Pursuant to N.J.S.A. 3B:8-12 [N.J.S.A. 3B:8-1, et. seq., the Elective Share Statute], “the surviving spouse or domestic partner may elect to take his elective share in the augmented estate by filing a complaint in the Superior Court within 6 months after the appointment of a personal representative of the decedent’s estate. The court may, before the time for election has expired and upon good cause shown by the surviving spouse or domestic partner, extend the time for election upon notice to persons interested in the estate and to distributees and recipients of portions of the augmented estate whose interests will be adversely affected by the taking of the elective share.”

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The Elective Share Statute originally appeared on NJ Family Issues on January 20, 2012.

Under the version of N.J.S.A. 3B:3-3(b) prior to the February 27, 2005 amendments, a surviving spouse was entitled to $50,000, plus 50% of the balance if there are issue from the marriage.

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Surviving spouse originally appeared on NJ Family Issues on January 20, 2012.

Section 2206 of the Internal Revenue Code provides:

Unless the decedent directs otherwise in his will, if any part of the gross estate on which tax has been paid consists of proceeds of policies of insurance on the life of the decedent receivable by a beneficiary other than the executor, the executor shall be entitled to recover from such beneficiary such portion of the total tax paid as the proceeds of such policies bear to the taxable estate.

[26 U.S.C.A. § 2206.]

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Insurance on the life of the decedent receivable by a beneficiary other than the executor originally appeared on NJ Family Issues on December 16, 2011.

“‘Undue influence’ has been defined as ‘mental, moral or physical’ exertion which has destroyed the ‘free agency of a testator’ by preventing the testator ‘from following the dictates of his own mind and will and accepting instead the domination and influence of another.’” Haynes v. First Nat’l State Bank, 87 N.J. 163, 176 (1981) (quoting In re Estate of Neuman, 133 N.J. Eq. 532, 534 (E. & A. 1943)); Pascale v. Pascale, 113 N.J. 20, 30 (1988).

The doctrine “afford[s] donors protection against their voluntary actions, the import of which they may not have fully understood.” In re Estate of Penna, 322 N.J. Super. 417, 423 (App. Div. 1999) (citing Bronson v. Bronson, 218 N.J. Super. 389, 392 (App. Div. 1987)).

To prove undue influence the movant must meet the twofold burden of showing 1) the donor-decedent and donee shared a confidential relationship; and 2) suspicious circumstances existed. In re Estate of Stockdale, 196 N.J.275, 303 (2008). If the contestant of the will, or will substitute, can show these elements, the burden shifts to the proponent to overcome the presumption of undue influence; normally, the proponent must do so by a preponderance of the evidence, but in certain circumstances, the more rigorous clear and convincing standard must be met. Ibid.; Haynes, supra, 87 N.J. at 177-81.

A confidential relationship exists where “trust is reposed by reason of the testator’s weakness or dependence or where parties occupied relations in which reliance is naturally inspired or in fact exists.” Haynes, supra, 87 N.J. at 176 (quoting In re Estate of Hopper, 9 N.J. 280, 282 (1952)). The suspicious circumstances “need be no more than ‘slight’” in order to shift the burden to the proponent of the transfer. Ibid.; Estate of Stockdale, supra, 196 N.J. at 303. Generally, whether the contestant has sufficiently demonstrated these elements is a question best left for the finder of fact. In re Livingston’s Will, 5 N.J. 65, 73 (1950) (“Each case of this nature must be governed by the particular facts and circumstances attending the execution of the will and the conduct of the parties who participated in order to determine if the coercion exerted was ‘undue.’”); see also In re Will of Liebl, 260 N.J. Super. 519, 527-28 (App. Div. 1992), certif. den. 133 N.J. 432 (1993).

NOTE: This Blog/Blawg, NJ Family Issues, is managed by Paul G. Kostro, Esq., an attorney/lawyer/mediator in Linden, Union County, New Jersey.

Undue influence and confidential relationships originally appeared on NJ Family Issues on December 16, 2011.

The New Jersey Transfer Inheritance Tax Act (N.J.S.A. 54:33-1 et seq.) (“Act”) creates a presumption that a gift made by a decedent during his life, is taxable as a testamentary substitute if the same was made in “contemplation of death” or is “or intended to take effect in possession or enjoyment at or after such death.” N.J.S.A. 54:34-1(c). This presumption exists where the gift was “made without adequate valuable consideration . . . within three years prior to the” decedent’s death and comprised “a material part of [the decedent’s] estate” or was “in the nature of a final disposition or distribution thereof.” Ibid. No such presumption exists if the decedent had gifted a material portion of his or her estate prior to the “three-year period.” Ibid.

[See e.g. Makris v. Director, Div. of Taxation, 4 N.J. Tax 139, 144 (Tax 1982) (transfers amounting to 36.7% of the decedent’s estate “constituted a material part” of the same); Maguire Estate v. Director, Div. of Taxation, 9 N.J. Tax 437, 445-46 (Tax 1987) (gifts valued as of the decedent’s death and “representing 17.7% of decedent’s estate, are substantial” and thus, “constitute a ‘material part’ of [the] estate”).]

The statutory presumption requires the State to initially “prove by a preponderance of evidence” four essential facts, namely, (a) a transfer; (b) without adequate consideration; (c) of a material portion of the decedent’s estate; and (d) made within three years of the decedent’s death. Swain v. Neeld, 28 N.J. 60, 67 (1958).

Once the Director has thus satisfied his burden of proof under N.J.S.A. 54:34-1(c), the burden now shifts to the taxpayer not only to prove by a preponderance of the evidence that decedent’s gift was not made in contemplation of his death, but also to ultimately persuade the court in this regard. Swain, supra, 28 N.J. at 65-68. The taxpayer’s proofs in this regard must be competent and “strong enough” such that “reasonable persons would differ about whether the presumed fact could be found.” Estate of Berg v. Director, Div. of Taxation, 17 N.J. Tax 256, 264 (Tax 1998).

The statutorily undefined term “contemplation of death” is not “limited . . . to its literal meaning of a gift . . . made with the known imminence of death.” In re Estate of Lichtenstein, 52 N.J. 553, 567-68 (1968). In other words, a transfer may be taxable even when made without thoughts of immediate or imminent death and “the thought of death” need not be the “controlling motive” for the gift. Id. at 570 (contrasting with this requirement under the federal estate tax law). Rather, the test in New Jersey is whether, regardless of “the existence of any life associated motives,” the decedent had an “impelling motive . . . to make a present disposition in lieu of a testamentary disposition.” Swain, supra, 28 N.J. at 69. Thus, a gift can be deemed as made in contemplation of death where a “transferor devoid of any thought of escaping inheritance taxes” makes a gift because he or she is “motivated by a desire to make an essentially testamentary disposition of his [or her] property.” Ibid. See also N.J.A.C. 18:26-5.7(b) (defining “contemplation of death” to include “that expectancy of death which actuates the mind of a person of the execution of his will and is therefore not restricted to that expectancy of death which actuates the mind of a person making a gift causa mortis”).

The question of whether the decedent had an “impelling” motive to make a gift during his life as opposed to after his death is factual. Lichtenstein, supra, 52 N.J. at 570. In other words, determination of the fact that the gift is a “testamentary substitute depends upon the donor’s subjective state of mind at the time of the transfer, and that state of mind is a question of fact . . . to be ascertained by reconstruction by means of objective indicia.” Meyerson v. Director, Div. of Taxation, 15 N.J. Tax 128, 133-134 (Tax 1995). Objective indicators of a decedent’s intent include, but are not limited to:

the age and general condition of health of the donor at the time of making the gift; the time interval between the inter vivos transfer and death; the existence of a desire to evade inheritance taxes; whether or not the inter vivos transfer was part of a testamentary scheme or plan; past history of substantial gifts by the donor; whether or not the gift was made to the natural objects of the donor’s bounty; whether or not there existed an emergency situation which may have prompted the donation (e.g., donee’s illness requiring large expenditures).

[Swain, supra, 28 N.J. at 70]

NOTE: This Blog/Blawg, NJ Family Issues, is managed by Paul G. Kostro, Esq., an attorney/lawyer/mediator in Linden, Union County, New Jersey.

There is a presumption that a gift made by a decedent during his life is taxable as a testamentary substitute if the same was made in contemplation of death or is intended to take effect in possession or enjoyment at or after such death originally appeared on NJ Family Issues on December 8, 2011.

Even where it is presumed that a Testatrix is of sound mind to execute a Will, that presumption can be overcome, however, upon a showing of undue influence. Haynes v. First Nat’l State Bank, supra, 87 N.J. 163, 176; Gellert v. Livingston, 5 N.J. 65, 76. Undue influence has been defined as “mental, moral or physical exertion which has destroyed the free agency of a Testator by preventing the Testator from following the dictates of his own mind and will and accepting instead the domination and influence of another.” Haynes v. First Nat’l Bank of N.J., supra, 87 N.J. 163, 176; In re Estate of Neuman, 133 N.J. Esq. 532, 534 (E. & A. 1943); In re Estate of Stockdale, 196 N.J. 275, 302-03 (2008).

However, “[n]ot all influence is ‘undue’ influence.” Gellert, supra, 5 N.J. at 73. “It denotes conduct that causes the testator to accept the ‘domination and influence of another’ rather than follow his or her own wishes.” In re Estate of Stockdale, supra, 196 N.J. at 303 (citing Haynes, supra, 87 N.J. at 176).

“Ordinarily, the burden of proving undue influence falls on the will contestant.” Id. at 303. However, “if the will benefits one who stood in a confidential relationship to the testator” and that “confidential relationship” is “coupled with suspicious circumstances, undue influence is presumed and the burden of proof shifts to the will proponent to overcome the presumption.” Ibid. A confidential relationship exists if the testator, “‘by reason of… weakness or dependence,’ reposes trust in the particular beneficiary, or if the parties occupied a ‘relation[ship] in which reliance [was] naturally inspired or in fact exist[ed].’” Ibid. (quoting In re Hopper, 9 N.J. 280, 282 (1952)). “The factors to be considered in determining whether a confidential relationship is present…include whether trust and confidence between the parties actually exist[ed], whether they [were] dealing on terms of equality,…whether one side [has] exerted ‘over-mastering influence’ over the other or whether one side [was] weak and dependent.” Estate of Ostlund v. Ostlund, 391 N.J. Super. 390, 402 (App. Div. 2007). “Its essentials are both ‘a reposed confidence and the dominant and controlling position of the beneficiary of the transaction.’” Ibid. (quoting Stroming v. Stroming, 12 N.J. Super. 217, 224 (App. Div.), certif. denied, 8 N.J. 319 (1951)).

The contestant has the burden of proving, by a preponderance of the evidence, that a confidential relationship exists. Ibid. The “preponderance of the evidence” standard requires the contestant to establish that the existence of a confidential relationship is “more probable than not.” Id. at 403. However, existence of a confidential relationship between the testator and the beneficiary does not alone create a “presumption of undue influence.” Gellert, supra, 5 N.J. at 71. There must also be “suspicious circumstances,” which need only be “slight.” Ibid.; Haynes, supra, 87 N.J. at 176; In re Will of Liebl, 260 N.J. Super. 519, 528 (App. Div. 1992), certif. denied, 133 N.J. 432 (1993).

NOTE: My Law Office is located at 726 West Saint Georges [W. St. Georges] Avenue (Route 27), Linden, Union County, NJ. Telephone: 908-486-2200; EM@IL

Existence of a confidential relationship between the testator and the beneficiary does not alone create a presumption of undue influence originally appeared on NJ Family Issues on November 29, 2011.

It is generally presumed that a testator or testatrix “was of sound mind and competent” when he/she executed the Will. Haynes v. First Nat’l State Bank, 87 N.J. 163, 176 (1981), citing Gellert v. Livingston, 5 N.J. 65, 71. A very low degree of capacity is sufficient. In re Will of Landsman, 319 N.J. Super. 252 (App. Div. 1999); In re Liebl, 260 N.J. Super. 519 (App. Div. 1992). Accordingly the burden is generally on the contestant to prove, by clear and convincing evidence, that the testator or testatrix, at the time the Will was executed, lacked the requisite mental capacity to make a Will. See, e.g., In re Frisch, 250 N.J. Super. 438 (Law Div. 1991); In re Weeks’ Estate, 29 N.J. Super. 533, 544 (App. Div. 1954); In re Politowicz, 124 N.J. Super. 9 (App. Div. 1973). Medical testimony is ordinarily required to assist in establishing a lack of testamentary capacity.

NOTE: My legal services include family law, divorce, child support, litigation, arbitration, mediation, child custody and visitation, alimony, equitable distribution, separation agreements, palimony, PSA, property settlement agreement, premarital and prenuptial agreements, midmarriage and marital agreements.

Medical testimony is ordinarily required to assist in establishing a lack of testamentary capacity originally appeared on NJ Family Issues on November 29, 2011.

Pursuant to N.J.S.A. 3B:2-2, the Superior Court has “full authority over the accounts of fiduciaries.” An action may be commenced by an interested person to compel a fiduciary to file an accounting and, in appropriate circumstances, to file an inventory and appraisement. Pressler, Current New Jersey Court Rules, comment to R. 4:87-1(b). “Unless for special cause shown, he shall not be required to account until after the expiration of one year after his appointment.” N.J.S.A. 3B:17-2. A creditor may be an interested party and may compel an accounting. In re Sycle’s Estate, 16 N.J. Misc. 23, 24-25 (Prerog. Ct. 1938).

Under N.J.S.A. 3B:22-4:

Creditors of the decedent shall present their claims to the personal representative of the decedent’s estate in writing and under oath, specifying the amount claimed and the particulars of the claim, within nine months from the date of the decedent’s death. If a claim is not so presented to the personal representative within nine months from the date of the decedent’s death, the personal representative shall not be liable to the creditor with respect to any assets which the personal representative may have delivered or paid in satisfaction of any lawful claims, devises or distributive shares, before the presentation of the claim.

“[T]he word ‘creditor’ is not used in the restricted sense of one to whom a debt is due, but includes a party entitled to prosecute a suit upon a tort of the deceased.” Hackensack Trust Co. v. Van Den Berg, 92 N.J.L. 412, 413-14 (E. & A. 1918); see Forwood v. Green’s Estate, 42 N.J. Super. 423 (Cty. Ct. 1956). “The statute itself has been said to contain ‘ample indicia of an intent to include all claims enforceable by suit terminating in a money judgment.’” Pitale v. Leroy Holding Co., 65 N.J. Super. 361, 365-66 (Ch. Div. 1961) (quoting Van Den Berg, 92 N.J.L. at 413).

One of the major purposes of probate is to see that the just debts of the decedent are paid from his or her estate. A creditor must present their written claim to the personal representative who may accept or deny the claim. The Probate Part does not adjudicate common creditor claims. A creditor whose claim is denied by a personal representative must initiate a Law Division action to reduce the claim to judgment. Once a creditor has reduced a claim to judgment, the creditor has standing to demand an accounting if the judgment is not satisfied.

N.J.S.A. 3B:22-10 states:

Where the assets of an estate exceed the amount needed to pay claims presented within the time limited pursuant to [N.J.S.A 3B:22-4], a claimant, who has failed to present his claim within the time so limited, may present the claim, in the form required by that section, to the personal representative at any time before the remaining assets of the estate shall have been distributed or paid over pursuant to law.

In essence, N.J.S.A. 3B:22-10 gives tardy creditors another chance to file a claim, up to the point where the assets are distributed from the estate.

N.J.S.A. 3B:22-15 states:

In an action by a creditor against a personal representative, for the payment of a ratable proportion of his debt, it shall be presumed that the assets of the estate due a devisee or heir have not been paid over to him, if no refunding bond from the devisee or heir is on file. However, the presumption may be rebutted by proof that the devise or distributive share was actually paid over to him.

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The Superior Court has full authority over the accounts of fiduciaries originally appeared on NJ Family Issues on November 14, 2011.

Rule 4:42-9 states:

(a) Actions in Which Fee Is Allowable. No fee for legal services shall be allowed in the taxed costs or otherwise, except
. . . .
(3) In a probate action, if probate is refused, the court may make an allowance to be paid out of the estate of the decedent. If probate is granted, and it shall appear that the contestant had reasonable cause for contesting the validity of the will or codicil, the court may make an allowance to the proponent and the contestant, to be paid out of the estate. . . .

In a will contest, the allowance of counsel fees under Rule 4:42-9(a)(3) is discretionary. In re Reisdorf, 80 N.J. 319, 327 (1979). “While deference will ordinarily be given to discretionary decisions, such decisions will be overturned if they were made under a misconception of the applicable law.” O’Neill v. City of Newark, 304 N.J. Super. 543, 550 (App. Div. 1997). Where the decision turns on a question of law that flows from established facts, the trial court decision is not entitled to any deference, and appellate review is de novo. Dempsey v. Alston, 405 N.J. Super. 499, 509 (App. Div.), certif. denied, 199 N.J. 518 (2009).

“Except in a weak or meretricious case, courts will normally allow counsel fees to both proponent and contestant in a will dispute.” In re Reisdorf, supra, 80 N.J. at 326. An unsuccessful contestant is entitled to costs when he or she shows “reasonable cause” for bringing a probate challenge, defined as a belief that “rested upon facts or circumstances sufficient to excite in the probate court an apprehension that the testator lacked mental capacity or was unduly influenced[.]” In re Will of Caruso, 18 N.J. 26, 35 (1955); accord In re Will of Eddy, 33 N.J. Eq. 574, 578 (E. & A. 1881). This requirement “`works no hardship upon the contestant and affords some protection to the estate from speculative and vexatious litigation.’” In re Caruso, supra, 18 N.J. at 35 (quoting In re Sebring’s Will, 84 N.J. Eq. 453, 455 (Prerog. Ct. 1915)).

In re Sebring’s Will cautions against awarding counsel fees where reasonable cause to contest the will has not been established because the failure to do so “affords an easy mode for a disappointed heir to thwart the intentions of the testator by squandering the estate in litigation, or compelling the legatees to accede to unreasonable terms of settlement.” In re Sebring’s Will, 84 N.J. Eq. 453, 455 (Prerog. Ct. 1915)).

NOTE: My legal services include family law, divorce, child support, litigation, arbitration, mediation, child custody and visitation, alimony, equitable distribution, separation agreements, palimony, PSA, property settlement agreement, premarital and prenuptial agreements, midmarriage and marital agreements.

In a will contest, the allowance of counsel fees is discretionary originally appeared on NJ Family Issues on November 14, 2011.

There is a presumption that a will’s “testator was of sound mind and competent when he executed the will.” Gellert v. Livingston, 5 N.J. 65, 71 (1950). However, if the execution of the will was tainted by “undue influence,” it may be overturned. Haynes v. First Nat’l State Bank of N.J., 87 N.J. 163, 176 (1981); Gellert, supra, 5 N.J. at 76. “[U]ndue influence is a mental, moral, or physical exertion of a kind and quality that destroys the free will of the testator by preventing that person from following the dictates of his or her own mind as it relates to the disposition of assets[.]” In re Estate of Stockdale, 196 N.J. 275, 302-03 (2008). However, “[n]ot all influence is `undue’ influence.” Gellert, supra, 5 N.J. at 73. “It denotes conduct that causes the testator to accept the `domination and influence of another’ rather than follow his or her own wishes.” In re Estate of Stockdale, supra, 196 N.J. at 303 (citing Haynes, supra, 87 N.J. at 176).

“Ordinarily, the burden of proving undue influence falls on the will contestant.” Id. at 303. However, “if the will benefits one who stood in a confidential relationship to the testator” and that “confidential relationship” is “coupled with suspicious circumstances, undue influence is presumed and the burden of proof shifts to the will proponent to overcome the presumption.” Ibid. A confidential relationship exists if the testator, “`by reason of . . . weakness or dependence,’ reposes trust in the particular beneficiary, or if the parties occupied a `relation[ship] in which reliance [was] naturally inspired or in fact exist[ed].’” Ibid. (quoting In re Hopper, 9 N.J. 280, 282 (1952)). “The factors to be considered in determining whether a confidential relationship is present . . . include whether trust and confidence between the parties actually exist[ed], whether they [were] dealing on terms of equality, . .. whether one side [has] exerted `over-mastering influence’ over the other or whether one side [was] weak and dependent.” Estate of Ostlund v. Ostlund, 391 N.J. Super. 390, 402 (App. Div. 2007). “Its essentials are both `a reposed confidence and the dominant and controlling position of the beneficiary of the transaction.’” Ibid. (quoting Stroming v. Stroming, 12 N.J. Super. 217, 224 (App. Div.), certif. denied, 8 N.J. 319 (1951)).

Plaintiff has the burden of proving, by a preponderance of the evidence, that a confidential relationship exists. Ibid. The “preponderance of the evidence” standard requires a plaintiff to establish that the existence of a confidential relationship is “more probable than not.” Id. at 403. However, existence of a confidential relationship between the testator and the beneficiary does not alone create a “presumption of undue influence.” Gellert, supra, 5 N.J. at 71. There must also be “suspicious circumstances,” which need only be “slight.” Ibid.; Haynes, supra, 87 N.J. at 176; In re Will of Liebl, 260 N.J. Super. 519, 528 (App. Div. 1992), certif. denied, 133 N.J. 432 (1993).

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Existence of a confidential relationship between the testator and the beneficiary does not alone create a presumption of undue influence originally appeared on NJ Family Issues on November 14, 2011.