Punitive Damages Okayed in Probate Case:

The New Jersey Supreme Court on July 22, 2008 considered the circumstances in which it is appropriate to award punitive damages against a fiduciary in a case involving Wills, Trusts, Probate proceedings and lifetime transfers.
 
In this case, a lawsuit was filed against a doctor who was alleged to have persuaded the decedent to transfer a large home in Spring Lake, New Jersey to him in lieu of the local Volunteer First Aide Squad who was the prior testamentary beneficiary under her Last Will and Testament.  In its analysis, the Court concluded that the remedy of punitive damages is limited to situations where an individual (who is essentially a stranger to the testator) gains access to him or her through undue influence and then carries out a scheme to place himself or herself in a position to seize control of the testator=s (decedents) assets through a lifetime transfers or a bequest under their Last Will and Testament.  The Court generally opinioned that any punitive damage award arising in such a case filed in the Probate Division of the Superior Court must be in compliance with the New Jersey Punitive Damages Act.  This remedy will be infrequent and limited to circumstances in which the person who received the lifetime gift or bequest is an individual who otherwise cannot be punished through a lesser available remedy by the Probate Court. Because of the unique facts of this case, an award of compensatory damages and potentially punitive damages was available.   The case was remanded back to the Probate court for further determination of the issue of compensatory and punitive damages in light of the Supreme Court decision.  This case is significant for the proposition that Executors, beneficiaries of lifetime and testamentary gifts when obtained through undue influence, suspicious circumstances, etc.  can be held personally liable for punitive damages.

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If a spouse dies, then the surviving spouse may elect to take a one-third share of the deceased’s estate. This is called an elective share. Basically, a spouse can’t be disinherited. The surviving spouse has a right to the elective share. The only way that a surviving spouse can be completely disinherited is through a prenuptial agreement, where both spouses can agree to waive any claims to an elective share of each other’s respective estates.

Your elective estate includes not only property in your name alone, but also most assets with beneficiary designations such as bank accounts, securities, IRA accounts, your interest in jointly-held property, annuities, certain interests in trusts, the cash value of life insurance, and even property that you might transfer to a child during the one-year period preceding your death. In other words, you cannot easily ignore your spouse’s rights to his or her elective share. Many clients ask me how the surviving spouse will be able to claim his or her share if the assets are left in trust for a child. The answer is that the surviving spouse can file a probate proceeding and force the child to return the assets to satisfy the elective share obligation.