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Lowenstein Sandler LLP

Bridget Harris

Bridget Harris

Associate

Lowenstein Sandler LLP
New Jersey, U.S.A.

tel: 973.597.2324
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Local Time: Sun. 22:36

Profile

In her estate planning practice, Bridget helps clients create plans that accomplish their personal and family goals while obtaining significant estate, gift, generation-skipping transfer (GST), and income tax benefits. She has experience drafting and implementing wills, revocable trusts, irrevocable life insurance trusts, grantor retained annuity trusts (GRATs), spousal lifetime access trusts, and both testamentary and inter vivos charitable split-interest trusts (CLATs and CRUTs).

Working closely with clients on prenuptial agreements, Bridget takes a sensitive yet strategic approach to this often stressful process. Protecting a client’s interests while minimizing his or her anxiety, Bridget has negotiated and drafted numerous prenuptial agreements designed to secure the future of privately held businesses and family wealth while treating the client's soon-to-be spouse with fairness and understanding.

In the area of tax-exempt organizations, Bridget advises private foundations and public charities on the highly complex formation and compliance processes. She has substantial technical skill in the numerous excise taxes applicable to private foundations.

Bridget's pro bono practice focuses on the acquisition and maintenance of federal income tax exemption under Internal Revenue Code (IRC) section 501(c)(3), with a particular emphasis on assisting charities in securing reinstatement of previously revoked tax-exempt status. In addition, she assists business leagues and professional associations in obtaining tax exemption under IRC section 501(c)(6).

Bar Admissions

    New York
    New Jersey

Education

New York University School of Law (J.D. 2013); Staff Editor, Journal of Law and Business
College of William and Mary (B.A. 2007), Chinese and Linguistics
Areas of Practice
Blogs

Capital Markets Litigation
Lowenstein Sandler LLP 

Litigation News for the Global Financial Community

Articles

In a case just decided by the New Jersey Appellate Division, Lowenstein Sandler helped a client successfully defeat New Jersey’s aggressive attempt to tax income a trust earned in other states. The Court ruled that New Jersey could not tax a trust’s out-of- state income even though the trust was created by a New Jersey resident.


A Little Background


Lowenstein Sandler represented the trustee of a trust created under the will of Fred Kassner, a co-founder of Liberty Travel. Because Mr. Kassner resided in New Jersey when he died, the trust is a “resident trust” under New Jersey tax law. The bad news is that New Jersey’s tax law states that a resident trust is taxable on all of its income, regardless of where that income is earned, for as long as the trust exists. The good news is that New Jersey courts long ago held it was unconstitutional to tax a trust’s income merely because a New Jersey resident created the trust, and the Division of Taxation informed taxpayers years ago in an official publication that it would not tax a resident trust’s income as long as the trust had no New Jersey trustee and no New Jersey property.


New Jersey said the current case was different, however, and that it could tax the trust on all of the trust’s income, because the trust earned some income in New Jersey (the trust paid tax on its New Jersey source income). New Jersey argued that prior law and its previous guidance did not shield the trust from tax on its out-of-state income, both because of changes in constitutional law and because New Jersey had notified taxpayers in 2011 that a resident trust that earns even a dollar of New Jersey source income is taxable on all of its income. One slight problem: New Jersey’s notification was issued five years after the tax year in question, and after Lowenstein Sandler had filed its Tax Court complaint challenging the tax assessment.

Effective April 1, 2014, New York has adopted significant changes to its estate, generation-skipping, and trust income tax laws.


Estate and GST Tax


First, the good news: since its “decoupling” from the federal estate tax, the New York estate tax exemption (the amount that each New York resident can pass tax-free at death to beneficiaries other than a surviving spouse or charity) was $1,000,000. Under the new law, the exemption will rise steadily over four years: to $2,062,500 as of April 1, 2014; $3,125,000 as of April 1, 2015; $4,187,500 as of April 1, 2016; and $5,250,000 as of April 1, 2017, through December 31, 2018. Starting in 2019, the exemption will be recalculated every year based on inflation, using $5,000,000 as a base and 2010 as a reference point, so that thereafter the New York exemption amount will match the federal exemption.


However, there are two important ways in which the New York exemption will differ from the federal exemption. The federal exemption is available to every estate, regardless of size. The New York exemption, however, is eliminated for estates exceeding 105% of the exemption amount. (A reduced exemption is applied to estates valued at between 100% and 105% of the
full exemption amount.) This creates a tax “cliff.” In 2018, for example, estates valued at or under $5,250,000 will pay no New York estate tax, but estates valued at $5,512,500 or more will be taxed on every dollar in the estate – not just the value in excess of $5,250,000, as is the case with the federal estate tax. Thus, the new law actually increases New York estate taxes for decedents whose estates exceed the cliff amount: instead of the $1,000,000 exemption previously applicable, those decedents’ estates receive no New York estate tax exemption at all.


WSG's members are independent firms and are not affiliated in the joint practice of professional services. Each member exercises its own individual judgments on all client matters.

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