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In the Matter of the Trusts

December 29, 2010

IN THE MATTER OF THE TRUSTS TO BE ESTABLISHED IN THE MATTER OF THE ESTATE OF MARGARET A. FLOOD, DECEASED.


On appeal from the Superior Court of New Jersey, Chancery Division, Probate Part, Monmouth County, Docket No. P-178-09.

The opinion of the court was delivered by: Fisher, J.A.D.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

APPROVED FOR PUBLICATION

Submitted December 8, 2010

Before Judges Cuff, Fisher and Fasciale.

The opinion of the court was delivered by FISHER, J.A.D.

The record in this probate matter demonstrates the decedent had engaged in estate planning but never executed a will by the time of her death. Notwithstanding, the judge utilized the doctrine of probable intent in permitting the establishment and funding of supplemental benefit trusts for decedent's two disabled daughters. Because the doctrine of probable intent --a rule of will construction -- cannot be used to create a testamentary disposition when a decedent dies intestate, we reverse.

The facts are relatively simple and undisputed. Margaret

A. Flood was survived by four children. Two of her children are disabled and the beneficiaries of supplemental security income and Medicaid programs; one of those two receives special residential services and other benefits from the Division of Developmental Disabilities (DDD). When judgment was entered, DDD's statutory lien exceeded $1,000,000; the lien has since grown at a rate in excess of $300 per day.

Margaret first considered estate planning following her husband's death in 2004. Margaret's daughter-in-law, who is an attorney, certified that Margaret was concerned about protecting the inheritances of her disabled daughters from any obligations to reimburse the governmental entities that had provided benefits and services. Although in late 2004 Margaret expressed these concerns and her desire to retain an attorney, it appears she did not consult an attorney until March and April 2008. Thereafter, Margaret's plans were interrupted first by the illness of one of her daughters and then by an injury she sustained in April 2008. Margaret died on May 24, 2008, with an estate valued at $480,000. She never executed a will or testamentary trust.

The estate's administrator filed this action, seeking the court's authorization to establish and fund the trusts he claims would have been created had Margaret's death not intervened. The matter came before the trial court on the return date of the initial order to show cause; DDD opposed the relief sought.

The facts, as briefly outlined above, were not disputed. The parties proceeded on the assumption that the decedent possessed the unfulfilled intent to create supplemental benefits trusts for her two disabled daughters. The bone of contention instead turned on whether a court may animate such an intention in the complete absence of a will or testamentary trust. The trial judge rejected DDD's arguments and held that the doctrine of probable intent could reach that far.

We conclude that the trial judge's well-intended decision was based on a mistaken understanding of the applicable law. In the absence of a testamentary disposition, Margaret's estate passed by way of the laws of intestacy, and her children's interests vested immediately upon her death. N.J.S.A. 3B:1-3. The doctrine of probable intent -- utilized here to do what Margaret failed to do in life -- has no application in the absence of a will. Certainly, as the administrator argues, the doctrine of probable intent has evolved; it now represents, as our Supreme Court has held, a "broader and more liberal approach to will construction" than the prior insistence on formalistic results. In re Estate of Burke, 48 N.J. 50, 63 (1966).

The doctrine permits the reformation of a will in light of a testator's probable intent by "searching out the probable meaning intended by the words and phrases in the will." Engle v. Siegel, 74 N.J. 287, 291 (1977). Moreover, extrinsic evidence may be offered not only to show an ambiguity in a will but also, if an ambiguity exists, "to shed light on the testator's actual intent." Wilson v. Flowers, 58 N.J. 250, 263 (1971). The outer reach of the doctrine's evolution is likely the Court's decision in In re Estate of Branigan, 129 N.J. 324, 330-31, 335 (1992), where the doctrine was used to ...


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