How to Distinguish Assets Belonging to a Deceased Person’s Estate from Corporate Assets in New Jersey
Detailed Answer
When someone dies, New Jersey law treats the decedent’s estate and any corporation they own as separate legal entities. The estate includes assets titled in the decedent’s name alone or as co-owner at death. Corporate assets belong to the business entity established under New Jersey law. You must trace the title and ownership documents to sort them out.
1. Identify Estate Assets
Under N.J.S.A. 3B:3-17 and 3B:3-18, the estate comprises all real and personal property in the decedent’s name at death. Check deeds, bank statements, retirement accounts and vehicle titles. Any asset titled solely in the decedent’s name or in joint tenancy with right of survivorship passes by operation of law and becomes estate property for probate purposes. N.J.S.A. 3B:3-17
2. Identify Corporate Assets
A corporation is a separate “person” under N.J.S.A. Title 14A. Its assets include property titled in the corporate name, bank and brokerage accounts opened in its name, and equipment or real estate the entity purchased. Obtain a certified copy of the Articles of Incorporation and review the corporate ledgers or stock certificates. Check the New Jersey Division of Revenue’s business records search to confirm the corporation’s status and registered agent.
3. Review Corporate Formalities
Maintaining separate records, bank accounts and corporate minutes helps preserve the corporate shield. If the decedent commingled personal and corporate funds or failed to observe formalities, a court might pierce the corporate veil and treat some corporate assets as estate assets. Courts apply veil-piercing under limited circumstances (see N.J.S.A. Title 14A and relevant case law).
4. Transfer of Corporate Ownership
Even if the decedent owned 100% of the shares, the shares themselves are estate property and will transfer according to the will or New Jersey intestacy rules. However, the corporation’s underlying assets remain distinct unless a court orders otherwise.
Helpful Hints
- Collect all asset records: deeds, account statements, stock certificates.
- Search the NJ Division of Revenue’s business registry for corporate filings and agent information.
- Review corporate bylaws, minutes and ledgers for evidence of separate ownership.
- Consult N.J.S.A. 3B (Decedents’ Estates) and Title 14A (Business Corporations Act) for statutory definitions.
- Monitor potential veil-piercing factors: commingling, undercapitalization or fraud.
- Consider a preliminary probate filing to inventory estate assets and clarify ownership.