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It’s Never Too Late (Sometimes) to Assert Rights as a Beneficiary

You don’t have to be a lawyer to be familiar with the concept of a “Statute of Limitations.”  In other words, legal rights must be asserted within a reasonable time frame. Otherwise, you’re out of luck.

Prior blog posts (here and here) have addressed this issue in the context of estates and trusts.  Will beneficiaries (and beneficiaries of Revocable Trusts) must contest a Will within four months of probate, if the beneficiary lives in New Jersey, or within six months if the beneficiary lives outside of New Jersey.  Trust beneficiaries generally have six months from the receipt of adequate “reports” to bring claims for breach of fiduciary duty by a Trustee.

However, as is often the case in the law, there is always an exception.  The recent New Jersey case of In the Matter of the Estate of Joan McFadden, deceased, is a perfect illustration of one of those exceptions.  Ms. McFadden (“the Decedent”) executed a Will in 1998 which made specific bequests to three charitable organizations and to two friends.  She left the rest of her estate in equal shares to her thirteen nieces and nephews.

At the time she executed her Will, she also executed a Power of Attorney naming her nephew, John, as her agent in the event she was disabled.   The Decedent’s medical condition declined in subsequent years and John assisted her with day-to-day tasks and even moved in with her until she eventually moved in to an assisted living facility where she remained until her death.

Title to the Decedent’s home was transferred to John in May 2002.  The Decedent died in October 2002.  At that time, the only beneficiaries who were aware of the existence of the Will were John and his sister, Mary.  John was named as Co-Executor along with Mary, but Mary renounced her right to serve and John probated the Will in May 2003.  He did not, as is required by law, notify the beneficiaries that the Will existed and had been probated.

In December 2011, ALMOST 10 YEARS AFTER THE DECEDENT’S DEATH, two of the nephews named in the Will, Joseph and Vincent, became aware of the Will and filed an action against John, not to contest the provisions of the Will, but for breach of fiduciary duty and theft of estate assets (including the house).  John argued, among other things, that the applicable statute of limitations (6 years for these types of claims) barred Joseph and Vincent’s claims.

The court disagreed.  The judge found that John did not act in good faith and made efforts to conceal the Will from the beneficiaries.  Therefore, the Statute of Limitations was “equitably tolled” and only began to run when Joseph and Vincent discovered the Will in 2011.  The court issued an order, which was upheld by the Appellate Division, directing John to repay and re-convey assets to the estate and awarding counsel fees to Joseph and Vincent.

Regular readers of this blog know that it is incumbent upon beneficiaries of estates and trusts to proactively assert their rights and that failure to do so may jeopardize any claims that they might otherwise be able to assert.  However, the McFadden case is a reminder that there are circumstances where the behavior of the fiduciary is so egregious that almost no amount of time, even 10 years in this case, is too late to assert your rights.

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