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In Re Estate of Halbig

A-3736-06T2 (N.J. Super. App. Div. 2008) (Unpublished)

DEEDS; DIVORCE — If a final judgment of divorce provides that upon the death of a party any inheritance previously received by that party is to be devised among his children, then the statute of limitations for the children to enforce that provision with respect to a subject property that was deeded by the decedent prior to his or her death does not begin to run until the death itself because the children would have had no right under the divorce agreement until after their parent died.

A settlement agreement was incorporated into a final judgment of divorce. The husband then passed away five years later. Included in the agreement was a provision that any inheritance received by the decedent was to be devised upon his death equally among his three children, one son and two daughters. Soon after the divorce, the decedent’s mother passed away and left him a house, a small car, one-quarter of the remainder of her estate, and a number of bank accounts. Little more than one year following the divorce, the decedent remarried and named his second wife as the executrix of his estate. Two months later, he sold the house left to him by his mother to his son and gave a mortgage to his son for the property’s purchase. When the man died nearly four years later, his executrix assigned the partially paid off mortgage to the decedent’s three children.

The three children obtained an order enjoining the executrix and the estate from selling, transferring or encumbering any of the estate’s proceeds. The lower court later found that the settlement agreement between the decedent and his first wife was binding on the estate and that the estate was liable to the decedent’s three children. During discovery it was revealed that the executrix had sold a condominium she jointly owned with the decedent, purchased another condominium for a lesser amount, and spent the remainder on personal bills and travel. The matter was transferred to the probate division and the three children brought an action to enjoin the estate and the executrix from dissipating the remaining assets of the estate. After the parties were unable to settle the claims of the decedent’s children, the matter went for a summary decision. The lower court found that the decedent had breached the settlement agreement with his first wife by keeping, or converting, the inheritance and selling his mother’s house to his son. It also found the estate liable to the decedent’s three children for his share in his mother’s estate. Additionally, the lower court found that the decedent’s son should not have been making mortgage payments to the decedent and that the amount paid was to be returned to all three of the decedent’s children.

In its appeal, the executrix argued that the decedent’s children were time-barred from bringing their action on the basis that they should have known of the decedent’s actions during his lifetime but conscionably delayed bringing an action. That argument was rejected. The Court pointed out that the executrix had not made this argument at trial and was procedurally barred from raising it as a defense on appeal. It found that the argument would have failed anyway since the decedent’s children had no rights under the divorce’s settlement agreement until after their father died and that brining the action thirteen months after his passing did not constitute an unreasonable delay.

On the matter of the estate’s liability, the Court noted that an action against a party for conversion or breach of contract survives the party’s death and that the party’s estate could be held accountable. It agreed with the decedent’s children that the estate was liable for the decedent’s breach of the settlement agreement and conversion of assets that were to be devised among them. The Court found that the executrix was barred, or estopped, from arguing that the estate was not bound by the divorce settlement agreement or liable to the decedent’s children, since the matter was adjudicated in the pre-probate proceedings. However, it found that the lower court, in the pre-probate proceedings, incorrectly included a second house owned by the decedent and his mother, as joint tenants, in the judgment against the estate. Since the second house was owned by the decedent and his mother as a joint tenancy, the house immediately passed to the decedent and was not considered an inheritance from his mother’s estate, and therefore was not subject to the settlement agreement to the divorce. The Court removed the second house jointly owned by the decedent and his mother from the calculations for the estate’s value and reduced the judgment in favor of the decedent’s children by that amount.

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