## Facts

- Pattie B. Trott, age 85, was adjudicated mentally incompetent in 1971, with an extremely remote likelihood of regaining competency.
- She resided in a private nursing home costing about $10,000 annually; her life expectancy was about 4.71 years.
- Her estate corpus exceeded $700,000 and generated roughly $18,500 in annual income.
- Trott’s most recent pre-incapacity will left her entire estate outright: one-half to two grandchildren and one-half to her daughter; a later codicil did not change the ultimate distribution.
- The guardian of Trott’s estate, joined by Trott’s apparent heirs, petitioned for authorization to transfer $100,000 from principal to the will beneficiaries and to make annual gifts of $3,000 to each beneficiary for 1971 and subsequent years during Trott’s life.
- Evidence showed the $100,000 transfer would reduce annual income by an estimated $1,500, leaving remaining assets and income more than sufficient for Trott’s foreseeable needs.
- A guardian ad litem was appointed to represent Trott’s interests in evaluating the proposed transfers.

## Issues

1. Whether a court of equity may authorize a guardian to make substantial inter vivos gifts from an incompetent adult’s estate under a substituted-judgment standard.
2. Whether tax-reduction objectives, coupled with consistency with the incompetent’s testamentary plan and adequate provision for care, justify such gifts from estate principal.

## Decision

- The court granted the petition in substance and authorized the proposed gifting program.
- The guardian was permitted to transfer $100,000 from estate principal to the individual beneficiaries by outright gift.
- The guardian was also authorized to make annual gifts of $3,000 to each beneficiary for 1971 and each subsequent year during Trott’s lifetime, subject to court oversight and conditions in the decree.

## Legal Principles

- A court sitting in equity may authorize transactions for an incompetent’s estate under a substituted-judgment doctrine, approximating what the incompetent likely would have done if competent.
- Gifts from an incompetent’s estate may be approved when the estate is more than sufficient to fund the ward’s care, support, and reasonable contingencies.
- In determining substituted judgment, a court considers the ward’s prior expressed intent (including a settled testamentary plan), the identity of the proposed donees as natural objects of bounty, and the economic and tax consequences of the transfers.
- Estate-tax minimization can be a proper consideration in estate administration for an incompetent, if the plan does not endanger the ward’s maintenance and aligns with the ward’s probable donative intent.
- Court approval is not automatic; the proposed gifts must be measured and justified by evidence of adequacy of remaining resources and consistency with the ward’s likely choices.

## Conclusion

The court authorized the guardian to make immediate and continuing gifts from an incompetent’s estate because the estate remained ample for the ward’s lifetime needs and the donees matched the ward’s longstanding testamentary beneficiaries, making the tax-oriented transfers a proper exercise of substituted judgment.


In re Trott, 118 N.J. Super. 436, 288 A.2d 303 (N.J. Super. Ct. Ch. Div. 1972)