Estate of Resnick, Matter of
| Decision Date | 31 August 1995 |
| Citation | 663 A.2d 132,284 N.J.Super. 47 |
| Parties | In the Matter of the ESTATE OF Max RESNICK, Deceased. Paul HELLER as Executor of the Estate of Max Resnick, Plaintiff-Appellant/Cross-Respondent, v. Mark RESNICK, David Resnick, Anna Resnick and Selma Resnick, Defendants-Respondents, and Selma RESNICK, Defendant-Respondent/Cross-Appellant. |
| Court | New Jersey Superior Court — Appellate Division |
Lewis Stein, Succasunna, for appellant/cross-respondent (Nusbaum, Stein, Goldstein & Bronstein, attorneys; Mr. Stein and Cynthia C. Stilwell, on the brief).
Sheldon H. Altwarg, Bloomfield, for respondent/cross-appellant Selma Resnick (Sussman & Altwarg, Bloomfield, attorneys; Mr. Altwarg and Harriet Heuer Miller, Jersey City, on the brief).
Ralph Neibart, West Orange, for respondents Mark, David and Anna Resnick (Mr. Neibart, on the brief).
Before Judges GAULKIN, BAIME and KESTIN.
The opinion of the court was delivered by
KESTIN, J.A.D.
The issues raised in this case bear upon the interests of those affected by a written contract to make reciprocal wills, specifically the restraints upon the freedom of action of a party in using or disposing of assets during his life as a survivor, and the enforceable expectations of irrevocable beneficiaries who are residuary legatees. These are questions of first impression, although touched upon in earlier cases involving oral testamentary contracts.
In January 1973, Max Resnick and Ada Heller were married. Max 1 was about 63 years of age and Ada was about 57. Each had been married before. Max had two adult children, Jerome and Charles. Ada had three adult children, Paul, Jean and Robert. Paul is the plaintiff executor herein.
Ten years after their marriage, on February 3, 1983, Max and Ada agreed, in writing, to make irrevocable reciprocal wills. N.J.S.A. 3B:1-4. Except for purely formal matter, the contract, in its entirety, provided:
NOW, THEREFORE, for and in consideration of the sum of ONE (1.00) DOLLAR and other good and valuable consideration, it is agreed as follows:
1. The Husband shall execute a Will in the form annexed hereto and marked Exhibit "A".
2. The Wife shall execute a Will in the form annexed hereto and marked Exhibit "B".
3. After the due execution of their respective Wills in the forms of Exhibits "A" and "B", neither the Husband nor the Wife shall alter or revoke any of the provisions of his or her respective Will without first obtaining the written and acknowledged consent of the other.
4. Upon the death of either the Husband or Wife, the survivor agrees not to alter or revoke any of the provisions as contained herein, inasmuch as each of the parties has provided for the children of the other party.
5. This agreement may not be altered in any manner except by written instrument duly executed and acknowledged by both parties.
6. This agreement shall be binding upon and inure to the benefit of the respective parties hereto and to their respective heirs and assigns.
The wills executed the same day designated Max and Ada as each other's sole heirs and provided that the children of both would be the residuary heirs of each. If any child of Max or Ada predeceased the parent, that child's share would devolve upon the offspring of that child.
Some two years later, on April 24, 1985, after more than twelve years of marriage, Ada died. Max was appointed as executor of her will. He filed an inheritance tax return reporting a net estate of $97,495.60.
In June 1986 Max, then about 76 years old, married Selma Cagin, aged 68, a widow with three adult children. They had met in September 1985. A month before his marriage to Selma, Max sold for $168,000 the condominium apartment in which he resided, previously owned by him and Ada by the entireties.
Also in June 1986, Ada's children filed suit seeking to compel discovery concerning the condition of their mother's estate and to obtain an accounting. On December 1, 1986, the relief sought was denied without prejudice.
Max and Selma resided in her condominium in West Orange and purchased another condominium in Hallandale, Florida for $122,500. The Florida property was initially purchased with funds belonging to Max. Shortly thereafter, Selma reimbursed Max for half the purchase price. They also purchased, from joint funds, for the Florida condominium, a $7,000 piano and other items. In November 1986, Max also bought a new Cadillac automobile for $20,201.
After they married, Selma, at Max's request, revised her will bequeathing him a life estate in her West Orange condominium. Also, on Max's recommendation, Selma gave her interest in a pharmacy business and associated real estate to one of her sons.
For the nearly two years from their marriage to Max's death on May 18, 1988, Max and Selma divided their time between their residences in West Orange and Hallandale. Selma continued to pay the carrying costs of the West Orange residence as she had before Max moved in, and she usually paid for their groceries. All other expenses of the couple were paid from their joint resources. They dined out three or four times per week and gambled in Atlantic City at least twice each week when they were in New Jersey.
Some of their respective property became intermingled; other resources were maintained individually. They opened joint bank accounts and deposited their social security income therein. From time to time, other funds were transferred from one spouse's accounts to the other's or to joint accounts. Purchases of stocks and bonds were made, with the securities being placed in the name of one spouse or the other, but not necessarily that of the spouse whose assets had funded the purchase.
In March 1986, a few months before Max and Selma were married, Max's son, Jerome, committed suicide. Max was executor of Jerome's will and claimed to be a creditor of Jerome's estate. The basis of the claim was a mortgage on Jerome's home in Connecticut securing an alleged debt in excess of $90,000 at the time of Jerome's death, representing the aggregate of a series of loans made to Jerome by Max between 1964 and 1985. In probate proceedings in Connecticut, Jerome's widow, Jessica, contested the debt, contending that the amounts given by Max to Jerome had been gifts with no expectation of repayment. She contended further that because of strained marital relations between her and Jerome, with divorce a possibility, the monies were paid over to Jerome by Max in a manner contemplated to avoid claims Jessica might have against Jerome in respect of the marital estate were a divorce to occur. After some inquiry by the Connecticut probate judge, Jessica and Max agreed that the funds would be provided to Max's grandchildren, Anna, David and Mark Resnick, Jerome and Jessica's children, for use in payment of college tuition and expenses, and that Max, accordingly, was to receive the funds in trust for the grandchildren. In December 1987 and January 1988, two payments of principal and interest totalling about $101,000 were made to Max by Jerome's estate and were deposited in one of Max's bank accounts. In April 1988, the funds were used to acquire three Franklin Federal tax free certificates, each in the name of one of the grandchildren and Selma as joint owners.
Selma was unaware of the existence of Max's and Ada's reciprocal wills or the related contract. When Max died, she searched for a will but found none. She consulted with Max's attorney to determine whether he knew of a will. He did not, 2 and he assisted Selma in filing papers on June 3, 1988 to qualify as administrator of Max's estate. Selma assumed that all of Max's property had passed to her, and she began treating the assets of Max's estate as if she owned them.
As a consequence of a complaint and order to show cause filed in August 1988 by the heirs under the will, the trial court revoked Selma's letters of administration, restrained alienation of all assets passing under the will, and appointed Paul Heller as executor of Max's estate. Issue was joined in a timely fashion. In an amended pleading filed in March 1991, however, Selma counterclaimed for an elective share of Max's estate pursuant to N.J.S.A. 3B:5-15a. Eventually, the executor filed a separate complaint seeking vacation of the 1988 transfers to Max's grandchildren effected in the three tax free certificates on which Selma was designated as joint owner. The action against the grandchildren and Selma was consolidated with the probate action.
Trial commenced with a focus on the cause of action concerning the transfers to the grandchildren. After the close of plaintiff's case on those claims, the trial court dismissed the action, holding that "the [three] joint accounts by definition were not assets of the estate," and that their establishment did not violate the contract for irrevocable reciprocal wills.
Two additional days of trial ensued in respect of the remaining issues bearing upon alleged assets of Max's estate. Findings were made based upon the proofs, as a consequence of which the trial court ordered Selma to turn over certain assets to the estate: a $15,000 New Jersey Health Care Facility bond, a $10,000 Atlantic County Improvement Authority bond, 500 shares of Bankamericorp stock, $28,315.15 in income from assets belonging to Max less whatever federal and state income taxes had been...
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