NEW JERSEY'S NEW PROBATE LAW

By Andrew J. Cevasco, Esq. and Louis C. Tomasella, Esq.

The last time the State of New Jersey performed a major overall of its probate code, Albert Burstein was majority leader of the New Jersey legislature. Despite the fact that Al is now safely ensconced in Herten Burstein, the legislature has once again addressed the probate code and made significant revisions which will become effective February 27, 2005.

Of primary concern to our clients is the change to New Jersey law regarding intestate succession. When an individual dies without having prepared a Will, New Jersey law will determine how the assets are distributed to family members.1 Under the law as revised, a surviving spouse will receive the entire estate of a decedent under two circumstances: (1) if all of the descendants (children, grandchildren, etc.) are also descendants of the surviving spouse, or (2) where there are no surviving descendants or parents of the deceased spouse. Under the prior law, the surviving spouse would only receive approximately 50% of the estate.

Where the deceased spouse is survived by parents but no descendants or by descendants who are not descendants of the surviving spouse (i.e., in a second marriage situation), the calculation of the intestate share is more complicated. In the former situation, the surviving spouse receives the first 25% of the estate, but not less than $50,000 nor more than $250,000, plus three-quarters of the balance of the intestate estate. The remaining one-quarter of the residuary estate passes to the parents of the deceased person. Where the decedent is survived by descendants who are not also descendants of the surviving spouse, the surviving spouse receives the first 25% of the estate, but not less than $50,000 nor more than $200,000, plus one-half of the balance of the intestate estate. The descendants receive the remaining one-half of the Estate.

It is also interesting to note that in the event there is no surviving spouse and no surviving descendants of the deceased person's grandparents, then the entire estate will pass to the decedent's stepchildren, or their descendants. This is also a major change in the law.

Obviously, it is always better to have a Will. In your Will you can tailor distribution of your estate to the persons you wish to benefit as opposed to leaving the distribution to state law. You can also establish controls or conditions for the receipt of a legacy. In addition, New Jersey law still requires that the administrator of the estate of a person who has died without a Will must post a surety bond for the faithful performance of their duties. This is an added expense to the estate that can easily be avoided by waiving the bond requirement in a properly drafted Will.

Proper estate planning also requires review of "non-probate" assets such as life insurance policies, 401(k) and IRA accounts, annuities, etc. The new probate code also addresses such instruments in the circumstance of divorce. Under the old probate code, while divorce automatically revoked a Will, it did not automatically change or revoke any disposition of non-probate assets. Under the new law, divorce automatically causes revocation of any disposition to a former spouse or a former spouse's relatives as well as any fiduciary appointment such as an agent under Power of Attorney or trustee under a trust. This is a major change in the law intended to correct an area that is sometimes overlooked in the emotionally charged context of a divorce action.

These are just some of the many changes to the New Jersey probate code that will become effective on February 27, 2005. Because of such changes as well as the continued change and uncertainty as to the future of the federal estate tax law, it is important that your estate plan be reviewed by a professional on a periodic basis. Please do not hesitate to call us at any time for a consultation with regard to your current estate plan.

1Although it is inconceivable that any of our clients would not have Wills, the situation does sometimes arise.