Real Estate in New Jersey

Real Estate in New Jersey is a very valuable commodity.  Whether you are referring to North NJ, Central NJ or South NJ; real estate in New Jersey has a tremendous amount of value.  This is if you are interested in selling or buying.

This is from a recent article from Bay Shore News

Legally Speaking
by JOHN CALLINAN
Posted: 2006-05-25

Supreme Court defines probable intent

Last month, the Supreme Court of New Jersey reaffirmed the concept of probable intent. More frequently than you may think, a person dies with a last will and testament that is less than a clear expression of his intent.

In the Matter of Theodore M. Payne, deceased, a case decided on April 20th of this year, the Supreme Court was faced with the question of whether or not the decedent, Theodore Payne, wanted certain real estate to pass to the beneficiaries of the property free of debt. Mr. Payne owned two homes, his primary residence in New Jersey and a vacation property in Maine. Both properties were subject to a mortgage.

In his Will, Mr. Payne requested that all of his “just debts” be paid from his estate. So, the question for the Court was, does the pedestrian clause in Mr. Payne's Will requiring “just debts” to be paid mean that the real estate that Mr. Payne specifically devised to two different people pass to those beneficiaries free of the mortgages that encumbered the properties? Or, is the phrase just boilerplate language to which Mr. Payne gave little or not thought?

The Court, basing its decision on the doctrine of probable intent, decided that the “just debts” clause did memorialize Mr. Payne's intention that his two properties pass debt/mortgage free to their respective beneficiary. The doctrine of probable intent holds that the goal of a court in interpreting a Will is to ascertain the probably intent of the testator.

In ascertaining that intent, the court must look to the entirety of the Will and the goal that the testator was attempting to achieve. In implementing the doctrine of probable intent, the court should ascribe to the testator those impulses that are common to human nature.

For instance, when an individual leaves money to a charity in his Will, that bequest is not subject to any death tax. Assume the following facts: Mr. Smith dies with an estate worth $4,000,000. Mr. Smith leaves the entirety of his estate to his wife, his brother, his son, and a charity, in equal shares. All of the aforementioned bequests appear in a section of the Will commonly known as the “residuary clause.”

The tax clause in the Will indicates that all death taxes (federal estate tax, New Jersey estate tax, and New Jersey inheritance tax) are to be paid from the residuary of the estate. So, a literal interpretation of the Will would seem to indicate that any and all death taxes should be apportioned among the four beneficiaries evenly, with each beneficiary share of the estate being reduced proportionately by the tax owed.

Mr. Smith's estate would be subject to various death taxes. His estate would pay approximately $800,000 in federal estate tax because the credit against federal estate tax is $2,000,000 and his estate is $4,000,000. Mr. Smith's estate would pay New Jersey estate tax of approximately $330,000, because the credit against New Jersey estate tax is $675,000. Finally, Mr. Smith's estate would pay approximately $110,000 in New Jersey inheritance tax for the $1,000,000 that he left to his brother.

If each beneficiary's share were reduced evenly, then each beneficiary would receive approximately $700,000; however, the bequest to the charitable beneficiary caused none of the tax, because bequests to charities are tax-free. So, once application of the doctrine of probable intent says that a testator is presumed to have intended for charitable deductions to inure to the benefit of the charity that created the deduction. In short, the doctrine of probable intent tells us to ignore the words of the Will and ascribe to the testator a different intention than he expressed in writing.

In the Payne case, the Court looked to extrinsic writings - letters from Mr. Payne to his attorney - to ascertain his probable intent. After reading all of the documents as a whole, the Court determined that Mr. Payne's probable intent was that he believed the “just debts” clause to require the payment of the mortgages that encumbered his property.

The doctrine of probable intent is common sense. It fills in the gaps that many Wills create. But it also is a warning to us that we should review our Wills carefully and express our true intentions clearly and in our own words.

Tip #23

Home Buying Tip, Big Ticket Items:
Before you buy a home you should avoid buying any big ticket items.  When this is found out during the credit process or reporting it can make mortgage banks nervous.

Even if you will be able to get a loan, you might not be able to get the best available interest rate.

 

Tip #24

Home Selling Tip, Listing Right:
A common mistake when people list their house (especially in a buyers’ market) is list the house at a high price that they don’t anticipate to sell it at.  They figure that if they get it then GREAT but if not they can always lower the price.

This is not a good practice because what mostly happens is it will stay on the market for a while and make potential home buyers nervous because it’s been on the market so long.