In 1978, New Jersey partially shifted away from a per stirpes approach to the distribution of intestate estates. With the changes to Title 3B effective Feb. 27, 2005, the system of per stirpes distribution was completely eliminated for intestate estates.
The 2005 changes also completely abolished per stirpes for distributions under the anti-lapse statute, N.J.S. 3B:3-35, and eliminated the presumption of per stirpes for the interpretation of a gift to “descendants” or “issue” under a will, a trust agreement or a beneficiary designation form. N.J.S. 3B:3-41.
Per stirpes still applies, however, whenever a will or trust agreement specifies per stirpes.
The new system is known both as “representation,” and “per capita at each generation,” and is taken from the Uniform Probate Code. It has two basic principles, which can be illustrated by the following examples.
Any share of the estate passing to the decedent’s descendants is to be distributed so that there is first an identification of the closest generational level which left at least one member surviving. If, as in Example 1, Mom left no surviving children, but did leave surviving grandchildren, then a distribution passing to the descendants is divided per capita in equal shares among the grandchildren, so in this example each receives one-fourth. This part of “representation” has been the law since 1978. This is done regardless of what would have been produced under a per stirpes method, which would have taken into account which predeceased child of the decedent had which grandchildren.
The 2005 revision of Title 3B included an alteration of the concept of the “representation,” so that the shares of any predeceased members of the oldest generation which had any surviving members are “combined,” and then divided into equal shares and distributed per capita across the members of the next younger generation whose parents predeceased the decedent.
In Example 2, Dad had two children who predeceased him, Alex and Cindy, and had one child, Brian, who survived him, along with various grandchildren. The one-third share which would have gone to Alex and the one-third share which would have gone to Cindy, are “combined,” and the total is then divided into four equal parts, so that each of the four grandchildren who are heirs receive one-sixth of the total estate. Any child of Brian’s would receive nothing.
The preference for a per stirpes approach is so common among attorneys that an attempt might be made to read the present statute to still require the application of per stirpes to an intestate estate. Any such attempt cannot survive a review of the Official Comment to Uniform Probate Code Section 2-106, which follows the same approach as the above examples.
The newer system of “representation” not only applies to intestate estates, but now also applies to distributions under a last will and testament when the anti-lapse statute, N.J.S. 3B:3-35, is involved.
If a will makes a bequest to a person who in fact dies before the testator, the gift will then pass pursuant to any specific directions in the will which contemplate the situation. If the will does not direct as to how the bequest will pass, then the general rule is that the bequest will “lapse,” and then pass as part of the residuary estate, or perhaps even pass according to the intestacy statute if all the beneficiaries of the residuary clause predecease the testator.
If the bequest in question was directed to a close family member, then the common human impulse is that the testator would probably have wanted the bequest to pass to the descendants of the predeceased beneficiary.
The New Jersey anti-lapse statute provides that if the predeceased named beneficiary was a grandparent of the testator, or a descendant of a grandparent of the testator, or a stepchild of the testator, and if that predeceased named beneficiary left his or her own descendants, and if there is no indication to the contrary in the will, then the bequest will pass to the named beneficiary’s descendants. This saves the bequest from lapsing.
Prior to 1978, the anti-lapse statute caused the bequest to pass to the named beneficiary’s descendants per stirpes. After 1978 and prior to Feb. 27, 2005, the concept of “representation” caused a qualifying bequest to pass down to the oldest surviving generation per capita. After Feb. 26, 2005, a qualifying bequest passes to the descendants by “representation,” including the concept of “combining” the shares for the next generation below. N.J.S. 3B:3-35.
The current meaning of “representation” is found in the definitions section of N.J.S. 3B:1-2, which has the same definition as that used for intestate estates under the current N.J.S. 3B:5-6. This eliminates the per stirpes approach, and applies the per capita at each generation approach to the anti-lapse statute.
The law has also changed with respect to the interpretation of wills on other points. If a will makes a bequest to a named beneficiary “or to his descendants,” or “to his issue,” then the same method of “representation” will be used if the named beneficiary predeceases the testator, and if no intent to the contrary is expressed in the document. N.J.S. 3B:3-41. This again relies on the definition of “representation” in N.J.S. 3B:1-2. Prior to 2005, the previous N.J.S. 3B:3-41 required a presumption of per stirpes.
This statute only imposes a presumption of representation, and does not apply if the document specifies per stirpes.
The current presumption under N.J.S. 3B:3-41 against per stirpes and in favor of the new system applies not only to the interpretation of wills, but also to the interpretation of any “governing instrument.” Under N.J.S. 3B:1-1, this term includes any deed, trust agreement, beneficiary designation for a life insurance policy or retirement account, a pay on death designation, “or a dispositive, appointive, or nominative instrument of any similar type.”
For persons dying prior to May 17, 1952, the case law required that when a will left a bequest to “issue,” there would be a presumption of a per capita distribution for an ambiguous bequest. Plainfield Trust Co. v. Hagedorn, 28 N.J. 483, 488-489 (1958). The presumption was later changed to one of per stirpes by the enactment of the old N.J.S. 3A:3A-1, which was subsequently recodified as a previous version of N.J.S. 3B:3-41. It has now been changed again.
Because some estates are not administered for many years, questions may still be raised regarding the application of the 1978 to 2005 intestacy statute.
During these years the intestacy statute regarding “representation” required that there first be the identification of the closest generation leaving at least one surviving member, and that then there be an allocation with “each surviving heir in the nearest degree receiving one share and the share of each deceased person in the same degree being divided among his issue in the same manner.” Former N.J.S. 3B:5-6 (emphasis added).
The limitation to “among his issue” prevented the combination calculation in the present statute.
Example 3 shows what would happen during these years when the decedent’s children are all deceased, along with three grandchildren.
Because there are no surviving children, but there are surviving grandchildren, the estate is first divided into as many shares as there are surviving grandchildren, plus deceased grandchildren who left descendants. After the per capita distribution at the grandchild generation, the shares of any predeceased grandchildren are distributed to their own respective descendants per stirpes, at least for intestate estates after Aug. 31, 1978, and prior to Feb. 27, 2005.
One theme of the 2005 changes was a shift to make more of the rules of wills apply to nonprobate transfers, and this included the use of the new term “governing instrument.” As described above, the system of representation now applies whenever a governing instrument directs a distribution to “issue” or “descendants” without specifying per stirpes or other method.
It is not clear whether the present anti-lapse statute applies only to wills, or to any governing instrument. The 2005 changes not only inserted the word representation into N.J.S. 3B:3-35, but also inserted the phrase “governing instrument” lower in the statute to describe the triggering event. However, the 2005 changes left in place the reference to a “devisee” at the beginning of the statute, which according to its definition applies only to a person taking under a will. N.J.S. 3B:1-1.
Therefore, there is a conflict in the wording as to whether the anti-lapse statute, with the new term “representation,” applies to all governing instruments, or only to wills. •