what she thought were clear instructions to disinherit her grandchildren, the lack of clearly laid out reasons for their omission and the large bequest to her pet opened up questions on the testator’s state of mind which ultimately resulted in a favorable outcome for the disinherited grandchildren.

 

Better foresight by Mrs. Helmsley and her drafting attorney of an inevitable Will contest and the Court’s possible ruling in favor of family members over pets may have prevented this situation. While Mrs. Helmsley’s Will was probated in New York, both New York and New Jersey allow Wills to be contested due to incapacity or undue influence even if there is a standard no-contest provision written into the Will. Full disclosure in a Will or better yet, setting up a Revocable Living Trust to ensure the courts are not involved, may have avoided this lengthy legal battle. Furthermore, a Revocable Living Trust would have kept all this messy family drama out of the public eye.

 

Of course, that’s not all there is to say regarding Leona Helmsley’s Will and the Estate Administration that followed; even at the end of probate, there was another issue regarding Executor compensation that was only finalized this past August. This matter was brought before the Court in 2016, and finally in 2019 the Court awarded $100 million to be divided equally between four Executors, with an additional $6.25 million to be paid to the Estate of the fifth Executor. This was over the objections of New York Attorney General’s office, which claimed that the compensation was an exorbitant amount and suggested it be cut by as much as 90 percent, based on a third party expert evaluation.

 

The Court upheld the Executors’ request for the $100 million fee, explaining that their efforts could not be accurately measured by an hourly compensation and that these Executors faced extensive challenges in dealing with the administration of the Estate. This decision resulted in fees paid to the Executors five times more than the original individual bequests included in the Will.

 

Was this decision in line with Mrs. Helmsley’s intentions? Most likely not. Generally, statutory laws dictate how much an Executor is entitled to as compensation out of the Estate barring any specific provisions about this in the Will. Therefore, if you have thoughts on how you would like your Executors to be compensated for their work, or if you would like to provide flexibility in their fees that the law does not, a specialized estate planning attorney can advise you on the best way to include such considerations in your Will.

 

Leona Helmsley’s Will, though it encompasses more assets than most of us are likely to have in our lifetimes, illustrates several of the nuanced challenges faced when writing a Will. Sandor Frankel, the attorney who drafted her Will, had nearly 40 years of litigation experience, but he was not an estate planning lawyer. This outcome for Mrs. Helmsley’s estate highlights the importance of working with a specialized Estate Planning lawyer who understands how to effectively deter Will contests and draft documents with the end goal of avoiding court intervention. Ensure that your Estate does not face these challenges after your passing by drafting your Will with a lawyer who understands how to plan for the needs of your unique situation.

 

How Remote Are Remote Contingency Provisions?

Posted on | by Rekha Rao

As an estate planning attorney, it is my job to talk about death and taxes in a very matter of fact manner.  When I sit down with my clients to design their documents, I try to take emotions out of the conference room as we go through what should happens at first death or second death.  When we come to the final part of the Will design, I ask – “In the unlikely event that all of you (you, your spouse, your kids, your grandkids) are not around to take their share, who would you want your assets to go to?” – and I get this uncomfortable laugh and oftentimes responses like “Wow, I did not think about that!” or “Whoa, that is crazy – who thinks that far?” or at times “C’mon, that is never going to happen so do you really need me to answer that?”…but I still go through the motions until they come up with an answer and once the documents are signed, this is likely to go into distant memory hoping that it will never be addressed…ever!

 

So when I heard about the Indian family of 4 (Thottapilly family ages 41, 38, 12 & 9)¹ who went missing on April 5, 2018 in Northern California while on a road trip and their bodies were later found submerged in the river into which their SUV crashed, all I could think of is that this remote provision was not that remote after all!

 

It could have been any family, this could have been any happy vacation – all it takes is a set of unfortunate conditions -Mother Nature at her worst or a terrorist act or human error.  Whatever the case may be, it goes back to the sad truth that nothing is certain except for death and taxes…and its not “if” but “when.”  Perhaps at this point we may not really care what happens to our assets if those closest and precious to us are gone but, by putting in place a contingency plan for both predictable and unpredictable events, you at the very least ensuring that your assets don’t pass to those you who dont want them going to and this may very likely happen if you leave behind no Will and your assets pass through the laws of intestacy.

Consult with an estate planning attorney today and make sure that your overall objectives for your assets, whether remote or not so remote, are fulfilled!

 

¹https://www.cbsnews.com/news/missing-thottapilly-family-personal-items-found-mendocino-california/

Changes to the Kiddie Tax

Posted on | by Rekha Rao

Now that the new tax law has been underway for a few months now, this is probably a good time for a refresher on how the new changes affect the kiddie tax that could impact some families.

 

The kiddie tax was first introduced in the Tax Reform of 1986 to close the loophole through which wealthy parents and grandparents would transfer assets the produced investment income to their children or grandchildren so that the child would be taxed at the lower tax rate. The tax was imposed on a portion of the affected child’s unearned income at the parent’s marginal rates if that was higher than the child’s rate.

 

Today, the new changes have revised kiddie tax in that those under 18 and those who are full time students between the ages of 19 & 24 at the same rate as trusts & estates.  This means that any income over $12,500 would be subject to the highest tax bracket of an individual or a married couple filing jointly.  The following table represents this new kiddie tax rate:

 

UNEARNED INCOME SUBJECT TO KIDDIE TAX TAX RATE
Up to $2,550 10%
$2,551 to $9,150 24%
$9,151 to $12,500 35%
Over $12,501 37%

So unless you are such high earners that the kiddie tax would still be a savings, wait until your kids turn 25 (and are hopefully out of school) before making them wage-earners of your businesses or recipients of your unearned income.

What Are ABLE Accounts and When Are They Used?

Posted on | by Rekha Rao

The ABLE account (or Achieving a Better Life Experience) program is likened to an Educational IRA with some differences.  An ABLE account can be set up for a Special Needs Individual who has had a disability diagnosis established before the age of 26.[1]

 

Special Needs Individuals who apply for disability benefits have to show that they have resources under $2k and any income that comes to them which puts them over that limit even by a dollar, could potentially trigger an ineligibility the following month.  Up to now, such individuals and their families could only set up First or Third Party Special Needs Trusts to hold any excess funds.  The funds could be used to pay for the special needs individuals’ expenses, subject to very strict limitations.  However, with the introduction of the ABLE account in NJ[2], families have another option for housing additional funds.  Like a First Party Special Needs Trust or d(4)(A) trust, contributions into this account are meant to supplement a special needs individual’s needs and so long as the rules for spending are strictly adhered to, the special needs individual can continue to receive government benefits without triggering an ineligibility.  Unlike a d(4)(A) trust though, the spending rules for ABLE accounts are a lot more flexible.  They can be controlled by the special needs individual and the account does not need to be set up by an attorney whereas a special needs trust agreement must be drafted by an attorney.   Moreover, the trustee of a special needs trust has to be somewhat financially savvy to ensure the trust files the proper tax filings each year and the strict distribution requirements are adhered to.

 

Only one account per individual is allowed but the special needs person as well as third parties can make contributions into this account.  Generally, ABLE accounts can accumulate up to a total of $400k and are subject to a yearly contribution of $15k/year; however, since NJ is a SSI state, for those who qualify for SSI, there is a $100k cap in an ABLE account.  Additionally, there is an income cap of $11,700 per year of how much a beneficiary can put into this account from his or her income.

 

NJ currently does not have its own program so those families looking to set an ABLE account for a special needs family member will have to look to Florida, Ohio, Illinois or other state that runs its own program.

 

Contributions into an ABLE account are not treated as gifts since money from the special needs individual can be placed in this account as well.

 

Withdrawals from this account are tax free so long as the funds are used for “qualifying disability expenses (or QDE).”  Additionally, excess income over the Medicaid threshold is disregarded so long as it is used for such QDE.  Fortunately, the definition of QDE is rather broad and can include expenses for housing, education, transportation, employment training, health and wellness, financial management, legal fees and more.

 

[1] A disability certificate from a doctor is kept on file and produced if there is an audit by the IRS
 

[2] NJSA 52: 18A-250

Revocable Living Trusts: Misunderstood

Posted on | by Rekha Rao

I have been, for a while now, one of “those” New Jersey attorneys who likes to recommend Revocable Living Trusts (RLTs) for my clients perhaps more often than a majority of my fellow New Jersey colleagues.  When I first started to practice in the area of trusts & estates, I spoke the same language as many of these attorneys when it came to recommending Wills over Revocable Living Trusts.  They all said: “NJ is a probate friendly state; there is really no need to set up living trusts here.  And those attorneys who are “churning” these trusts out like mills are only doing it to make a fast buck!”  And I believed them…after all, when you are new in the field, you naively treat what the more experienced colleagues are saying like gospel.

 

Fast forward a few years later and I realized that these very same attorneys had dismissed a crucial benefit (among a few others) in setting up RLTs.   Investment/brokerage accounts in a RLT do not get “frozen” upon the death of the account holder unlike those assets passing under a Will.  You see, in NJ, the State Tax Branch obligates institutions to freeze accounts of those decedent estates with over $675k (in 2016)[1] until the Executor provides a waiver from the Tax Branch showing that taxes had been paid.  These waivers could take several months to be issued after the filing of the estate tax return.  Up to 50% of the precious funds that could have otherwise been allocated to paying expenses are instead tied up for this time causing undue delays.  The RLT avoids the waiting period completely – taxes still have to be paid, but when assets are in a RLT account, the Executor-Trustee does not have to jump through hoops to get bills paid or to make other necessary expenses.

 

But…we are now in 2018 and NJ does not have an estate tax starting this year.  This means families can just sign a self-executing waiver to release accounts over to the estate and distribute them to Class A[2] beneficiaries almost immediately.  So although I now recommend RLTs less frequently than before, I still find that certain clients can benefit from having RLTs in place for the more than the usual set of reasons.  RLTs are still beneficial to (i) avoid probate in multiple jurisdictions where an individual owns properties in other states; (ii) it allows assets of an incapacitated individual (especially a business owner) Grantor to be managed by the successor Trustee of the RLT instead of relying on the Agent’s authority under a Financial Power of Attorney; or (iii) keep things between family members where privacy is very important to the Grantor.  Moreover, RLTs are still extremely beneficial where self-executing waivers cannot be used i.e. when assets pass to beneficiaries in testamentary trusts or (2) when someone other than lineal descendants of the decedent (i.e. non-Class A beneficiaries) stand to inherit from the decedent’s estate since the inheritance tax in NJ is still alive and well.

 

In conclusion, RLTs are more expensive and there may be no need to set these up for straightforward estates.  However, for the right client, I recommend RLTs because even though both Wills and Trusts work fine in our “probate friendly” jurisdiction, RLTs work better in the long run and the client’s family’s life is made just a little (and in some cases, a lot) easier.

 

[1] The NJ estate tax exemption was at $675k for several years before going up to $2m per person in 2017 and finally disappearing in 2018.  For now, until the next legislative change occurs, there is no estate tax in NJ; but there is still an inheritance tax on assets transferring to all non-spouse and non-lineal descendant beneficiaries.
 
[2] Class A beneficiaries include parents, spouse and children of the decedent

Things I Learned at Heckerling

Posted on | by Rekha Rao

Two weeks ago, I was fortunate to be able to attend the 52nd Heckerling conference on Estate Planning.  This is a conference where the best & brightest minds in estate planning deliver tips & strategies on the latest planning techniques.  It was even more fortuitous for me, as a first-time attendee, that this year’s conference was all about the new tax code which went through a complete overhaul late last year.

This new law informally referred to as the Tax Cuts and Jobs Act of 2017 is also officially known as:

“H.R. 1 – An Act to provide for reconciliation pursuant to titles II and V of the concurrent resolution on the budget for fiscal year 2018.”  It was numbered Public Law 115-97.

Heckerling did not disappoint!  As Jonathan Blattmacher, the guru of estate planning put it (and I summarize), the change up of the tax environment presents a unique & exciting opportunity to those attorneys who may want to master these new laws and gain a competitive edge over the older and more experienced attorneys who had become comfortable with the old tax regime.  Here is what I learned:

 

  • • The new mantra is income tax savings rather than estate tax savings. While moderately wealthy and high net worth (“HNW”) clients still need to keep thinking about estate tax savings & creditor protection with 2026 in mind[1], for the vast majority whose assets are well below the newly increased thresholds ($11.18m exemption per person; $22.36m for a married couple), we ought not to be too concerned about estate tax savings but rather we need to focus on income tax reduction techniques;
  • • Having said that, the estate tax conversation has not completely gone away for the moderately wealthy and HNW clients who need to plan quickly and prudently in light of the very real possibility that the law may very well in fact sunset in 2025 (or earlier if there is a legislative change). A relatively young client with $5m in his or her estate right now can easily be looking at an estate over $10m estate in 2025 which in turn, translates to a sizeable taxable estate especially if the exemption limits drop considerably;
  • • Roth IRAs should be looked at as the golden goose that keeps on giving. The compounding interest and income tax free nature upon withdrawals makes Roth IRAs not only attractive but critical to amassing wealth, says Natalie Choate the Queen of Retirement Accounts.  More importantly, there are several tips & techniques that can be taken advantage of, if your income is over the income cap for Roth contributions;
  • • The lack of being able to take State and Local Tax (or SALT) deductions on our federal taxes is concerning to those of us living in high income tax states; however, the new law also presents interesting opportunities to get around this problem, especially with the use of nongrantor trusts;
  • • Conversions from partnerships or S corps to C corps for some individuals or businesses may make practical sense for some businesses to get the lower effective tax rate for corporations; having said that, this needs to be explored careful since the conversion could be a taxable event as well as irrevocable; and
  • • Businesses that are providing a service (i.e. doctors, lawyers and accountants, but interestingly not engineers or architects), don’t enjoy the same benefits as regular corporations under this new tax law; but here too, there may be some planning techniques that could be utilized to bypass this restriction.

All in all, it was definitely an exciting time to be part of this conference this year.  The strategies we had been implementing for so many years need to be revisited and changed based on the current tax climate.  Our earlier conversations that focused on the gift & estate tax will now need to include capital gains, cost basis and income tax planning as well.  And finally, now more than ever, it is important for all us – the financial planner, the CPA and the estate planning attorney – to put our heads together to provide a comprehensive team approach to a client’s wealth building and preservation goals.  These plans need to maximize income tax efficiency, utilize the available estate & gift tax exemptions prudently and at the same time fulfil the client’s personal succession planning goals.

[1] The new tax law is scheduled to sunset in 2025

Incapacity Planning

Posted on | by Rekha Rao

It’s hard to believe that the holiday season is well behind us and we are into the first week of February!  This post was originally scheduled for a January submission but due to a recent good interruption last week (my attendance at the Heckerling Conference on Estate Planning in Orlando, Florida), there was a slight delay.  Stay tuned for my musings of the conference in the coming weeks.  Thank you!

We all know that people download Wills off of Legal Zoom thinking that “some” plan in place is better than none at all; rather than incur the expense of engaging an attorney, their thought is to come up with a quick solution to ensure their family’s protection.  The problem with this approach is that one may actually be causing more harm than good.  For ex. if all a person created was a Last Will & Testament, then what happens if that person got hit by a truck and went into a coma for several months or years?  What does the family do when they need to pay bills, run the household or just take care of the incapacitated person?  Any good estate planning attorney will offer as part of the estate planning package along with a Last Will & Testament, a broad and robust Financial Power of Attorney as well as a Health Care Directive naming an Authorized Representative to make decisions upon incapacity.

 

Okay, so I know you are thinking: “Fine – I’ll just download these Powers of Attorney and I am all set.   From what you say, these documents are all I need to cover me then, right?”  Not so fast!  Drafting your own legal documents with the help of Legal Zoom or other online software tools is like trying to fix your car using a manual.  I don’t know about you but I know I will not get very far fixing a carburetor using a manual.

 

There are specific powers in a power of attorney that we look for when we help families – from the Medicaid planning perspective, I am looking for certain powers of the agent to help an aging parent or spouse set up trusts or apply for government benefits; for banks, I want to ensure that the agent has all of the proper authority under the document that banks are looking for; gift giving provisions are hugely helpful where there is a taxable estate and assets need to be transferred out of the estate when someone is incapacitated but where death may be imminent.

 

Finally, most people are clueless when you talk to them about the difference between probate and non-probate assets.  To give you some perspective – let’s talk about a widowed surviving spouse who takes it upon himself to draft all of the required documents discussed above and gets them properly signed, witnessed & notarized.  And let’s also say that this individual was savvy enough to ensure that his two minor children do not get the assets from his estate outright but rather he designed the Will to put those assets into a trust for his children until age 30.  Now let’s assume that this individual has a primary residence that he owns “joint tenants with a right of survivorship or JTWROS” with his brother and the only other asset he has is a significant life insurance policy where he has named his children as primary beneficiaries in equal shares on the designated beneficiary form.  Imagine this individual’s surprise when he is told that his beautifully designed Will cannot work as intended because at his death, these assets would bypass the Will and be handed to the named beneficiaries directly!  These are red flags that a good estate planner will point out and take it upon himself or herself to ensure that the documents are designed in a way that fulfill the Testator’s objectives.

 

It’s difficult to understand the work estate planning attorneys do on the back-end.  Although I have heard people stating this quite often, good estate planning is never about simply “copying & pasting” or using “boiler-plate” documents.  Each family’s situation is unique and even the most straightforward family situation may present nuances that are unique only to that family.  My job is to ensure that you or your family never have to spend wasted money undoing mistakes and hopefully never have to enter a court of law to contest or dispute the provisions contained within the documents.

Businesses and Unclaimed Property

Posted on | by Rekha Rao

We all know about unclaimed property for your personal assets. All of your tangible and intangible items that you may have forgotten about (CDs, bank accounts, life insurance etc.) or haven’t been claimed for a long time, will be deemed abandoned.  Eventually these assets escheat to the state.  Go ahead and check out www.MissingMoney.com right now to see if you have any unclaimed property out there that belongs to you!

 

Interestingly, I found out only recently that businesses can also have abandoned property for which they are required to file an annual report identifying items of unclaimed property.[1] This is due by October 31st each year whether or not the business has any unclaimed property to report.  This report is called the negative report which has no fee for filing but may carry with it significant penalties for NOT filing.  If you have a business either incorporated or have a business presence in the state of New Jersey make sure you visit the state’s website to see if you need to register your company and file your report(s)!

[1] http://www.wgcpas.com/news/alerts/846-tax-alert-new-jersey-creates-new-filing-requirement-for-unclaimed-property