Wills, Trusts, and Estate Planning

Wills, Trusts, and Estate Planning

Wills are an essential part of every well-crafted estate plan. In many estate plans, a will serves as a primary means of transferring property at death. In other estate plans, including those that rely on a revocable or irrevocable trust, wills dispose of property inadvertently left out of the trust.

When a will is used to transfer property after the death of an individual, after qualifying at the Surrogate’s Court of the county in which the decedent was domiciled at death, the Executor appointed in the decedent’s will administers and distributes the decedent’s estate in accordance with the terms of the will (N.J.S.A. 3B:3-24 and N.J. R. 4:80-1). The process by which the Surrogate Court’s confirms the appointment of the executor and oversees the transfer of the decedent’s property to the rightful beneficiaries is known as probate.

In the absence of a valid will, the Surrogate’s Court would still oversee the transfer of the decedent’s property to the rightful beneficiaries under statute via a succession scheme called “intestate succession” (N.J.S.A. 3B:5-2). On a decedent’s death, an individual, typically, the decedent’s spouse or next of kin, would make application to the Surrogate’s Court of the county in which the decedent was domiciled at death, to qualify as the administrator of the decedent’s estate (N.J.S.A. 3B:10-1 and N.J. R. 4:80-1).

While wills are an important part of every estate plan, they are not always the main vehicle for transfers on death.

A will sometimes serves only to supplement non-probate methods of asset transfer, such as transfers occurring at death due to survivorship rights or beneficiary designations. Examples of non-probate transfers include assets that pass by:

Because wills are often used as the main method to transfer assets on death, strict formalities have been established to create a valid will. In the planning and execution process, two condition must be met:

  • The testator has the capacity required to make a will (Testamentary Capacity).
  • The will is properly drafted, signed, and witnessed (Requirements for a Valid Will).

To make a valid will, an individual must have testamentary capacity at the time s/he executes it. To have capacity, the testator must:

  • Be at least 18 years of age.
  • Be of sound mind (N.J.S.A. 3B:3-1.)

There is a presumption that a testator was of sound mind and competent when his/her will was executed (In re Probate of Last Will & Testament of Catelli, 361 N.J. Super. 478, 486, 825 A.2d 1209, 1214 (App. Div. 2003).

Generally speaking, the law requires only a low degree of mental capacity for one executing a will (Matter of Will of Liebl, 260 N.J. Super. 519, 524 (App. Div. 1992) citing In re Rasnick, 77 N.J.Super. 380, 394, 186 A.2d 527 (Cty.Ct.1962). To have testamentary capacity, the testator must understand the following at the time the will is drafted:

  • The power to comprehend the property she or he is about to dispose of;
  • The natural objects of testator’s bounty;
  • The meaning of the business in which the testator is engaged.
  • The meaning of the business in which the testator is engaged.
  • The relationship of each of these factors to the others.
  • The distribution that is made by the instrument (will or trust).

 

(In re Probate of Alleged Will of Landsman, 319 N.J. Super. 252, 267 (1999).

Old age and failure of memory do not of themselves take away a testator’s capacity. Likewise, absent-mindedness, occasional forgetfulness, idle and repetitive questions, and like conduct do not indicate lack of testamentary capacity (see In re Rein’s Will, 139 N.J. Eq. 122, 132 (Prerog. Ct. 1946)). A will may be valid even if the testator is eccentric or suffering from mental disease (In re Lucas’ Will, 124 N.J. Eq. 347, 349 (Prerog. Ct 1938).

Unreasonable or unequal division of property is not proof of incapacity, nor is disinheriting an expected recipient of the testator’s property. The testator’s prejudice against a child or other near relative is not in itself grounds for invalidating his or her will, even if it is wholly unreasonable and ill founded. People may hate their relatives for bad reasons and yet not be deprived of testamentary power.

The test is not whether an individual is lucid at all times, but whether the individual was lucid at the time the he or she executed the will (In re Phillips’ Estate, 139 N.J. Eq. 257, 258, 50 A.2d 862, 862 (Prerog. Ct 1947) decree aff’d).

New Jersey does recognize a will without a witnesses if the signature and material portions of the will are in the testator’s handwriting, and there is evidence that the testator intended the writing to be a will (N.J.S.A. 3B:3-2, N.J.S.A. 3B:3-3, In re Probate of Will & Codicil of Macool, 416 N.J. Super. 298, 307, 3 A.3d 1258, 1264 (App. Div. 2010).

New Jersey courts recognize out-of-state wills if they meet the requirements for validity in any of the following:

  • The state of New Jersey;
  • The state of execution;
  • The state in which decedent was domiciled at the time of death or at the time of execution.

 

(N.J.S.A. 3B:3-9 and see Out-of-State Wills).

If the testator is physically capable of signing the will, he or she should do so. The testator’s signature may consist of a mark, cross, initials, or an assumed name (In re Bullivant’s Will, 82 N.J. Eq. 340, 341 (1913). If the testator’s signature looks questionable, or if the testator can only sign with a mark or initial, counsel should carefully document the file in the event the signature is challenged later.

If the testator is present but cannot execute a signature, either due to lack of physical capability or otherwise, another person may sign the testator’s name if said person signs in the testator’s presence and at his or her direction (N.J.S.A. 3B:3-2(a)(2). Counsel should take extra care in the signing process and can minimize potential problems with validity by:

  • Having the testator specifically ask the person who will sign for the testator in the presence of the witnesses;
  • Having an independent person who is not one of the witnesses sign for testator;
  • Having the testator explain in the presence of the witnesses why the testator is not signing personally;
  • Having witnesses provide affidavits summarizing what they witnessed at the execution, apart from the typical attestation clause;
  • Though not a requirement, counsel should consider having the testator initial the bottom of every page of the will. During the will execution ceremony, counsel should review each page of the will in the testator’s presence immediately after execution to ensure the testator has properly signed the will in each place where a signature is necessary.

Wills must be signed by at least two competent individuals within a reasonable time after each witnessed either:

  • The testator’s signing of the will;
  • The testator’s acknowledgement of his or her signature on the will (N.J.S.A. 3B:3-2 and N.J.S.A. 3B:3-7).

 

While an interest in the decedent’s estate does not disqualify a person from being a witness or invalidate the will (or any gift under the will to the interested witness), counsel should ensure that disinterested individuals are available to serve as witnesses to the execution (N.J.S.A. 3B:3-8). Great weight is given to the testimony or attestation of the subscribing witnesses as to the testator’s mental capacity (In re Delaney’s Estate, 131 N.J. Eq. 454, 25 A.2d 901, 902 (Prerog. Ct 1942). If a beneficiary serves as a witness, the will is more susceptible to a claim that the beneficiary exerted undue influence or attested to the testator’s capacity out of a conflict of interest. Furthermore, while a notary public, whose primary function is to attest and certify signatures on certain documents, is not prohibited from serving as a witness, counsel should have two independent witnesses other than the notary public.

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