When a Refunding Bond is Required
In the Matter of the Estate of Dorothy Dreher, No. A-4800-17T3, 2019 WL 1512720 (N.J. Super. Ct. App. Div. April 8, 2019).
Dorothy Dreher had two children, David and Rebecca. David was the executor. Rebecca filed a verified complaint to vacate the probate judgment on grounds of undue influence and lack of capacity. After four days of trial the parties reached a settlement which they placed on the record. The settlement provided that the net estate would be split equally by the parties and that Rebecca would receive an immediate $100,000.00 advance distribution.
David’s attorney sent a refunding bond and release to Rebecca’s attorney. Rebecca’s attorney returned an executed refunding bond and release, but the form had been altered to remove the language requiring Rebecca to refund any part of her distribution. David’s attorney advised that the estate would not make the distribution without an appropriate refunding bond.
Rebecca moved to enforce litigant’s rights. She argued that since the settlement agreement provided that she would receive a $100,000.00 advance distribution but did not specifically state that she would be obligated to provide a refunding bond, she should not be required to do so.
The trial judge denied Rebecca’s motion, stating:
Plaintiff requests an order enforcing the terms of the settlement because the settlement agreement did not include the terms encompassed in a release and refunding bond. Despite plaintiff’s assertion that the settlement “was for real money”, it appears that the parties agreed that each sibling would receive 50% of the decedent’s net estate. The $100,000 requested by plaintiff is not a cash gift, but rather is an early distribution made of her 50% share of decedent’s estate. Due to the nature of distributions, as opposed to cash settlement payments, the refunding bond requirement of N.J.S.A. 3B:23-24, et seq., applies.
Id. at *2.
The trial court continued:
In short, there is nothing the court can enforce as it is plaintiff’s own actions preventing the early distribution from the estate. The $100,000 payment was framed as a distribution when the parties placed the settlement on the record . . . essentially, plaintiff is asking the court to order an estate distribution as if it were a cash payment. This is unsupported by the statutory law and the settlement agreement on the record.
Id.
The Appellate Division affirmed, agreeing that N.J.S.A. 3B:23-24 requires the personal representative of an estate to obtain a refunding bond prior to distribution.