New Jersey Lawyer & Attorney : Stark & Stark Law Firm : New Jersey Law Blog

If someone were to die without having a will in place, a common misconception that is often times mentioned is that the deceased’s assets are turned over to the State. This is completely false. Instead, state law determines who will receive the deceased’s property. Each state has a statute (the intestacy statute) that provides who the people are that are the closest relatives to the deceased, and those relative receive the deceased’s estate.
 

New Jersey law is as follows:

For a single person:

1. To the person’s descendants
2. If there are no descendants, to the person’s parents
3. If there are no descendants or parents, to the descendants of the person’s parents
4. If there are no descendants, parents, or descendants of parents, one-half to the paternal grandparents, or if they are also deceased, to their descendants; and the other one-half to the maternal grandparents, or their descendants
5. If there are no descendants of grandparents, to stepchildren
6.  

For a married person (spouse or domestic partner):

1. The entire estate passes to the surviving spouse, if there are no descendants or parents of the deceased.
2. If there are descendants, all of whom are also descendants of the surviving spouse, then the surviving spouse receives the entire estate.
3. If the deceased is survived by a spouse and parent(s), the spouse receive the first 25% of the estate, but not less than $50,000 nor more than $200,000, plus 75% of the balance; the parent(s) receive the remaining property of the estate.
4. If the surviving descendants are also descendants of the surviving spouse, and the surviving spouse has other descendants; or if there is a descendant of the deceased who is not a descendant of the surviving spouse, then the spouse receives the first 25% of the estate, but not less than $50,000 nor more than $200,000, plus 50% of the balance.  The descendants receive the remaining property of the estate.

Now, maybe these are the people who you would want to inherit from you. But maybe they are not. Preparing and signing a Will gives you the power of choice to benefit others - family, friends, and/or charity - rather than relinquishing that choice to the government.
 

There is another important issue that state law will control if a person has died without a Will: guardianship of your minor children. If a child under the age of 18 has no living parent, state law determines that the child’s closest next of kin have the first right to serve as the child’s guardian. Being the closest relative does not really qualify someone to raise a child. And, if several persons are related in the same way to the child (for example, both sets of grandparents), the Court then decides, with both sides of the family incurring legal fees as well suffering an emotional hardship. Again, it is a matter of choice - should you choose who should raise your child in the event of an untimely death, or should the government?
 

Preparing a Will is not something you do for you - it is something you do for your family. To ensure your loved ones are benefitted, that your children are properly cared for, and that your estate is administered at the least possible cost, please contact us as to how we can assist you in preparing a Will and other estate planning documents.

Rose Durkin is a Shareholder in Stark & Stark's Lawrenceville, New Jersey office specializing in Wills & Estate Planning. For questions, please contact Ms. Durkin.

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Paul Norris, a colleague of mine here at Stark & Stark, and I authored the following blog. Together, we wanted to make those who are currently caring for an aging loved one aware of the various options available to them as alternatives to the more traditional Power of Attorney. 

It is an issue that most of us will be confronted with at some point in the future; how best to care for an aging loved one. People commonly think a Power of Attorney is the only method by which to manage another person’s affairs who may no longer be competent to do so. There are other forms of protective arrangements, however, under New Jersey Law which provides a person who is to serve in a  fiduciary role with substantial latitude to provide care for their loved one. These arrangements differ in nature as to the scope of the supervisory role.

The two most common forms of protective arrangements under New Jersey Law are Guardianships and Conservatorships.

Guardianships are Court supervised arrangements that provide surrogate decision making for minors or persons who are incapacitated – that is, unable to manage their property and affairs effectively.  The arrangement is typically commenced by a third-party application to the Court, and once the Court adjudicates a person to be incapacitated, it obtains jurisdiction over an incapacitated person.  N.J.S. 3B:12-1 seq.; New Jersey Court rule 4:86-1 through 10.

A Plenary or General Guardianship grants to the appointed Guardian full substituted decision making authority over all aspects of an incapacitated person’s life, including matters such as medical decisions, handling legal affairs, managing property and finances, making vocational choices, determining residence and social associations, voting, maintaining a driver’s license, seeking employment, and entering into marriage.  Because the authority of a General Guardian is sweeping, there is a preference in New Jersey to employ limited Guardianship where possible, so that an incapacitated person can retain legal authority to make decisions over as many subject areas as possible, and safe to do so.  Even a General Guardian is expected to consider and take into account expressed preferences of the incapacitated person.  Guardianships are frequently used with respect to persons who are developmentally disabled (once they attain the age of eighteen), those who are cognitively impaired, and for elderly persons with diminishing capacity.  Guardianships are also put in place where minors (under the age of eighteen) have monies or property to be managed, but, given their age, lack the legal authority to do so. 

An alternate protective arrangement is the conservatorship, which is a voluntary arrangement employed by a competent person (the Conservatee) to grant authority to a third-party (the Conservator) to manage his or her property.  New Jersey Court Rule 4:86-11.  Conservatorships are voluntary proceedings where the Conservatee is legally competent, and the legal arrangement cannot be imposed by a Court over the objections of the Conservatee.  If a Conservator is appointed through a Court proceeding, the Court oversees this arrangement and the Conservatee can at any time – providing that he or she is competent, revoke the Conservatorship.  This type of arrangement, while as not as commonly employed as Guardianships, is often appropriate where the Conversatee has limited ability to manage his or her own financial affairs, or acknowledges a difficulty in doing so effectively.  Individuals with cognitive impairments that interfere with their ability to properly handle financial matters, older persons unable to resist undue influence of family or third-parties over their financial affairs, and person suffering from mental illness, or other afflictions that place their financial stability at risk are appropriate candidates for Conservatorship.
 

Both Guardianships and Conservatorships can only be put in place by a Court, and continuing Court supervision follows the initial appointment.  This can provide significant protection to a person who is vulnerable, lacks capacity, or suffers from cognitive limitations.  Many people choose to avoid involving Courts in their personal affairs by executing in advance of any potential infirmity, Durable Powers of Attorney and Medical Advance Directives.

The decision to enter into protective arrangements should be carefully considered, as the arrangement might later be scrutinized by other individuals who feel that the arrangement is not in the best of the interests of the individual who is receiving assistance.  As such, it is often suggested that you consult with an attorney to ensure that the process is fair, and moreover, ensure that the individual receives the best possible assistance.

If you have questions regarding guardianships or conservatorships and would like to discuss your specific case in more detail, please contact me to set up an appointment here in my firm’s Lawrenceville, New Jersey office.

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Noah A. Schwartz, member of Stark & Stark’s Business & Corporate Group in the firm’s Marlton, New Jersey office, will be featured on this evenings edition of WHYY’s Newsworks Tonight. The program will air from 6:00 – 6:30 PM on station 90.9 FM.

Mr. Schwartz joins host Maiken Scott as they discuss a common issue facing many families after the death of a loved one: do we have to pay bill collectors looking for money after our family member has passed away? Mr. Schwartz discusses special considerations offered after the loss of a spouse, child and parent.

**Updated September 28, 2011 - 8:40 AM** In case you missed last night's edition of Newsworks Tonight with Mr. Schwartz, you can listen to the full program online here.

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In probate court actions, the award of attorney fees to a contestant of a last will & testament, is within the discretion of the Court. Except in a "weak or meretricious" case, Courts will generally allow counsel fees to both sides.

However, when a case involves non-probate assets, such as life insurance policies and pension proceeds, attorneys fees will not be paid out of these assets as they pass by operation of contract and property law and are outside of the decedent's estate.

In the Matter of the Estate of John Oliva, Jr., Deceased, a case decided by the Superior Court of New Jersey, Appellate Division, on August 25, 2011, the attack was on assets resulting from the decedent's life insurance policy and pension. The Court found that there was no authority for finding that such assets were part of the probate estate available to satisfy an award of counsel fees. In addition, the Court found that there could only be an award of counsel fees against an executrix personally where there was a "gross abuse of trust and confidence".

In general, New Jersey Courts follow the "American Rule" which requires each party to pay their own attorneys fees. While there is an exception in probate matters, that exception is limited and only applies to matters involving assets that are part of the probate estate.

If you have questions regarding the above matter, feel free to contact me here in my firm’s Lawrenceville, New Jersey office to discuss this matter in more detail.  

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In the Matter of the Estate of BELVA PLAIN, Superior Court of New Jersey, Chancery Division, Probate Part, Essex County, Docket No. ESX-CP-0048-2011, decided on July 22, 2011, the question was raised as to whether a child of a decedent was precluded from challenging the Last Will and Testament of his mother by his execution of a settlement agreement eighteen years before her death.  In that settlement agreement, the son covenanted not to challenge his mother's documents after her death.
 

The son filed a complaint seeking to invalidate his mother's will on the basis that she lacked the testamentary capacity to make the will or that the will was the result of undue influence.  The family history of the parties was one of considerable animosity and extensive litigation. Prior to the mother's death, she found it necessary to seek multiple restraining orders against her son.  At one point, the restraints barred her son from entering the municipality where his mother lived.   In 1993, approximately eighteen years before the mother died, the son and mother executed a settlement agreement which globally resolved more than a dozen pending litigations and resulted in the vacation of all outstanding restraining orders. In the Agreement, the son agreed not to attempt to set aside or contest the mother's will, or make any claim against the mother's estate. The mother agreed to make annual payments to the son for his support which would continue for the rest of the son's life. The mother also agreed to fund the son's psychiatric care up to a set maximum amount per year. The mother agreed to create an inter vivos trust that would be funded upon her death in order to continue to fulfill the obligation to support the son under the Agreement. The son, as of the time of trial, had received in excess of five hundred thousand dollars under the terms of the Agreement. Further, since 1990 the mother had executed ten different wills, all purporting to disinherit the son; the last eight wills executed after the parties’ 1993 Agreement, including the March 21, 2007 Will, all referred to the mother's obligations to support her son as set forth in the Agreement.
 

The agreement also required the mother to make a total of four future visits with her son under the supervision of the son's psychiatrist; two pre-scheduled telephone calls to the son per year at times and intervals to be determined by the mother; to write the son two letters annually, whose timeliness, content and duration shall be totally within the discretion of the mother.  Other than the contact detailed above, the Agreement forbade the son from contacting, attempting to contact or communicate with the mother or any other member of the family without the prior written consent of the specific family member. 
 

To avoid enforcement of the very clear language in the 1993 Settlement Agreement prohibiting Will challenges of precisely the sort initiated by the son in this case, the son first argued that the Settlement Agreement was both procedurally and substantively unconscionable. The Court noted that our legislature has addressed the issue of unconscionability as it pertains to contracts. N.J.S.A. § 12A:2-302 states, "(1) If the court as a matter of law finds the contract or any clause of the contract to have been unconscionable at the time it was made the court may refuse to enforce the contract, or it may enforce the remainder of the contract without the unconscionable clause, or it may so limit the application of any unconscionable clause as to avoid any unconscionable result."  The common law doctrine of unconscionability has proven difficult to define and has been rarely invoked undoubtedly because, other than in exceptional cases, it has been largely viewed as grossly interfering with the freedom to contract.  There are very few cases from New Jersey courts examining and defining unconscionability.
 

The son' next claim was that he was at an economic disadvantage when dealing with his mother and that he was required to "take whatever was thrown his way."  It was an undisputed fact that the son was represented by counsel at the time of the 1993 Settlement Agreement and that the parties engaged in multiple negotiations over a period of time exceeding one year. It was also undisputed that there was a lengthy history of litigation between the parties.  In light of the rancorous history of litigation and personal conflict, and also in light of the substantial consideration provided to the son over the years, the Court found nothing troubling about the agreement, either procedurally or substantively, as a matter of law.
 

Lastly, the son argued that he was excused from performance of the contract, because the his mother materially breached the agreement by failing to write him two letters per year as was required by the Settlement Agreement.  The Court noted that in contract law, a ‘material’ breach of contract is a failure to perform the contract that strikes so deeply at the heart of the contract that it renders the agreement irreparably broken and defeats the purpose of making the contract in the first place.  If there is a material breach the other party can simply end the agreement and go to court to try to collect damages caused by the breach.  The Court determined that due to the fact that the mother had total discretion to determine the timing, content, and duration of these letters, and, although there were questions as to just how therapeutic these letters could reasonably be expected to be, or how material they were to the overall agreement, the son's continuing to accept the other benefits of the Agreement in light of this alleged breach led to the conclusion that the son waived his right to use the breach as a defense to nonperformance.
 

The Court also found that the son's claims were also barred by the equitable doctrine of laches in view of his failure to timely act.   While the son claimed that his mother violated the Agreement shortly after it was executed by failing to send him two letters per year, he did not act on this knowledge, choosing instead to sit on his rights until he brought a will contest prohibited by the express terms of the Agreement. The Court found that a period of close to eighteen years without any assertion of his rights under the Agreement constitutes inexcusable delay and that the son was barred by laches.
 

Similarly, the doctrine of equitable estoppel barred the son's challenge to the contract. Equitable estoppel prevents one from rectifying his own grossly negligent mistake at the expense of another who has, without negligence, been misled.  The Court found that the son conducted himself in such a way as to lead all parties to believe the contract was still in force and to allow the son to assert the existence of a material breach negating his own obligations under the contract after all of these years would amount to fraud by conduct and would violate the Court’s equitable responsibilities.
 

The contract signed between the son and mother was deemed to be enforceable and the son was barred from making any claims concerning his mother's will.

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In a recent case decided by the Appellate Division of the Superior Court of New Jersey on June 17, 2011 (In The Matter of the Estate of Blanche T. Riordan, Deceased, Docket  No. A-4123-09T4; Docket No. A-4464-09T4; Superior Court of New Jersey, Appellate Division), the Trial Court concluded that the decedent had testamentary capacity when she executed her will and that the will was not the product of undue influence. 
 

The Plaintiffs argued that the Trial Court's finding that the decedent possessed the requisite testamentary capacity to execute a will was not supported by sufficient, credible evidence and rather, "was so far wide of the mark and contrary to competent evidence in the record as to amount to a manifest denial of justice.” The Appellate Division found the findings of the Trial Court on the issues of testamentary capacity and undue influence, though not controlling, were entitled to great weight since the Trial Court had the opportunity of seeing and hearing the witnesses and forming an opinion as to the credibility of their testimony reasonably credible evidence as to offend the interests of justice.
 

As a general principle, New Jersey law requires only a very low degree of mental capacity to execute a will. The gauge of testamentary capacity has been stated to be whether the testator can comprehend the property he/she is about to dispose of; the natural objects of his/her bounty; the meaning of the business in which he/she is engaged; the relation of each of these factors to the others, and the distribution that is made by the will. Testamentary capacity is tested at the time of execution of the will.
 

In any attack upon the validity of a will, there is a legal presumption that the testator was of sound mind and competent when he executed the will. This presumption can only be overcome by clear and convincing evidence. The burden of establishing lack of
testamentary capacity falls upon the party who contests the will being offered for probate.
 

Evaluating the evidence in the aggregate, the Trial Court in this case concluded that Plaintiffs did not satisfy their heavy burden of proving, by clear and convincing evidence, that the decedent lacked testamentary capacity when she executed her will.  The Appellate Division was satisfied that there was sufficient competent and reasonably credible evidence in the record to support the Trial Court's findings.
 

Plaintiffs also contended that the Trial Court's factual findings and legal conclusions with respect to the issue of undue influence were unsupported by the credible evidence adduced at trial and warranted reversal.
 

What constitutes undue influence sufficient to invalidate a will is a question of law.  But whether a will was procured by undue influence is a question of fact for the court, as is the truth or credibility of evidence introduced on such issue and the weight to be given to the evidence.   A will which on its face appears to be validly executed, can be overturned if it is tainted by "undue influence."
 

Undue influence has been defined as 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. 
 

Two elements are required to raise a presumption of undue influence. First, there must be a "confidential relationship" between the testator and the beneficiary. Second, the presence of "additional 'suspicious' circumstances" in combination with such a confidential relationship must exist.  Such circumstances need only be slight.
 

Under normal circumstances, once a presumption of undue influence has been established and the burden of proof is shifted to the proponent of the will, the presumption may be overcome by a preponderance of the evidence.  If, however, the presumption arises from a professional conflict of interest on the part of an attorney, coupled with confidential relationships between a testator and the beneficiary as well as the attorney, the presumption must instead be rebutted by clear and convincing evidence.
 

Notwithstanding the confidential relationship that existed, the Trial Court found no evidence that anyone overpowered the will of the decedent.  The court concluded the defendants had met their burden to overcome the presumption of undue influence by a preponderance of the credible evidence.  The Appellate Court upheld these conclusions as to the claims of undue influence as well as the claims of lack of testamentary intent.
 

Even though the Plaintiff was not successful in proving lack of mental capacity or undue influence, the Trial Court still awarded the payment of counsel fees from the estate.   The Plaintiffs appealed the Trial Court's failure to award the full amount of their counsel fees and the Defendants appealed the award of any counsel fees to Plaintiffs. The Appellate Court rejected both challenges.
 

The decision to award attorneys' fees falls within the discretion of the Trial Judge and, accordingly, is reviewed under an abuse of discretion standard as long as the Trial Judge did not act under a misconception of the applicable law.
 

New Jersey has a strong public policy against the shifting of attorneys fees and costs.  Generally, everyone pays their own counsel fees.  This based upon what is known as the American Rule.  However, there is an exception to this American Rule in certain cases.  One of those exceptions is for payment of counsel fees from an estate in a will contest where probate is granted and it appears that there was reasonable cause for contesting the validity of the will.  Except in a weak or meretricious case, courts will normally allow counsel fees to both proponent and contestant in a will dispute.
 

The Appellate Court upheld the finding of the Trial Court that there was a reasonable basis for the Plaintiffs position even though that basis was not sufficient to set aside the will. Simply put, the Trial Court determined the challenge to the will was reasonable and that the award of some, although not all of the counsel fees, was appropriate.

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As a general rule a party must exhaust its administrative remedies before it can invoke the jurisdiction of the courts. However, the Third, Fourth, Fifth, Sixth, Ninth, and Tenth Circuits have all held that exhaustion is not a prerequisite to suits alleging statutory ERISA violations.

One potential administrative remedy that employees should consider is filing a complaint with the US Department of Labor, Employee Benefits Security Administration.

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Before Congress enacted the Multiemployer Pension Plan Amendments Act of 1980 (“MPPAA”), “many employers were withdrawing from multiemployer plans because they could avoid withdrawal liability if the plan survived for five years after the date of their withdrawal,” and Congress was concerned “ ‘that ERISA did not adequately protect multiemployer pension plans from the adverse consequences that result when individual employers terminate their participation or withdraw.’ ”
 

The MPPAA was therefore enacted and was “designed ‘(1) to protect the interests of participants and beneficiaries in financially distressed multiemployer plans, and (2) to encourage the growth and maintenance of multiemployer plans in order to ensure benefit security to plan participants.’ ”
 

To accomplish these goals, the MPPAA “requires that a withdrawing employer pay its share of the plan's unfunded liability,” which “insures that the financial burden will not be shifted to the remaining employers” in the fund. 
 

The pension fund determines whether withdrawal liability has occurred and in what amount.  A “complete withdrawal ... occurs when an employer-(1) permanently ceases to have an obligation to contribute under the plan, or (2) permanently ceases all covered operations under the plan.” The amount of an employer's withdrawal liability is the employer's proportionate share of the unfunded vested benefits existing at the end of the plan year preceding the plan year in which the employer withdraws.
 

A trustee is empowered to sue a withdrawing employer for its share of the unfunded liability of the plan. If, however, the trustee does not sue, a beneficiary may sue the trustee as well as the party or parties the trustee failed to sue. Consequently, should we discover that the trustees of the merged pension plan at issue failed to sue a withdrawing employer, we would have a cause of action against the trustees and the withdrawing party. 

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ERISA section 1054(g)(1), provides in relevant part: “The accrued benefit of a participant under a plan may not be decreased by an amendment of the plan ….” The anti-cutback rule is a “crucial” aspect of ERISA's protection of pension benefits. In light of the importance of the anti-cutback rule and in order to avoid work-arounds that curtail accrued benefits by means other than formal plan amendments, courts have deemed actions to be violative of the anti-cutback rule even when there had not been a formal amendment of a pension plan. 
 

Treasury regulations implementing the anti-cutback rule make the point explicitly: a pension plan may not deny a protected benefit “directly or indirectly, through the exercise of discretion ....”  Moreover, plan participants are entitled to notice whenever a plan amendment is seriously considered or enacted. 
 

Sometimes a violation of the anti-cutback provision will give rise to a breach of fiduciary duty claim.  According to the Second Circuit, amendments to multi-employer plans which “affect the allocation of a finite asset pool to which each participating employer has contributed” could properly be treated as fiduciary functions.  However, the Third Circuit does not agree and does not make a distinction between single-employer or multi-employer pension plans.
 

Thus, the Third Circuit has adopted the view that ERISA's fiduciary duty provision does not apply to amendment of multiemployer plans. Therefore, absent some other culpable conduct, a violation of ERISA’s anti-cutback provision will not, by itself, support a breach of fiduciary claim in New Jersey.

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Each plan subject to minimum-funding requirements must maintain a minimum-funding standard account and meet a minimum-funding standard. A funding standard account consists of charges for normal costs, amortization costs and funding deficiencies, offset by credits for amounts contributed by the employer, amortization gains, waived funding deficiencies, and the excess of any debit balance in the funding standard account over any debit balance in the alternative minimum standard account, if any.
 

All costs, liabilities, rates of interest, and other factors under the plan must be determined on the basis of actuarial assumptions and methods that must be reasonable in the aggregate and in combination offer the actuary's best estimate of anticipated experience under the plan. A plan meets the minimum-funding requirements only if, at the end of each plan year, the account does not have an accumulated funding deficiency.

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