New Jersey's New Probate Law
November 15, 2004
By: Myrna Blume
Significant changes to the law governing wills and estates will take effect in February
The New Jersey Probate Code (Title 3B), which governs the Administration of Estates, Decedents and Others, has been revised to reflect the 1990 Uniform Probate Code. Senate Bill, No. 708, signed into law Aug. 31, 2004 (P.L. 2004, c.132). New Jersey's current law with respect to wills and estates is modeled on the 1969 UPC, with amendments thereto enacted over the years. The new law, which takes effect Feb. 27, 2005, substantially revises existing law. The most significant changes, discussed below, deal with nontestamentary transfers, the effect of divorce on such transfers, new definitions that codify general usage or clarify existing terms, the requirements of a writing deemed admissible to probate, revocation, rules of construction, intestate succession, the expansion of the right to disclaim and creditors' rights.
The biggest change is the expansion of current law to include nontestamentary transfers. This is accomplished by the addition of a definition for "governing instrument," which includes a deed, will, trust, insurance or annuity policy, a "pay on death" or "transfer on death" account, a security designating a beneficiary upon the holder's death, a pension, profit-sharing, retirement or similar benefit plan, an instrument creating or exercising a power of appointment or a power of attorney, or a dispositive, appointive or nominative instrument of similar type. N.J.S.3B:1-1.
The expansion of the law to encompass nonprobate transfers will have its greatest practical impact on divorced individuals. Under current law, a divorce automatically revokes a former spouse's bequest or fiduciary appointment only under a will; the new law provides for an automatic revocation of any disposition to, fiduciary appointment of, or power of appointment created, in a former spouse or a former spouse's relative under any governing instrument. A former spouse's relative is defined as an individual who is no longer related to the divorced spouse after the divorce. An unintended consequence may be the automatic revocation of an in-law's appointment as guardian of a minor child; if the divorced individual does not want that result, he or she must expressly provide otherwise in the governing instrument.
In addition, divorce will automatically sever the interests of former spouses in property held as joint tenants with the right of survivorship or as tenants by the entirety and convert such interests into tenancies in common. In the event of divorce, the provisions of the governing instrument are given effect as though the former spouse and the former spouse's relative disclaimed his or her interest therein, or in the case of fiduciary appointments, as though the former spouse and his or her relative died immediately before the divorce. N.J.S.3B:3-14.
The new law includes these other notable additions to the list of defined terms and clarifications of existing terms (N.J.S.3B:1-1 and 3B:1-2):
• "Joint tenants with the right of survivorship." This added definition essentially codifies the established meaning of the term (a form of co-ownership whereby the surviving owner or owners succeed to the entire property upon the death of one or more of the other co-owners) while differentiating it from forms of ownership where the underlying ownership of each party is in proportion to that party's contribution, such as tenants in common.
• "Per capita." This term is defined, as expected, as a distribution pattern that creates equal shares for each distributee within the designated group without regard to right of representation.
• "Per stirpes." This definition describes a distribution pattern whereby property is divided into as many equal shares as there are surviving children of the designated ancestor and deceased children who left surviving descendants. Each surviving child is allocated one share and the share allocated to each deceased child with surviving descendants is divided as if each such deceased child was the designated ancestor. The new definition makes it clear that the division into equal shares occurs in the generation just below the designated ancestor, so that "my descendants, per stirpes," requires a different distribution pattern than "the descendants of my children, per stirpes," in which the designated ancestors are the decedent's children and the property is divided into as many equal shares as there are surviving grandchildren and deceased grandchildren who left surviving descendant.
• "By representation" and "per capita at each generation." Both these terms mean a distribution pattern whereby property is divided into equal shares at the generation nearest the designated ancestor in which there is at least one surviving member. Equal shares are then created for each such surviving member and each member who is deceased but leaves surviving descendants. One share is allocated to each surviving member and all shares created for the surviving descendants of one or more deceased members are combined and then divided in the same manner as aforesaid among all such surviving descendants, so that each beneficiary at the same generation level receives an equal share.
• "Stepchild." The traditional definition of stepchild is broadened to include not only a child of a surviving or deceased spouse but also the child of a former spouse. While a stepchild's bequest under the will of a testator who is subsequently divorced will be revoked as described above, a bequest to a class of stepchildren without further identification in a post-divorce will may well include the children of a former spouse who were the decedent's stepchildren at the time of the marriage.
• "Will." The existing definition of a will has been expanded to include, in addition to a codicil, any testamentary instrument that merely appoints a fiduciary, revokes or revises another will or expressly excludes or limits an individual or class to succeed to the decedent's property passing by intestate succession. This change means that a single purpose document will be considered a will.
Other Significant Revisions
Writings intended as wills. The amended provision dealing with writings intended as wills provides that such writings will include: (i) a formally executed will; and (ii) a document intended as a will, whether or not witnessed, as long as the signature and material portions of the document are in the testator's handwriting (formerly known as a holographic will), as long as intent can be established by extrinsic evidence. N.J.S.3B:3-2. In addition, a new provision provides that a document that was not executed in compliance with the foregoing may nevertheless be treated as having complied if the proponent of the document establishes by clear and convincing evidence that the decedent intended the document to constitute: (i) the decedent's will; (ii) a partial or complete revocation of the will; (iii) an addition or alteration to the will; or (iv) a partial or complete revival of a formerly revoked will. N.J.S.3B:3-3. The new language represents a codification of the concept of substantial compliance, with a requirement for a high burden of proof.
Revocation. Under the new law, the performance of a revocatory act by an individual with the intent to revoke his or her will will revoke the will even if the revocatory act, which includes burning, tearing, canceling, obliterating or destroying the will or any part of it, does not touch any of the words on the will. In addition to the performance of a revocatory act, the execution of a subsequent will that does not expressly revoke a previous will, will nonetheless wholly revoke the previous will by inconsistency if the testator intended the subsequent will to replace rather than supplement the previous will. N.J.S.3B:3-13.
Requirement of survival by 120 hours. The existing 120-hour survival requirement has been amended under the new law so that it applies to the disposition of property or a fiduciary appointment under any governing instrument. In addition, proof of survival must be made with clear and convincing evidence. For purposes of construing a governing instrument, an individual who is not established by clear and convincing evidence to have survived an event, including the death of another individual, by 120 hours is deemed to have predeceased the event. As in the current law, the 120-hour survival requirement does not apply if the governing instrument provides for another outcome. N.J.S.3B:3-32. In the case of co-owners with the right of survivorship, if there is no clear and convincing evidence that one survived the other, one-half of the property passes as if one had survived by 120 hours and one-half passes as if the other had survived by 120 hours.
Anti-lapse provisions. Under the new law, a stepchild is added to the list of individuals to whom the anti-lapse rule applies. Thus, unless otherwise provided in the will, if a devisee who is a grandparent, stepchild or a lineal descendant of a grandparent of the testator is dead at the time of the execution of the will or fails to survive the testator (or is treated as though he or she predeceased the testator), the descendants of such devisee who survive the testator by 120 hours will take by representation in place of the deceased devisee. N.J.S.3B:3-35.
Issue and descendants to take by representation. The new law provides that when a provision is made for the benefit of issue or descendants and no contrary intention is expressed, the issue or descendants take by representation and not per stirpes, as mandated by existing law. N.J.S.3B:3-41.
Intestate succession. Provisions governing the disposition of the property of an individual who dies without a will have been substantially revised, giving the surviving spouse a greater share than is permitted under current law. Under the new law, a surviving spouse will receive the entire estate if: (i) the decedent leaves no descendants or parents; or (ii) all the descendants are the descendants of both the spouses, whether or not there is a surviving parent. If the decedent is not survived by any descendants but is survived by a parent and a spouse, then the surviving spouse will receive the first 25 percent of the intestate estate (but not less than $50,000 or more than $200,000) plus three-fourths of the balance of the intestate estate and the surviving parents will receive the remaining one-fourth. A surviving spouse will receive the first 25 percent of the intestate estate within the same parameters just described plus one-half of the balance of the intestate estate if either the decedent or the surviving spouse has a descendant who is not a descendant of both of them and the decedent's descendants will receive the remaining one-half. N.J.S.3B:5-3 and 3B:5-4.
Other changes to the intestacy provisions include the following:
• The amended 120 hour survival rule, which applies to heirs under intestate succession, has also been added as a requirement for after-born heirs - an individual in gestation at the time of the decedent's death must survive for 120 hours in order to be presumed to have survived the decedent. N.J.S.3B:5-8.
• As under current law, any part of the decedent's estate not effectively disposed of by will passes by intestate succession to his or her heirs. However, a new section provides that a testator may specifically exclude an heir from taking any part of the intestate estate; such heir will be treated as having disclaimed the interest. N.J.S.3B:5-2.
• Under existing law, intestate succession to descendants passes per stirpes; the new law provides for succession by representation, in accordance with the new definition. N.J.S.3B:5-6.
• A new provision has been added to include step-children as heirs of last resort; if there are no surviving descendants of decedent's grandparents, then the estate will pass to the decedent's step-children, or their descendants. N.J.S.3B:5-4.
Omitted children. The new provisions dealing with after-born or after-adopted children are considerably more detailed and helpful than existing law, which merely states that such children are entitled to a share of the estate equal to what they would have received under intestate succession. Under the new law, if a testator fails to provide in his or her will for any child born or adopted after the execution of the will, and the omission is not intentional or the testator has not otherwise provided for the omitted child, such omitted child will receive a share of the estate in accordance with the following: (i) if the testator had no living children at the time of the will's execution, then the omitted child will receive a share of the estate that the omitted child would have received if the testator died intestate, unless the testator devised all or substantially all of the estate to the omitted child's other parent or to a trust for the benefit of the other parent, and the other parent survives the testator; or (ii) if the testator had living children at the time of the will's execution, then the omitted child will share equally in the devise made to the testator's then living children. N.J.S.3B:5-16.
Disclaimers. The right to disclaim under New Jersey law has been greatly expanded. In addition to a beneficiary under a will or trust, any individual who is entitled to property under a nontestamentary instrument (including an individual who succeeds to a disclaimed interest) may disclaim all or a portion of his or her interest in such property within the time prescribed by law (now pending). N.J.S.3B:9-2. Other additions or changes to the law governing disclaimers are as follows:
• In order to accommodate disclaimers of interests in property passing under a nontestamentary instrument, a definition of "effective date" has been added, which means the date on which a property right vests or a contract right arises. N.J.S.3B:9-1.
• A new provision clarifies that joint property with a right of survivorship consists of two interests, a present interest and a future interest, the future interest being the right of survivorship. A surviving joint tenant may disclaim as a separate interest any property devolving to such tenant by right of survivorship without regard to such tenant's actual contribution to the creation of the joint interest. N.J.S.3B:9-1.
• A fiduciary or agent acting on behalf of a principal within the express, general or implied authority of a power of attorney may make a disclaimer. If the governing instrument expressly grants the fiduciary or agent the right to disclaim on the principal's behalf, no court authorization is necessary. N.J.S.3B:9-4.
• A fiduciary may also disclaim any power or discretion he or she holds in a fiduciary capacity. Again, court authorization will be necessary unless the governing instrument expressly authorizes such a disclaimer. In addition, any such disclaimer is personal to the fiduciary and does not constitute a disclaimer by a co-fiduciary or a successor fiduciary. N.J.S.3B:9-(a new section as yet unnumbered).
Creditor's claims. Under the new law, creditors of a decedent must present their claims to the personal representative of the decedent's estate within nine months from the date of the decedent's death. The personal representative no longer has any obligation to give public notice to creditors and will therefore not be liable to any creditor who has not presented a claim within the prescribed time period with respect to any assets the personal representative has distributed to beneficiaries or paid in satisfaction of any lawful claims. N.J.S.3B:22-4
It should be noted that the current law with respect to a surviving spouse's right to an elective share has not been revised. The revisions listed above were selected for discussion because they are deemed to be of general interest; they are not intended to represent an exhaustive list of all of the substantive changes to the current law.
This article is reprinted with permission from the NOVEMBER 15, 2004 issue of the New Jersey Law Journal. © 2004 ALM Properties, Inc. Further duplication without permission is prohibited. All rights reserved.