Recent Developments

■
Proper
Prenup Protects Estate:

W and H signed a prenup agreement. Both were
represented by counsel, engaged in discovery, and schedules of assets,
liabilities and income tax return were attached to the agreement. H and W
married July 8, 2003. H died March 9, 2008. On March 31, 2008 W filed a caveat
to H’s will. A caveat is a challenge that the will should not be admitted.
Issue – should the caveat be rejected and the will accepted, or should the
prenuptial agreement be rejected and W be permitted to take a surviving
spouse’s elective share under N.J.S.A. 3B:8-1 to -19. An elective share is a
minimum inheritance a surviving spouse is entitled to by law, regardless of a
will, if this right was not properly waived. W claimed, among other things that
the agreed payments were made to her under a trust instead of under the will as
required. The court found no practical difference. The court noted that the
law, N.J.S.A. 37:2-38, places the burden of proof to set aside a prenup on the
party alleging the agreement to be unenforceable and that burden must be met by
clear and convincing evidence. A challenge can succeed on equitable
considerations, such as unconscionability, failure to disclose, etc. In the
matter of the estate of Donald Towbin, Deceased, Sup Ct NJ, App Div, Docket No.
A-0161-08T30161-08T3, March 16, 2009.

■ Real Estate Tax Audits:

The IRS
Estate and Gift Tax Program recently started working with state and county
authorities in several states to determine if real estate transfers reported to
them are unreported gifts. Although a tax may not be due, a gift tax return may
be required for real estate transfers above the annual exclusion amount.  Penalties will be considered on all
delinquent taxable gift returns filed.