The present proceeding has been brought by American National Bank & Trust of New Jersey, the guardian of this incompetent, jointly with her sole apparent next of kin and heirs at law. It seeks the authority of the court to permit the guardian currently to transfer assets of a value of $100,000 from the principal of the incompetent's estate to the individual plaintiffs by outright gift. In addition, authorization is sought to permit the guardian to make gifts of $3,000 to each of the individual plaintiffs for the year 1971 and for each subsequent year during the lifetime of the incompetent. A guardian ad litem was appointed to represent the interests of the incompetent in this proceeding.
According to the pleadings and the evidence adduced at the hearing, the incompetent is presently 85 years of age and is suffering from a condition which is such that the likelihood of her being restored to competency is extremely remote. She is being cared for in a private nursing home, where the annual cost of her maintenance approximates $10,000. Reference to the Table of Life Expectancy (Appendix I of the Rules Governing the Courts (1969)) indicates that the incompetent has a present life expectancy of 4.71 years.
It further appears that, as of December 31, 1971, the corpus of the estate of the incompetent had a market value in excess of $700,000 and was producing an annual income in the neighborhood of $18,500. Gerrit A. Klop, a vice-president and trust officer of the guardian, testified that by reason of the nature of the securities in which the estate was invested and the type of securities which the guardian contemplated would be transferred to the donees in consummation of the proposed gift of $100,000, the transfer would result in a reduction of income estimated to be only $1,500 annually, at present rates. It was his further opinion that the assets remaining and the income therefrom would be more
than adequate to meet amply all conceivable needs of the incompetent until her death.
Mrs. Trott was adjudicated an incompetent by the Essex County Court by order dated April 30, 1971. The most recent will executed by her prior to the onset of her mental incapacity is dated June 24, 1964. Although there also has been found among her papers a codicil dated September 18, 1967, which purports to be a codicil to a will "bearing date the 18th day of September, 1967," it would effect no change in the ultimate distribution of her estate, even if valid.
By the terms of the will of June 24, 1964, the incompetent's entire estate is left outright -- one-half to plaintiffs Andrew S. Brazwell III and Walter S. Brazwell (grandchildren of the incompetent), and one-half to the incompetent's daughter, Laura B. Martin. Mrs. Martin has since died and is survived by her two children, plaintiffs Alexander Martin and Pattie Armesto. Hence, inasmuch as the incompetent has no living descendants other than the four individual plaintiffs (and their descendants), only plaintiffs and their descendants can have any interest in the incompetent's estate at her death, N.J.S.A. 3A:3-13 and 14 -- barring the remote and highly unlikely possibility that the incompetent is survived by none of her grandchildren and their descendants.
Concededly, the principal if not the sole reason for this application is the possible saving of death taxes. Klop estimated that were the proposed gift of $100,000 to be authorized and consummated, the resultant savings on death taxes might amount to as much as $20,000. Thus, the application poses two issues: (1) does the court have the power to authorize a guardian to make a gift of a part of the estate of an incompetent for the purpose of minimizing death taxes, and (2) if so, should such power be exercised under the circumstances here present?
Generally speaking, the powers and authority of the guardian of an incompetent with respect to the administration of the estate of the incompetent are found in N.J.S.A.
3A:6-36. That statute charges the guardian to take possession of the incompetent's "real and personal property and see to it that no waste or destruction of his real property is done * * * and [to] apply his personal property and the rents and profits of his real property so as properly to support the * * * incompetent." Within specific and circumscribed limits the court is empowered by statute to authorize the use of the incompetent's assets for the maintenance and support of the incompetent's "household, family, spouse, child or children," N.J.S.A. 3A:20-3, 5, 6 and 10; and where the income of the incompetent's estate is more than sufficient for the proper support of "himself, his household, family, spouse, child or children," the court may also authorize the use of not more than two-thirds of any surplus income for the support or education of the "parents, brothers or sisters" of the incompetent "who are without adequate means of support and dependent on the bounty of others." N.J.S.A. 3A:20-4; In re Groebe , 49 N.J. Super. 111 (Ch. Div. 1958).
Although a review of the applicable statutes discloses no express authority for the guardian of an incompetent to dispose of a portion of the incompetent's estate in the manner here proposed, the power to grant such authorization in a proper case inheres in a court of chancery by virtue of its position as protector and general guardian of all persons under disability. Under the doctrine of parens patriae the court, as representative of the sovereign, may intervene in the management and administration of an incompetent's estate in a given case for the benefit of the incompetent or of his ...