July 29, 2004
There are 7 Common Misconceptions about Domestic Partnerships that you need to know about. You should know:
- A Domestic Partner has no right to inherit from the other Domestic Partner. A Domestic Partner receives nothing on their partner's death unless they have a Will naming him or her.
- A Domestic Partner has no say in their partner's funeral arrangements unless the deceased partner has a Will naming their partner to make those decisions.
- A Domestic Partner's estate may pay federal and New Jersey estate taxes (reducing the amount going to their partner) even if they leave everything to their Domestic Partner. Proper planning can reduce or eliminate these taxes.
- A Domestic Partner has no "parental" rights or obligations with respect to their partner's children. These rights can be granted in a Will.
- A Domestic Partner has no right to a "spousal elective share" of his or her partner's estate (a right to take one-third of a spouse's estate if left less than that from the spouse's estate) and may be completely disinherited.
- Domestic Partners may become liable for each other's long term medical care. This is of special significance to opposite sex couples over 62 years of age who are considering becoming Domestic Partners.
- Domestic Partners may not file joint income tax returns, not even for New Jersey income taxes.
These issues, and others, can be addressed by proper planning in a Will and in a Domestic Partnership Agreement between Domestic Partners.
Your telephone calls on this and other issues are welcome.
New Jersey's New Millionaire's Tax
I received several comments on topic last week on the New Jersey "Millionaire's Tax.” The discussion was not intended to be political or exhaustive.
Anthony A. Vecchio Adspec Rainbow, Inc., owner of a promotional marketing firm at 561 Northfield Avenue in West Orange (http://www.adspecrainbow.com) wanted to know what the new tax means to those of us earning less than $500,000? The revenue from the Millionaire's Tax is to be used solely for increasing the property tax rebates given by New Jersey every year. Those making less than $200,000 will get back more in their property tax refund than they otherwise would have and those making between $200,000 and $500,000 will not be affected.
Overall, and without getting into specific taxes and rates, you are paying a little bit less in federal income taxes, the same in New Jersey income taxes, and your property, sales and employment taxes and user fees to the State have gone up significantly due to decreases in Federal funding to the states and cuts in federal programs and services that the states have picked up.