Notice of probate from a litigator’s perspective

Many of the estate administrations we handle come to us midstream.  Many people, when they learn they’re named as executor in a Will, begin the probate process without counsel;  I have a lot of respect for people who try to minimize the costs to the Estate by doing the work themselves, and maybe even more for those who know when they’ve done all they can do and need the assistance of a lawyer.

Now, it’s almost always the case that an unrepresented personal representative won’t have done things quite as we would have, and probably the most common oversight is the notice of probate.  In New Jersey, Rule 4:80-6 requires that a personal representative send all beneficiaries and other parties in interest (spouse, heirs, next of kin) written notice that the Will was probated, including the date and place of probate, and stating that a copy of the Will will be provided to them upon request.  Proof of mailing has to be provided to the Surrogate within ten days after the notice is sent.

More often than not, when I ask a new client who’s serving as personal representative about the notice of probate, the client explains that all the beneficiaries know about the Will already.  From a practical point of view, this makes excellent sense;  why send formal notice to someone of a fact they already know?  From my point of view as an estate litigator, this misses one of the primary functions of the notice of probate.  The case In the Matter of Fanny Green, Deceased is one of the things I’m thinking of when we prepare a notice of probate.

Notice of probate protects the Estate and the personal representative from later Estate litigation.  Until the notice of probate requirements are met, we cannot have confidence that the probate won’t be challenged down the road.  The Fanny Green case makes clear that, even when a beneficiary or party in interest has actual knowledge of the probate, the personal representative is not relieved of their responsibility to give notice of probate, and a Will challenge can be brought long after it would ordinarily be barred.  Notice of probate isn’t merely a nice thing to do;  it’s an important part of the personal representative’s duty, and it’s a perilous thing to ignore.

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Sidenote:  as common as it is for the notice of probate to be overlooked, it is even more common for the proof of mailing requirement to be forgotten.  Happily, the case law makes it fairly unlikely that the mere failure to file the proof of mailing will leave the Estate vulnerable.  Which is not to say it should be ignored.

The time to investigate whether or nor to challenge a Will: before it’s too late

I’ve written here about how little time a litigant has to challenge the probate of a Will in New Jersey. Under Rule 4:50-1, in almost all circumstances, an action to set aside the probate must be brought within 4 months of the Will being admitted to probate, or within 6 months if the plaintiff doesn’t reside in New Jersey.

In civil litigation, it’s not at all uncommon to discover facts that support a claim you didn’t know about when the case was filed. Pleadings are routinely amended to include new claims, and while I’ve never actually seen it happen, there are circumstances where the Rules of Court allow a party to add a new theory or claim even after all evidence has been presented to the judge or jury.

A colleague asked me recently whether facts discovered in the course of litigation could allow for a Will challenge even after the 4-month period had run. (This was, I’m embarrassed to report, pretty much idle chat. Her actual case involves a decedent’s estate, but there’s no question as to whether or not probate is going to be challenged.)

I’ve never litigated the issue, and I was curious enough to spend a little time scratching around, I cannot find a single case where newly discovered facts were sufficient to allow a litigant to challenge probate after the period set out in the Rule. In fact, the few reported cases that touch on the question fall squarely against an expansion of time for newly discovered evidence. Where a plaintiff has alleged that the facts supporting a claim of undue influence, waste, or lack of testamentary capacity were only discovered after the time to challenge probate had run, the action to set aside probate was barred nonetheless.

The message for the practitioner is clear: if there is any hint that a probate challenge might be appropriate, the matter requires speedy investigation and timely filing.

How late can the probate of a Will be challenged?

“In delay there lies no plenty.”

In estate litigation, there’s rarely reason to delay, and often every reason to act quickly. Once probate has been granted, assets can be liquidated, property transferred, and all manner of action can be taken that can’t easily be undone.

It’s one thing to say that it’s generally prudent to act quickly to challenge the probate of a Will. In New Jersey, it’s not merely prudent, it’s required. The statute of limitations for the challenge of probate is one of the shortest in New Jersey law: the action must be commenced within four months after the Will is admitted to probate (or 6 months if the person bringing the action lives out-of-state).

This is an extraordinarily short limitation; typically, the statute of limitations for an action is no shorter than two years. And casual research will not reveal the 4-month limitation; there is no “statute of limitations” for these actions described in the New Jersey statutes.

The limitation is in the R. 4:85-1 of the Rules of Court. It’s well-settled that the four-month limitation described in the Rule operates as a statute of limitations; see, e.g., Marte v. Oliveras, 378 N.J. Super. 261 (App. Div. 2005). The limitation is relaxed to allow an additional 30 days on a showing of good cause under R. 4:85-2, and in certain circumstances can be relaxed further by the court, but if you want to challenge probate as of right, you have four months only to do so.

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One of the reasons this rule comes to mind is that I was speaking with fellow estate lawyer last week and she said that, in her experience, many families aren’t ready to move from the emotional loss of a loved one to the business of handling an estate for 7 months. I’m not sure I’ve given enough thought to the question to say, but it’s certainly true that some families take longer than others to think about the business of handling estate matters. Four months is not long, but that’s all the rules afford.

Probating an unsigned Will?

The notion that a signature should always be required for certain important documents and instruments continues to fade in New Jersey law, and it appears that the door may be open to probating a Will never signed by the testator.

There’s no reported case I’m aware of allowing the probate of an unsigned Will, though it’s rumored to have occurred.  The Will would come in under N.J.S.A. 3B:3-3, which is something like a saving provision allowing a Will to be admitted even if it does not meet the requirements for a formal Will (N.J.S.A. 3B:3-1) or a holographic Will (N.J.S.A. 3B:3-2).  This statute allows for the probate of a document not otherwise qualifying as Will if the proponent can show by clear and convincing evidence that the decedent intended the document to be a Will.

This rule has been fairly liberally applied, in the interest of equity, and particularly in uncontested matters it can help avoid manifest waste or the thwarting of the decedent’s wishes.   It remains to be seen whether the rule is so broad that it will allow the probate of a document, prepared by someone other than the decedent, that the decedent never signed.

A recent appellate division decision, IMO Louis Macool, Deceased (416 N.J. Super. 298, App.Div. 2010), seems to suggest that an unsigned Will could in fact be admitted to probate.  The facts in Macool aren’t uncommon by any means, except for the moment of the decedent’s death.  Ms. Macool met with her lawyer to change her Will, and the attorney thereafter prepared a “rough” draft of the Will, following Ms. Macool’s central instructions and modifying a few small items.   Before the draft could be reviewed, Ms. Macool died.

The draft Will in Macool was not admitted to probate.  What’s particularly interesting to me are the reasons the draft was rejected.  First, the decedent had never seen the Will.  In addition, the Will contained some terms that she had never discussed with her attorney, and modified some of the terms she directed. The holding makes no mention of a signature requirement:

“We hold that for a writing to be admitted into probate as a will under N.J.S.A. 3B:3-3, the proponent of the writing intended to constitute such a will must prove, by clear and convincing evidence, that: (1) the decedent actually reviewed the document in question; and (2) thereafter gave his or her final assent to it.”

This has pretty significant implications for the practitioner, I think.  While it’s not our practice to have final estate planning documents reviewed before signing, there are times when circumstances almost require it.  If complex documents need to be reviewed in the evening when witnesses are unavailable, for instance, we may go over the documents, obtain “final assent,” and schedule a short follow-up for the actual signing of the instruments.  I suspect that many lawyers send draft copies of Wills to clients for review before meeting.  If the client sends back a message saying that the Will is just right, it seem likely that it would be accepted for probate.

What is the standard for temporary restraints in estate litigation?

At the beginning of estate litigation, it’s not unusual for a party to apply for temporary restraints, usually in the first filing with the court. Temporary restraints are akin to what are more commonly called injunctions, and as the name suggests the relief is temporary pending further review by the court.

The typical case calling for temporary restraints is where a plaintiff is filing an action but wants to keep the other party from causing further harm during the time between the filing of the action and first court date. Without temporary restraints, the opposing party has (at least) the time between the filing of the complaint and court date and may continue whatever conduct it is that caused the suit. Temporary restraints sought in estate litigation generally seek to preserve the status quo, essentially to put everything in amber. These temporary restraints are often continued after the initial court date until the case can be fully heard.

It’s my experience that courts of equity are generally sympathetic to preserving the status quo, which makes good sense to me. While a chancery court is empowered to do equity and is given broad discretion to do so, the actual articulated standard actually sets the bar quite high. If a party, for whatever reason, opposes a request for an order preserving the status quo, the standard can be difficult to meet.

The rule governing temporary restraints in New Jersey – R. 4:52-1 – allows for an application for temporary restraints without notice to the other parties, or with notice. The rule seems to suggest that the standard shifts depending on whether or not the application is without notice to the adverse party: a party is not entitled to “any temporary restraints [ . . . ] unless the defendant has either been given notice of the application or consents thereto or it appears [. . . ] that immediate and irreparable damage will probably result to the plaintiff before notice can be served.” While the standard of irreparable damages is applied by rule only to ex parte proceedings, the case law carries this standard through all applications for temporary restraints.

The leading case articulating the standard relative to temporary restraints is a 1982 New Jersey Supreme Court case called Crowe v. De Gioia. The test actually set forth in Crowe is 3-pronged: a litigant must show that there is a risk of irreparable harm, that the law underlying the complaint is well-settled, and that the litigant is likely to succeed on the merits.  Subsequent cases have read the Crowe test to also require a balancing of the relative weight of the harm posed if the relief is denied against the burden on the adverse party if the relief is granted, and additionally that the relief requested is not adverse to public policy.

Notwithstanding customary practice, applications seeking to preserve the status quo – as opposed to ones seeking more extraordinary relief – are not given a lot of special deference under the Crowe standard. (The only prong of the test where the preservation of the status quo is specifically addressed in Crowe is the likelihood of ultimate success on the merits.)

The greatest difficulty is typically meeting the test for irreparable harm. Any injury that can be addressed by monetary damages is not considered irreparable. In estate litigation, we are often seeking to stop a party from raiding the decedent’s assets. Worse, we often know that a judgment for monetary damages will be an empty victory, where the damages will be difficult or impossible to collect.  Preparing to articulate irreparable damages is a significant part of preparing any application for temporary restraints, and even where the plaintiff seeks “only” to preserve the status quo, counsel should be prepared to answer each prong of the Crowe standard, including irreparable damages.

Undue Influence and Joint Bank Accounts

In my practice, it’s common for me to learn that a decedent held a joint bank account with an adult child or other trusted person in the belief that a joint account would be a convenient way for the fellow account holder to assist in paying bills, depositing checks, and the like. Typically, in an amicable administration, it’s understood that these are “convenience” accounts, and the joint account holder waives off any claim to the account.

It’s not uncommon to find that a decedent divided his or her money into several accounts and made each account joint with a different person. In an amicable administration, this arrangement is viewed as a sort of homespun estate plan, and there is no challenge to the right of each of the surviving account holders to their respective accounts.

Using a joint bank account as a convenience account is unnecessary and inadvisable, and using a joint bank as an on-the-side estate planning tool is a bad idea all the way around, for the reasons described here and otherwise.

The third scenario I encounter involving joint bank accounts is one in which impropriety, typically in the form of undue influence, is suspected. When we discover that, in the months prior to her death, a decedent was brought to her banks by a trusted nephew or a new paramour and that she converted all of her accounts into joint accounts with that person, the inference of impropriety is unavoidable.

It surprises many of my clients to learn that, by statute in New Jersey, money left in a joint bank account “belong[s] to the surviving party or parties as against the estate of the decedent unless there is clear and convincing evidence of a different intention at the time the account is created.” Clear and convincing evidence is a difficult burden to meet if ownership of the account is to be litigated; at this level of analysis, the right of the surviving account holder to the asset seems nearly unassailable.

Under suspect circumstances, however, the right of joint account holder is quite vulnerable if challenged. The first point to recognize is that, in circumstances that give rise to estate litigation on this point, the addition of surviving account holder to the account is almost always a de facto gift. These are not accounts where both owners paid in and both owners used the account to conduct their affairs; these are typically accounts established and funded by the decedent, with the surviving owner later named. The courts are quick to view such transactions for what they are: inter vivos gifts from the decedent to surviving owner.

In the leading New Jersey undue influence case, now more than half a century old, the Supreme Court distinguished between the standard for determining undue influence in the making of a Will as compared to inter vivos gifting. The Court found that “where one is giving away what one can still enjoy, the presumption of undue influence is raised more easily than in cases involving wills.” Subsequent cases have expanded this point, and it is now well-settled how little is required to raise a presumption of undue influence as to inter vivos gifts.

Uniquely, the burden of proof shifts against the surviving account holder if a confidential relationship between the parties can be shown. That is all that is required; if a confidential relationship existed, the surviving account holder must affirmatively that the gift – the making of the joint account – was not the product of deception or undue influence.

What constitutes a “confidential relationship” will require a series all its own, but in short something akin to trust in handling financial or legal affairs will suffice. There is often, in my practice, a power of attorney by the decedent to the surviving holder, and that fact alone establishes a confidential relationship sufficient to transfer the burden of proof.