After Mrs. Dreher died and her son probated her will, her daughter filed a complaint objecting to the probate. The plaintiff claimed that the will was the product of undue influence, and that her mother lacked testamentary capacity to sign the will.

After four days of trial, the parties settled the case, and the terms of the settlement agreement were placed on the record. The settlement agreement provided that the net estate would be divided equally between the plaintiff and defendant, and that plaintiff would receive an immediate advance on her distribution in the amount of $100,000.

Thereafter, the defendant forwarded a refunding bond to the plaintiff and asked that it be signed so that the $100,000 distribution could be made. The plaintiff signed the refunding bond, but deleted the “refunding provision,” which required the distribution to be returned in the event that the estate owed debts or taxes that could not be satisfied with the remaining estate funds. The defendant refused to distribute the $100,000 without that provision.

The plaintiff then filed a motion to enforce litigant’s rights, seeking to compel the defendant to make the $100,000 distribution without being subject to the refunding provision.

The probate judge denied the plaintiff’s motion, reasoning that the $100,000 was not a cash settlement payment, but was an early distribution of the plaintiff’s share of the estate. Therefore,

Due to the nature of the distributions, as opposed to cash settlement payments, the refunding bond requirement of N.J.S.A 3B:23-24 applies…. Defendant … is requesting a Refunding Bond and Release … [and] it is Plaintiff’s own actions preventing the early distribution from the Estate.

On appeal, the Appellate Division affirmed the probate judge’s decision. It reasoned that,

N.J.S.A. 3B:23-24 requires the personal representative of an estate to obtain a refunding bond in order to make any distribution prior to the closing of the estate, and N.J.S.A. 3B:23-26 requires the bond to be conditioned on the devisee returning any portion of the distribution if later needed to discharge any debt.

Therefore, because the parties’ settlement agreement provided that the $100,000 was a distribution from the estate, these statutes applied and the defendant was “statutorily obligated” to require a refunding bond prior to releasing the funds.

 A copy of Estate of Dreher can be found here – IMO Estate of Dorothy Dreher

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