Doctrine of Probable Intent

Doctrine of Probable Intent – an interesting approach involving the judicial creation of Supplemental Needs Trusts for disabled adult daughters of an intestate decedent, ultimately disallowed by a state appeals court in New Jersey.

Emphasizing again the need for timely estate planning, the decedent retained an attorney for the purpose of creating supplement trusts for her disabled daughters, but died before her estate plan was formalized and executed.  The decedent had indicated to various relatives that she wanted to shield her estate, valued at approximately $480,000, from a lien of more than $1 million dollars held by a state public aid agency for residential care provided to one of the daughters.  The decedent retained an attorney in March of 2008, suffered an injury in April of 2008, and subsequently died in late May of 2008.

Her estate successfully convinced a county judge, utilizing the doctrine of probable intent, to establish and fund the supplemental needs trusts.  The attorney for the estate asked the court to approve the creation of the trusts, because clearly the decedent would have done so, had she lived.  The trial judge ruled that the doctrine of probable intent could applied to carry out the decedent’s intent to protect her assets for the benefit of her daughters.  The state public aid agency holding the lien objected to the ruling.

On appeal, the estate attorneys relied upon Kimley v. Whittaker, 63 N. J 235 (1973), a case in which the court utilized the doctrine of probable intent to reform a will in which the testator left all her property to her husband, and specifically excluded her daughter and grand-children.  The husband pre-deceased the testator, and her will lacked a provision for an alternative distribution.  In this case, the doctrine of  probable intent was appropriately applied, given that her intent to disinherit the daughter and grand-children was clear.  The appellate court found that application of the doctrine of probable intent  requires an existing testamentary disposition, and cannot be used in an intestate estate to create a testamentary disposition where none existed.

Although not appearing in the synopsis of this opinion, a clear public policy argument could have been raised by the public aid agency, as enlarging the use of the doctrine of probable intent to create supplemental need trusts, to avoid repayment of a lien for services provided, clearly works to defeat the public benefits of lien reimbursement and payback trusts.

Bottom line:  Need a testamentary instrument in order to apply the doctrine of probable intent, and then probably need a receptive and creative trial judge.

Somewhere in the South of France

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