Benjamin Franklin once famously said that, “In this world nothing can be said to be certain except death and taxes.” President Trump’s recent tax reform proposal is the administration’s attempt to alleviate one of these certainties of life.

President Trump’s proposal, which was released on Sept. 27, contained the following changes for individual taxpayers:

Continue Reading A Look at President Trump’s Tax Reform Proposal

Upon the death a loved one, the Last Will and Testament governs how the liquid assets of an Estate are distributed. It is also common that the Last Will and Testament may provide instructions as the distribution of some of the personal property of the Decedent. Even under such circumstances, however, this often leaves a large amount of personal property which has to be divided among the living heirs. There are several different ways in which the remaining items of personal property of the Decedent can be distributed which is discussed below.

Continue Reading Division of Personal Property in an Estate

On Friday, September 30, 2016, New Jersey lawmakers held a press conference announcing significant changes affecting the New Jersey Estate Tax. The video and transcript of the conference can be accessed by clicking here.

The New Jersey Estate Tax applies to the estates of New Jersey residents and currently has an exemption of only $675,000. Under the proposal, the New Jersey Estate Tax exemption will be increased to $2.0 million per person on January 1, 2017; and effective January 1, 2018, the New Jersey Estate Tax will be eliminated entirely.

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In many of my previous blogs I have discussed the procedure involved in contesting a Last Will and Testament. This blog shall focus on other side of the equation, the defense of a Will contest. Since there are many facets involved in the defense of a Will contest, we shall first focus on what the named Executor or Executrix must do upon being served with a Verified Complaint seeking to contest the validity of a Last Will and Testament. For the purposes of this blog, I will assume that the Executor had already taken the necessary steps to admit to probate the Last Will and Testament of the decedent.

Continue Reading Defending a Will Contest

If you are the beneficiary of an Estate where a Decedent recently passed away, you will undoubtedly like to know when you will receive your bequest under the Decedent’s Last Will and Testament. What you should be aware of, however, is that there are a multitude of steps that must occur before distributions can be made under a Last Will and Testament.

The first necessary step is that the Decedent’s Will must be admitted to probate. This would be done by the named Executor in the Will, and thereafter, the Executor would be appointed by the Surrogate to serve as the Executor of the Estate. The next step would be for the Executor to marshal all available liquid assets of the Estate and deposit them into an Estate account, or simply discover the location of the assets if they exist in the form of stocks, bonds, or other investment vehicles. Once this has occurred, the Executor will typically prepare an informal accounting, which will be provided to the beneficiaries of the Estate.

Continue Reading When Do I Receive My Share of the Estate

In general, the time limitation to file a lawsuit in the State of New Jersey is quite lengthy. For instance, an action related to a Breach of Contract matter would extend for six years from the date of the breach, whereas a Personal Injury matter may be filed two years after the cause of action accrued. With regard to a Will Contest, however, the period of time to file a lawsuit is actually quite short.

Rule 4:85-1 governs the time period pursuant to which a Will Contest must be commenced. In general, if you are an in-state party that time period begins to run four months after the probate of the Will or the granting of letters of appointment by the Surrogate. If you are an out-of-state party, that period begins to run six months after the probate of the Will or the granting of letters of appointment by the Surrogate. As such, the time period to contest a Will is extremely short based upon the confines of Rule 4:85-1.

It should be noted, however, that the Court can extend the time period for thirty days pursuant to Rule 4:85-2, based upon a showing of good cause. For the most part, the Court is willing to grant a thirty-day extension in light of the short time period set forth by the statute.

Continue Reading Time to File a Will Contest

If an Executor fails to properly administer an estate, it can have severe repercussions for the beneficiaries. An Executor has broad authority to control all aspects of an estate. When an Executor acts improperly, it can delay settlement of the estate and diminish the value of the estate’s assets. If you are a beneficiary of an estate that is being damaged by an Executor, you have rights and can take action to enforce the estate and the executor’s obligations.

Beneficiaries need to be aware that even simple problems, such as an Executor’s failure to take timely action, can substantially damage an estate. I will provide a hypothetical estate to help demonstrate these problems. Suppose an estate consists of the following assets: (i) a car; (ii) a house worth $650,000; and (iii) financial accounts worth $2,000,000. If the Executor fails to list the house for sale, the estate incurs unnecessary property taxes, utilities, and operating costs. The homeowners and automobile insurance policies have to be transferred into the name of the estate, and failure to properly update the insurance coverage may jeopardize coverage. The house and the automobile have to be secured and sold. Failure to take these basic actions places estate assets at risk and incurs unnecessary costs.

The Executor is responsible for filing and paying income taxes and paying property taxes on the house. If income and property taxes are not paid on time, they accumulate interest and penalties. In addition, New Jersey imposes a lien for the collection of New Jersey Estate and Inheritance Taxes.

Continue Reading What Can I Do If An Executor Abuses the Estate?

A recent Tax Court case highlights some of the issues faced by estates that own valuable artwork and the need to account for artwork as part of estate planning and estate administration. Artwork is an important aspect of estate planning and administration because artwork can affect the estate’s overall value, and can result in substantial estate or inheritance taxes. Artwork is a non-revenue producing asset that can make financing taxes more challenging, particularly when there is no advanced planning. Valuable artwork is subject to substantial changes in value, depending on market conditions.

This case involved a dispute over the value of fine artwork owned by a sophisticated art collector. The Estate owned three exquisite and valuable paintings: (1) “Tĕte de Femme (Jacqueline)” by Pablo Picasso; (2) an untitled piece by Robert Motherwell; and (3) “Elément Bleu XV” by Jean Dubuffet. The Picasso was by far the most valuable, selling at auction in 2010 for $12.9 million. On the Federal Estate Tax Return, the Estate reported the following values for each painting: (1) $5.0 million for the Picasso; (2) $800,000 for the Motherwell; and (3) $500,000 for the Dubuffet.

The IRS contested the Estate’s reported valuations and commissioned its own experts to value the paintings. The IRS’ experts determined the paintings had substantially higher values than those reported by the Estate: (1) $10.0 million for the Picasso; (2) $1.5 million for the Motherwell; and (3) $900,000 for the Dubuffet. Using these higher values, the IRS issued the Estate a Notice of Deficiency, and the dispute found its way into the U.S. Tax Court.

Continue Reading Can Artwork Affect My Estate?

In the recent Appellate Division case of In Re Sogliuzzo, the Appellate Court awarded counsel fees to the Estate to be paid by Defendant. This was due to the Defendant’s unlawful misappropriation of funds from his elderly mother, which he accomplished by exerting undue influence over her in order to facilitate the transfer of the funds. This case is the inverse of a typical challenge to a Will, wherein counsel fees are paid by the Estate to the contestant.

In this particular matter, which is much less common, the Estate was awarded counsel fees for prosecuting an undue influence action against the wrongdoer pursuant to which it was forced to incur counsel fees and costs in prosecuting the action. The Appellate Court found that Defendant’s exertion of undue influence over his mother, pursuant to which he obtained a substantial financial benefit for himself, met the rationale for an award of counsel fees.

Thus, Defendant was ordered to pay counsel fees to the Estate for the costs it incurred in bringing this action. The Court rationalized that this was the only way to make the estate whole due Defendant’s defalcation.

Continue Reading Fee Shifting in an Undue Influence Case