By Fredrick P. Niemann, Esq. of Hanlon Niemann & Wright, a Freehold, NJ Estate & Probate Litigation Attorney

In Part 1 and Part 2 of this series I discussed a very interesting case. A man died after his will was updated leaving the majority of his estate to his new live in caretaker. The changes to the Last Will were made under suspicious circumstances, causing the original beneficiary to make claims of undue influence. While reaching a settlement outside of a trial may seem to be the easy way out, we learned that it was not. In this post we will conclude the case and learn the outcome.

The State of New Jersey gave the following rationalization to justify its refusal to recognize the probate of the will. A death tax must be levied upon rights created by a decedent’s last valid will regardless of any private arrangements or agreements later made between beneficiaries with respect to the distribution of the assets of the estate. The single fact that a will was not probated does not determine its invalidity. Where two wills are known to exist, the state tax department has the right and power, as a quasi-judicial agent of the State, to determine which last will is operative in the absence of a binding adjudication of the invalidity of a will later in date than the Last Will admitted to probate by the county surrogate.

Although admitting that he could not have been made a party to the probate proceeding, the director concluded that since he was not made a party he was not estopped from collaterally attacking the probate judgement.

The director did not asset that the settlement was motivated by a fraudulent intent to avoid or decrease the amount of inheritance taxes.

The court told the state it was “nuts” (my words not the court’s). The director is bound by the judgment probating the 1950 will, and, having asserted a claim of fraud, he is barred from a collateral attack. The fact that judgment was entered by consent does not change the effect thereof. A consent judgement has equal effect to one entered after trial or other judicial determination.

While the New Jersey view appears to be that a death and inheritance tax is computable in accordance with the terms of a Last Will, unaffected by a compromise settlement agreement, in probate litigation, the courts have also reasoned that in most cases the death tax will be fixed at the time of the death of the testator. Since a will cannot be changed by an independent agreement entered into after the testator’s death, property passing under such an agreement is not in fact inherited.

In this case the settlement agreement took effect subsequent to the transfer made by the will. The Estate was not taxable because the statue does not impose a tax upon it.

To discuss your NJ Estate Probate Litigation matter, please contact Fredrick P. Niemann, Esq. toll-free at (855) 376-5291 or email him at fniemann@hnlawfirm.com.  Please ask us about our video conferencing consultations if you are unable to come to our office.