Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Official citation and/or docket number and footnotes (if any) for this case available with purchase.

Learn more about what you receive with purchase of this case.

In re Estate of Grant

Superior Court of New Jersey, Appellate Division

May 28, 2013

IN THE MATTER OF THE ESTATE OF LOUIS S. GRANT, SR., Deceased.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued May 14, 2013

On appeal from the Superior Court of New Jersey, Chancery Division, Probate Part, Hunterdon County, Docket No. 39487.

Arthur J. Russo argued the cause for appellant Louis S. Grant, Jr.

John G. Manfreda argued the cause for respondent Administrator C.T.A. (Gebhardt & Kiefer, attorneys; Mr. Manfreda and Susan M. Flynn, on the brief).

Carter, Van Rensselaer and Caldwell, attorneys for respondents Virginia Liotta and Nancy Grant (William J. Caldwell, on the brief).

Before Judges Reisner, Yannotti and Hoffman.

PER CURIAM

Louis S. Grant, Jr. (Junior) appeals from a January 24, 2012 order, approving the third and final informal accounting filed by John G. Manfreda, the court appointed administrator C.T.A. of the Estate of Louis S. Grant, Sr., deciding the amounts of estate taxes to be paid by each estate beneficiary, and awarding counsel fees. He also appeals from a March 5, 2012 order denying his motion for reconsideration. We affirm, substantially for the reasons stated by Judge Stephen B. Rubin in his written opinions issued on January 24, 2012 and March 5, 2012.[1]

I

This appeal is the most recent chapter in protracted litigation over the estate of Louis S. Grant, Sr. (Senior), who died in 2001. The history was described in some detail in two of our prior opinions, In re Estate of Grant, No. A-2014-04 (App. Div. May 3, 2007) (Grant I), and In re Estate of Grant, Nos. A-0078-09 and A-0079-09 (App. Div. Dec. 7, 2010) (Grant II).

As we described in Grant I, Senior operated a successful horse tack business, Roosevelt Sales Stables, with the help of his son Junior. In 1998, Senior made the last of a series of wills. Article Four of the will left the inventory of the business to Junior, as a specific bequest. Article Five provided that the estate taxes should be paid from the residuary estate and that the beneficiaries of any specific bequests should not be responsible for those payments. Article Six left the residuary estate to Senior's three children —— Junior, Nancy Grant (Nancy) and Virginia Liotta (Virginia) —— in equal shares.[2]

Despite the will's provisions, Junior ultimately received the vast majority of his father's assets. Originally, the tack business was unincorporated. But, in 1999, Senior sought to create a partnership that would hold the assets of the business. Senior wanted all of his children to participate in the partnership, but Nancy and Virginia never executed the assignments of limited partnership interest that were offered to them. Apparently, they refused to sign on the advice of Virginia's husband, who was an attorney. As a result, the partnership was created with only Senior and Junior as the partners. When the tack business inventory was liquidated, the proceeds (about $978, 000) were placed in the partnership, and at some point, the funds were transferred to Junior.

After Senior died, Junior sought to have the 1998 will admitted to probate. His sisters challenged the will as the product of alleged undue influence. They also filed a counterclaim contending that the $978, 000 was an estate asset over which Junior had improperly asserted control and arguing that he should return the money to the estate. In Grant I, we affirmed the trial court's decision, holding that the will was not the product of undue influence and ordering that the will be admitted to probate. The trial judge had also dismissed the counterclaim, but that issue was not directly addressed in the appeal.

In 2008, the trial court removed the three siblings as administrators of their father's estate and appointed an administrator C.T.A., John Manfreda, Esq. Further litigation ensued over the assets of the partnership, with Manfreda contending that the partnership assets, including the $978, 000, should be distributed pursuant to the terms of the will. In Grant II, we granted leave to appeal from the trial court's decision that the partnership assets should be distributed pursuant to the will. We remanded that issue to the trial court for further consideration. In remanding, we relied on gift tax returns that Senior filed in 2000 and 2001, which supported Junior's position that his father had gifted the partnership to him during the father's lifetime.[3]

In Grant II, we also addressed the $978, 000 "representing the net proceeds of the liquidation of inventory in decedent's business." We concluded that those funds constituted an ademption by satisfaction, pursuant to N.J.S.A. 3B:3-46(a), that is, property gifted by the testator during his lifetime to satisfy a devise contained in the testator's will. In this case, Article Four of Senior's will left Junior "so much of the tack and inventory as [decedent] may die possessed of in an unincorporated business known as 'Roosevelt Sales Stables.'" We concluded that when Senior liquidated the inventory to which his will referred, and gave the proceeds to Junior, he did so as an advance satisfaction of Article Four of his will. Therefore, we held that the money belonged exclusively to Junior and was not to be shared with the sisters as part of the residuary estate.

On July 21, 2011, Manfreda filed a third amended final informal accounting of Senior's estate, covering the period from April 16, 2008 to June 30, 2011. Manfreda reported that he had received $1, 136, 313 in estate assets, including $661, 142.45 from an annuity that all parties agree was intended to be an estate asset. Manfreda reported disbursements and distributions of $955, 105.97. Most of the reported expenditures were for New Jersey and federal taxes, and for counsel fees that the court had previously approved for payment. The accounting set forth a separate schedule of "death taxes paid" from 2001 through 2010. The taxes amounted to $1, 040, 843.24. The estate had assets of $151, 417.17. However, the estate owed $286, 603 in federal and state taxes, real estate taxes and counsel fees, leaving a net deficiency of $135, 185.83.

Manfreda proposed to recoup from Junior and his sisters sufficient funds to pay the estate's remaining obligations, in proportion to their receipt of assets which were subject to recoupment for that purpose, pursuant to N.J.S.A. 3B:24-6.[4] In a certification in support of his accounting, Manfreda stated that the $978, 000 in cash and the 97% of the partnership that Junior received were part of Senior's taxable estate. He recounted that Junior had filed tax returns for the estate in 2005 without paying the taxes attributable to those amounts. He also asserted that Junior had failed to file a protective claim with the Internal Revenue Service for the estate's payment of counsel fees and had failed to file for a tax refund. As a result, the statute of limitations for taking those steps expired. Manfreda also supported his accounting with a detailed affidavit of services.

In response, Junior filed a "counterstatement of material, relevant facts and procedural history." However, he did not file a certification or affidavit. The counterstatement asserted that his sisters, their attorneys, and Manfreda, were all responsible for the failure to pay the estate's taxes in a timely manner. He also asserted that the sisters and Manfreda had caused the estate to incur counsel fees for meritless probate litigation. He further contended that Manfreda had improperly allowed Nancy to live in one of the estate properties without paying rent. Among the documents attached to Junior's counterstatement was a May 11, 2001 letter from Junior's attorney to an attorney for the sisters. That letter asserted Junior's position that the assets Senior transferred to Junior prior to his death "will not be included in his taxable estate." Consequently, it appears that some of the delay in making timely tax payments on those amounts was attributable to Junior and not to his sisters.

The trial judge determined that the estate was insolvent and that the beneficiaries would be required to pay the estate's remaining estate taxes and expenses in proportion to the assets they had received. The judge ordered Junior to pay 97%, Nancy to pay 2% and Virginia to pay 1% of those expenses. He awarded Manfreda's law firm fees of $125, 392.50, and ordered the parties to pay those fees in the same proportions.[5]

In his written opinion, the judge acknowledged Article Five of the will, which indicated the testator's intent that the estate taxes be paid from the estate's residuary assets, but he also considered Kapnek v. Kapnek, 38 N.J.Super. 268 (Ch. Div. 1955), which addressed the payment of estate taxes when an estate is insolvent. The judge reasoned that since Junior received most of the non-probate assets through inter vivos transfers, which resulted in the majority of the estate taxes, he was responsible to pay his pro rata share of those taxes. The judge also reasoned that N.J.S.A. 3B:24-6 authorized an estate administrator to recoup those assets, in an amount sufficient to pay the estate taxes.

The judge held that N.J.S.A. 3B:14-23(k), absolving a fiduciary of legal responsibility under certain circumstances, did not preclude Junior from liability for estate taxes, because Junior made decisions and took actions respecting the estate in his capacity as a co-fiduciary. The judge also concluded that the administrator was entitled to fees for representing the estate as an attorney. Finally, the judge concluded that there was no need for an evidentiary hearing on objections from Junior that he found were either minor or untimely, including the claim for rent.

In rejecting Junior's subsequent motion for reconsideration, Judge Rubin summarized and restated his earlier findings as follows:

In the present action, Junior's Motion for Reconsideration fails to meet the narrow criteria for such a motion recognized by New Jersey courts and improperly raises a number of new issues in an effort to find a purported basis for reconsideration. Junior fails to cite any authority in support of his position that [Kapnek v. Kapnek, 38 N.J.Super. 268 (Ch. Div. 1955)], is inapplicable to the facts of this case, nor does he cite any authority that the Court's reliance on N.J.S.A. 3B:24-6 in apportioning estate taxes was inappropriate. Junior simply repeats his argument from the original Exceptions to the Accounting that the Court should have relied upon N.J.S.A. 3B:24-4, which mandates that the testator's intent in regard to the payment of taxes be followed; however, the Court has previously determined that this statute is not applicable in this case as there are directions regarding estate taxes expressly included in the Testator's will, and this statute only applies "in the absence of directions to the contrary." There is no ambiguity in [the] Testator's will on this point, nor is there any genuine, good faith basis for continuing to attempt to make this a probable intent case.
Furthermore, there is no case law or statute that supports Junior's position that he should not be liable for the administration expenses and taxes in proportion to the non-probate assets he received from the estate. Where an estate is rendered insolvent due to the taxability of certain non-probate assets, including inter vivos transfers, the taxes and administrative expenses are payable by recipients of the non-probate assets. [Kapnek, supra, 38 N.J.Super. at 272-73.] Similarly, Junior's argument that he was the victim of decisions made by a majority of the fiduciaries fails. The Court has found that Junior was a fiduciary from 2001 through 2008 (when the Administrator C.T.A., John Manfreda, was appointed), he took material action on behalf of the Estate in his capacity as a fiduciary during that time period, and he did not express his required statutory dissent to his co-fiduciaries as mandated by N.J.S.A. 3B:14-23(k). Junior therefore remains responsible for his pro rata share of taxes and expenses.
Junior's motion for reconsideration repeatedly refers to the eleven years of litigation related to the Estate. However, the Third Amended Informal Accounting properly covers only the period beginning in 2008 when the Administrator C.T.A. was appointed. Any issues that relate back to the eight years preceding the Administrator's appointment, when Junior himself was a fiduciary, are not properly before this Court. Simply stated, Junior received the overwhelming majority of the Estate's assets, specifically 97.8%, and therefore has the corresponding responsibility for the payment of the Estate's taxes and expenses attributable thereto. I find that Junior has presented no evidence which the Court ignored or overlooked, nor has he raised any meritorious claim that the Court based its opinion on a "palpably incorrect or irrational basis" as required by [D'Atria v. D'Atria, 242 N.J.Super. 392 (Ch. Div. 1990)].

II

On this appeal, Junior presents the following points of argument for our consideration:

POINT I.
THE TRIAL COURT ERRED VIA ITS APPROVAL OF THE ACCOUNTING AND DISTRIBUTION SCHEME SINCE IT WAS IN DIRECT DEROGATION AND VIOLATION OF THE COMPREHENSIVE ESTATE PLAN AND INTENT OF THE TESTATOR IN THE CLEAR AND UNAMBIGUOUS LANGUAGE OF DECEDENT'S LAST WILL AND TESTAMENT.
POINT II.
THE TRIAL COURT ERRED BY ADJUDICATING THE ALLOCATION OF ESTATE TAXES, ADMINISTRATION EXPENSES, AND ATTORNEYS' FEES IN DIRECT DEROGATION OF TESTAMENTARY INTENT VIA MISAPPLICATION OF N.J.S.A. 3B:24-4 AND THE HOLDING OF KAPNEK V. KAPNEK.
POINT III.
THE TRIAL COURT ERRED IN ITS ACCEPTANCE AND RELIANCE UPON THE ERRONEOUS CONCLUSIONS OF THE ADMINISTRATOR IN ITS ACCOUNTING THAT FAULT UNDERLYING THE ALLEGED INSOLVENCY OF THE ESTATE WAS CAUSED BY LOUIS GRANT, JR., WHICH RULING WAS DIRECTLY CONTRARY TO THE DISPUTED CONTROLLING MATERIAL FACTS.
POINT IV.
THE TRIAL COURT, IN ITS RULING, FURTHER MISAPPLIED THE APPLICATION OF THE STATUTE TO THE MAJORITY FIDUCIARIES TOGETHER WITH THE ADMINISTRATION OF ATTORNEY JOHN MANFREDA.
POINT V.
THE MAJORITY FIDUCIARIES AND ADMINISTRATOR C.T.A. FAILED TO ADHERE TO STATUTORY DUTIES INVOLVING THE ADMINISTRATION AND ACCOUNTING OF THE ESTATE IN CONFORMANCE WITH THE ESTATE PLAN AND TESTAMENTARY INTENT OF THE DECEDENT AND FURTHER FAILED TO UTILIZE ORDINARY CARE, SKILL, AND DILIGENCE.
POINT VI.
THE ACCOUNTING ACCEPTED BY THE TRIAL COURT IN ITS RULING WAS NOT REPRESENTATIVE OF A TRUE AND ACCURATE ACCOUNTING OF THE ASSETS AND LIABILITIES OF THE ESTATE AND, FURTHER, THE RECOMMENDED CREDITS, DISTRIBUTION AND APPORTIONMENT OF THE LIABILITY WAS FLAWED.
POINT VII.
THE TRIAL COURT ERRED BY AWARDING ALL OF THE ATTORNEY FEES REQUESTED BY THE ADMINISTRATOR IN VIOLATION OF R. 4:42-9.
POINT VIII.
THE TRIAL COURT CLEARLY ERRED BY PROCEEDING TO ADJUDICATE THE THIRD AMENDED ACCOUNTING WITHOUT SCHEDULING A DISCOVERY PERIOD AND EVIDENTIARY HEARING REGARDING THE EXTENSIVE MATERIAL DISPUTED FACTS, PURSUANT TO THE AUTHORITATIVE CASE LAW.

Many of these arguments are asserted with no supporting citations to the record. We also conclude that they are all without sufficient merit to warrant discussion in a written opinion. R. 2:11-3(e)(1)(E). We add the following comments.

We agree with Judge Rubin that Junior did not establish, by legally competent evidence, any material factual disputes, and that an evidentiary hearing was not required. As is clear from Manfreda's accounting, the estate paid counsel fees attributable to the extensive prior probate litigation, including approximately $177, 000 in fees to Junior's attorneys. The estate also owed taxes and penalties, due in part to the three sibling-administrators' failure to properly file returns prior to 2005, and in part to mistakes that Junior made when he filed the 2005 tax return.

Junior argues that requiring him to pay a share of the estate taxes is contrary to the intent of the testator. See N.J.S.A. 3B:3-33.1(a). He relies heavily on N.J.S.A. 3B:24-4, which provides that "[i]n the absence of directions to the contrary, " taxes shall be apportioned to transferees in proportion to the assets they received. He also relies on Article Five of the will, which directed that the estate taxes be paid from the residuary estate, and directed that the beneficiaries of the bequests, set forth in Articles One through Four of the will, should not be responsible for the estate's debts.

However, we agree with Judge Rubin that both N.J.S.A. 3B:24-4 and Article Five are irrelevant, because, at the time Manfreda filed his accounting, the estate had insufficient funds with which to pay its debts. The estate's taxes and other debts must be paid regardless of the testator's intent. Here, the majority of the taxes were paid from the residuary estate, which included a substantial annuity that the decedent left to pay for the estate's taxes and other expenses. However, it was not possible to pay the remaining taxes and other estate expenses from the residuary estate. Therefore, Manfreda correctly invoked the provisions of N.J.S.A. 3B:24-6 to recoup funds from the beneficiaries in order to pay the estate's debts, and to charge the beneficiaries in proportion to the assets they received. See Kapnek, supra, 38 N.J.Super. at 272-73; see also In re Estate of Ericson, 152 N.J.Super. 169, 177-78 (App. Div. 1976), aff'd in part, rev'd on other grounds, 74 N.J. 300, 311 (1977). Because Junior received virtually all of the assets, he was properly assessed a proportionately large share of the estate taxes and other estate liabilities.

Finally, we will not disturb a trial court's award of counsel fees, absent "a clear abuse of discretion." See Rendine v. Pantzer, 141 N.J. 292, 317 (1995). We find no abuse of Judge Rubin's discretion in the award of a fee to Manfreda's law firm for handling this extended and hotly-disputed probate matter.

Affirmed.


Buy This Entire Record For $7.95

Official citation and/or docket number and footnotes (if any) for this case available with purchase.

Learn more about what you receive with purchase of this case.