In my last blog, I started talking about the case of In re Cohen, which focused on the issue of a guardian making gifts on behalf of his or her ward that directly contradicted an estate plan created previously by a ward. Our ward in this matter, Henrietta, specifically left one half of her estate in trust for her one son, Howard, and his two children, Douglas and Michelle, because she was afraid of her son’s new wife, Jacqueline, and what would happen if Howard received everything outright and made it all available to Jacqueline.
Four years after the estate plan was made, Jacqueline and Howard retain a lawyer to investigate Henrietta’s estate plan and to create a new plan for her under the guise of saving Henrietta’s estate from those federal and estate taxes. In reality, the plan would make a bunch of gifts from her estate while she was alive outright to her beneficiaries, a portion of which would go directly to Jacqueline. At that point, Henrietta’s mental condition had begun to deteriorate and Alan, Henrietta’s grandson, sought to have her declared incapacitated. After being served, Howard filed a counterclaim seeking to set aside the estate plan Henrietta had made, claiming it was a product of undue influence. Henrietta was declared incapacitated in May 1997, and the judge appointed a neutral guardian of her estate.
Howard then sought to have her original estate plan voided and his estate plan substituted in place. The parties went back and forth attempting to settle the matter, and they had put together an agreement in writing, but before the settlement was entered, a few of the parties, including Douglas and Michelle, objected. The settlement was similar to the original estate plan in that the estate would be split evenly, with Howard’s side getting one-half and Charles’s side getting the other half. However, the trust agreement for Howard and his children was revoked, and Henrietta’s property would be gifted outright to the original beneficiaries, minus $1.4 million being left in reserve to care for Henrietta. Howard’s family’s one-half distribution would be placed in a family limited partnership (FLP), with Howard receiving a 70% interest in the FLP, and Douglas and Michelle receiving 15% interests each in the FLP. Most notably, Jacqueline would get a distribution to be placed in a special trust for her benefit, which she was allowed to withdraw from as well. Michelle appealed the decision, arguing that the settlement did not match Henrietta’s testamentary intent when she drafted her original estate plan, and had she not been incapacitated, she would never have agreed to this current estate plan outlined in the settlement.
In our next blog, we will discuss the court’s analysis and its decision.
To discuss your NJ Will or Guardian 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.
By Fredrick P. Niemann, Esq. a New Jersey Guardianship Attorney