By Fredrick P. Niemann, Esq. of Hanlon Niemann, a NJ Trust Attorney
Here’s a common scenario. A will bequeaths $5K ($5,000) to an infant great-grandchild, with the infant’s mother named as Trustee of the funds until age 21. The infant and Trustee live outside of New Jersey. The County Surrogate is demanding that the Trustee be bonded for 21 years at about $125 per year. Executrix (putative Trustee’s mother) says “drop dead” because the bonding premium will eat up half of the corpus of the Trust over the 21 year period.
The statute reads that the Surrogate’s bonding requirement is permissive, meaning not mandatory, but the Surrogate refuses to acknowledge the burdensomeness of the requirement, and says “take it to the judge” if you don’t like my requirement.
The “Trustee” then asked the Surrogate to hold the money in their minor’s account until the child reaches 21 but (the Surrogate) has refused, saying that NJ law requires her to distribute money at age 18, so therefore she cannot abide by the Testator’s wishes for distribution at age 21.
The Executrix and Trustee don’t want to spend money on legal fees, etc. if there is a simple way around this (and the Surrogate’s office is holding up administration of the estate until Trustee posts bond).
Some ideas discussed are: a) have the infant, through his mother and father, renounce the bequest, and make private arrangements inside the family to accomplish Testator’s wish, but query whether or not it is in the “best interests” of the child for the parents to renounce, or b) “move to NJ” to avoid statutory obligations that require an out of state Trustee to post a bond. Not feasible, but here is the brightest idea I’ve considered.
Assuming the Executor and Trustee are close family, recommend that the Trustee simply not qualify before the Surrogate. In other words, refuse to serve. Then the money can sit in the estate until age 21 at which point the Executor can distribute directly to the beneficiary. Of course, one must have a plan in place in case the Executor dies within the next 20+ years. But… so it goes.
If you have questions regarding a NJ trust or a trust requirement within a Last Will, please contact Fredrick P. Niemann, Esq. toll-free at (855) 376-5291 or email him at fniemann@hnlawfirm.com/.