A Judgment Against an Estate Receives No Priority Under New Jersey Law

HNWElder Law, Estate Administration and Probate

  • Judgments entered against a decedent have priority under New Jersey probate and estate administration laws.
  • However, if the decedent dies before a judgment has been entered, a claim against the estate does not receive a priority status and the creditor is nothing more than a general creditor.
  • Being a general judgment creditor of an insolvent estate means you likely won’t get paid on your judgment.

Judgmnet Against an EstateI read an interesting case recently whereby a judgment creditor claimed priority status under New Jersey probate and estate administration laws.  Unfortunately for this creditor, judgment was entered against the decedent after the date of death and the issue before the court was whether the creditor was a priority creditor or a general creditor which is no different than say, a credit card company.

The court reviewed the N.J.S.A. 3B:14-36 and concluded that this creditor received no enhanced priority status under New Jersey law.  N.J.S.A. 3B:22-2 sets forth the order of claimants to which an estate’s personal representative shall make payments where “assets of the estate are insufficient to pay all claims . .  . .”

N.J.S.A. 3B:14-36 states:

Any sale or encumbrance to the fiduciary, his spouse, agent or attorney, or any corporation or trust in which he has a substantial beneficiary interest, or any transaction which is affected by a substantial conflict of interest on the part of the fiduciary, is voidable by any person interested in the estate except one who has consented after fair disclosure, unless:

a) The will or a contract entered into by the decedent expressly authorized the transaction; or

b) The transaction is approved by the court after notice to interested persons.

According to the statute, “debts and taxes” have priority over a creditor who obtained a judgment against a decedent before his or her death, and those creditors have priority over those who obtained a judgment against an estate or personal representative.  “A judgment against an executor [or] administrator . . . unlike a judgment against [a] decedent in his lifetime, is not entitled to a preference over other claims payable out of the assets of the decedent’s estate” (noting that for judgment to be preferred, they must be actually entered during decedent’s lifetime).

To discuss your NJ estate administration and probate 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 or telephone consultations if you are unable to come to our office.

By Fredrick P. Niemann, Esq., of Hanlon Niemann & Wright, a Freehold Township, Monmouth County NJ Estate Administration and Probate Attorney


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