by Jose D. Roman | May 12, 2026 | Estate Administration, Estate Planning, Last Will and Testament, Probate, Trusts
Can a testator include an arbitration clause in their Will that forces beneficiaries to resolve disputes in a private arbitration forum rather than a New Jersey court? For the first time, the New Jersey Appellate Division has answered that question directly — and the answer is no.
In a case published on April 21, 2026, In re Estate of Samuel P. Hekemian, the Appellate Division held that an arbitration provision contained in a Last Will and Testament is unenforceable under New Jersey law.
Background: The Hekemian Family Estate
Samuel P. Hekemian died testate in August 2018, survived by his wife Sandra and their four adult sons: Peter, Jeffrey, Mark, and Richard. His 2002 Last Will and Testament (2002 LWT) appointed his son Peter and longtime advisor Edward G. Imperatore, Esq. as co-executors and co-trustees of three testamentary trusts established under the Will.
The 2002 LWT contained an arbitration clause providing that any dispute regarding the interpretation of the Will or its administration “shall be submitted for settlement by arbitration.” The clause declared arbitration to be “the exclusive remedy” for resolving such disputes and stated that the arbitrator’s decision “shall be final and binding upon all interested parties and shall not be appealable to any court of law.”
The same arbitration provision appeared in reciprocal Wills executed simultaneously in 2001 by Samuel and Sandra that were prepared by the same New York attorney. When Sandra and Richard later filed exceptions to the co-executors’ first intermediate accounting of the estate, the co-executors moved to compel arbitration.
A Second Look at the Same Arbitration Clause
This was not the first time the arbitration provision had been challenged. In an earlier unpublished opinion, the Appellate Division had affirmed the denial of a motion to compel arbitration of Richard’s request for an accounting, finding that the clause was not the product of mutual assent under traditional contract principles and that it failed to explain that Richard was relinquishing his right to bring a claim in court. At that time, however, the court stopped short of declaring the arbitration provision categorically unenforceable.
In the intervening period, Sandra joined the litigation and filed her own exceptions to the co-executors’ accounting. Unlike Richard, Sandra had received distributions under the 2002 LWT. The co-executors argued this distinguished her situation and that her participation in the Will’s benefits, combined with the execution of the reciprocal 2001 Wills, established the mutual assent necessary to compel her to arbitrate. The trial court rejected that argument and denied the motion. The co-executors appealed.
The Court’s Holding: Two Independent Grounds
The Appellate Division affirmed the trial court’s denial, but went further than the lower court by issuing a definitive ruling on a question of first impression: arbitration clauses in testamentary instruments are unenforceable under New Jersey law. The court rested its holding on two independent and mutually reinforcing grounds.
1. Lack of Mutual Assent
An agreement to arbitrate, like any contract, requires mutual assent — a knowing and voluntary waiver of the right to pursue claims in court. The court reaffirmed its earlier conclusion that the arbitration clause failed to explain, in clear and unambiguous terms, that interested parties were relinquishing their right to sue. Citing Atalese v. U.S. Legal Servs. Grp., L.P., 219 N.J. 430 (2014), the court emphasized that “the point is to assure that the parties know that in electing arbitration as the exclusive remedy, they are waiving their time-honored right to sue.”
The co-executors argued that Sandra’s simultaneous execution of a reciprocal Will containing the same arbitration clause demonstrated her assent. The court rejected this. While a meeting of the minds is not required for a Will to be effective — because a Will is a unilateral disposition of property, not a contract — that principle cuts in the opposite direction for arbitration purposes. Precisely because a Will is unilateral, neither Sandra nor any other interested party was afforded the opportunity to consider or elect to waive their right to proceed in court. The court was not satisfied that the simultaneous execution of reciprocal Wills, without more, established the kind of informed, knowing assent required for a valid arbitration agreement.
2. Inconsistency with the Probate Code
Even if the assent problem could be overcome, the court held that arbitration clauses in Wills are incompatible with New Jersey’s statutory framework for estate administration. The Probate Code, N.J.S.A. 3B:1-1 et seq., vests the Superior Court with comprehensive authority over Will disputes, trust administration, and fiduciary accountings. The court catalogued the relevant provisions, including but not limited to:
- N.J.S.A. 3B:2-2 grants the Superior Court "full authority to hear and determine all controversies respecting wills, trusts[,] and estates, and full authority over the accounts of fiduciaries, and also authority over all other matters and things as are submitted to its determination under this title."
- N.J.S.A. 3B:3-17 during probate, the Superior Court "may take depositions to wills[,] admit the same to probate, and grant . . . letters testamentary or letters of administration with the will annexed."
- N.J.S.A. 3B:3-18 requiring that to "prove the transfer of any property or to nominate an executor, a will must be admitted to probate."
Against this backdrop, the court reaffirmed and expressly adopted what had been an observation in its prior unpublished opinion: “arbitration clauses that eliminate the courts’ expected role in resolving Will disputes are inconsistent with the detailed statutory scheme vesting the superior courts with the authority to adjudicate such issues.” Accordingly, enforcement of an arbitration clause in a testamentary instrument is contrary to both the Probate Code and New Jersey’s contract principles. The court held:
We conclude enforcement of an arbitration clause in a testamentary instrument is contrary to the court’s role underlying the Probate Code and inconsistent with our State’s contract principles.
What This Means for Estate Planning in New Jersey
The Hekemian decision settles a question that had been lingering in New Jersey estate practice for years. Estate planners and their clients should take note of several practical implications.
- Arbitration clauses in Wills are unenforceable in New Jersey. Regardless of a testator’s intent, an arbitration provision in a Last Will and Testament cannot compel beneficiaries, heirs, or other interested parties to resolve their disputes outside of court. Any such provision should be considered a nullity.
- Testamentary trusts are also covered. The court’s holding extends to disputes concerning trusts created under a Will, not merely the Will itself. The arbitration clause in the Will purported to cover disputes “regarding the interpretation of this Will and the trusts created hereunder” — both were held unenforceable.
- The result is the same regardless of mutual assent. Even if a testator and their spouse executed reciprocal Wills containing identical arbitration clauses, and even if the surviving spouse received benefits under the Will, that is insufficient to establish the knowing, voluntary waiver of court rights required under Atalese.
- Inter vivos trusts are a different question. The Hekemian decision addresses testamentary instruments — Wills and trusts created by Wills. Arbitration clauses in standalone inter vivos trusts, which are contractual instruments, may be treated differently.
- Will disputes belong in court. Beneficiaries and interested parties who find themselves in estate disputes in New Jersey have a right to litigate those disputes in the Superior Court, Chancery Division, Probate Part — and a testator cannot take that right away through a provision buried in their Will.
A Practical Note for Families
For families navigating an estate dispute in New Jersey, the Hekemian decision is significant. If a co-executor or trustee attempts to invoke an arbitration clause in a Will to divert your dispute out of court, that clause is unenforceable. You are entitled to pursue your claims — whether exceptions to an accounting, removal of a fiduciary, or other relief — in the Superior Court under the full protections of New Jersey law.
For those in the estate planning process, this decision underscores the importance of working with an experienced New Jersey estate planning attorney who stays current with developments in the law. Estate planning documents should reflect the current legal landscape, not aspirational provisions that courts will not enforce.
by Jose D. Roman | Mar 31, 2026 | Estate Administration, Estate Planning, Guardianship, Intestate Estate (No Will), Last Will and Testament, Legal Bulletin, Medicaid, Medicaid Estate Recovery, Medicaid Planning, Medicaid Updates, Trusts
A decision from the New Jersey Appellate Division published June 17, 2025 (In the Matter of G.W.) has clarified a critical and previously unsettled area of law concerning public benefit liens. The court held that a lien issued by the Division of Developmental Disabilities (DDD) is immediately enforceable, while a Medicaid lien cannot be collected until the beneficiary’s death — a distinction with significant consequences for estate planning.
The Background
Gabrielle W., an adjudicated incapacitated adult, received residential services funded by both DDD and Medicaid. When she inherited $600,000 from her sister’s estate, Arc of Bergen and Passaic Counties, her court-appointed property guardian, sought to protect her Medicaid eligibility by transferring those funds to a special needs trust. But standing in the way was a $1,052,304 lien from DDD for the cost of her care — a lien DDD sought to enforce immediately.
The trial court declined to enforce the DDD lien, ruling instead that Medicaid’s future estate recovery rights had priority. The court reasoned it was in Gabrielle’s best interest to preserve her Medicaid eligibility and protect the trust. But on appeal, the Appellate Division disagreed.
The Court's Holding
The Appellate Division reversed the lower court’s order, emphasizing that DDD liens are enforceable immediately under N.J.S.A. 30:4-80.1. These liens attach to the property of a living person who receives services from DDD. On the other hand, Medicaid liens can only be asserted posthumously, pursuant to N.J.S.A. 30:4D-7.2, and only against the estate of the deceased Medicaid recipient.
The court concluded there is no statutory conflict: both liens can coexist, but they operate on distinct timelines. In the case of a living person like Gabrielle, DDD had the only legally viable lien. Medicaid’s recovery rights would not ripen until Gabrielle’s death.
Why This Matters
This case is a clear warning to guardians, trustees, and estate planners: Inherited assets cannot be shielded from DDD repayment obligations simply by invoking Medicaid's future claim rights. If a client receives services from DDD and comes into money, the DDD lien must be addressed promptly — either by repayment or through the statutory compromise process. The court also made clear that a “best interests” argument cannot override a legislatively mandated lien. Courts must enforce the statutes as written.
Planning Tip
If you have a loved one who receives public benefits like Medicaid or services from DDD, careful estate planning is essential. Leaving them an inheritance outright — even with good intentions — can jeopardize their benefits and trigger immediate repayment obligations. Instead, consider using special needs trusts or other protective planning tools to ensure their continued eligibility and long-term care without exposing them to liens or disruptions in services.
The G.W. case illustrates precisely what happens when protective planning is absent. Gabrielle's sister died intestate — without a will — which meant the $600,000 passed to Gabrielle outright under New Jersey's laws of intestate succession. There was no will directing those funds into a Special Needs Trust, no advance coordination with an elder law attorney, and no mechanism to receive the inheritance in a protected form. The result was an immediate lien enforcement proceeding that consumed the entirety of the inheritance and left nothing for Gabrielle's ongoing care needs.
Had Gabrielle's sister executed a will with proper special needs planning, she could have directed her estate — or the portion intended for Gabrielle — into a third-party Special Needs Trust. Unlike a first-party trust funded with the beneficiary's own assets, a third-party SNT is established with someone else's money and carries no Medicaid payback requirement at death. Gabrielle would have received the benefit of those funds without triggering the DDD lien, and without disrupting her Medicaid eligibility.
This is one of the most important and underappreciated points in elder law and disability planning: the person doing the planning is often not the disabled individual, but the family member who intends to leave them something. A parent, sibling, or other relative who has a loved one receiving public benefits should have a will — and that will should account for the beneficiary's disability. Leaving assets outright to a Medicaid or DDD recipient, however well-intentioned, can do more harm than good.
by Jose D. Roman | Mar 25, 2026 | Estate Planning, Guardianship, Irrevocable Family Trusts, Medicaid, Medicaid Planning, Power of Attorney, Trusts
When most people hear the word “divorce,” they think of a relationship in crisis. But for some New Jersey couples facing the catastrophic cost of long-term care, divorce is not a sign of a failing marriage — it is a deliberate financial planning strategy designed to protect a healthy spouse from impoverishment while allowing the other spouse to qualify for Medicaid.
It sounds counterintuitive. It raises profound emotional and ethical questions. And it is not a strategy that is right for most families. But in the right circumstances, a so-called “Medicaid divorce” is a legitimate legal strategy under New Jersey law.
Why Married Couples Face a Unique Medicaid Challenge
Medicaid treats married couples differently than single individuals when assessing eligibility for long-term care benefits. When one spouse applies for Medicaid to cover nursing home or home-based long-term care, Medicaid looks at the combined assets of both spouses — regardless of whose name the assets are in — and requires a spend-down to very low levels before the institutionalized spouse qualifies.
New Jersey does provide some protection for the healthy spouse, known as the “Community Spouse.” The Community Spouse Resource Allowance (CSRA) permits the Community Spouse to retain a portion of the couple’s combined countable assets. For 2026, the CSRA in New Jersey ranges from a minimum of $32,532 to a maximum of $162,660, depending on the total assets. The community spouse is also entitled to a Minimum Monthly Maintenance Needs Allowance (MMMNA) to cover monthly living expenses — currently $2,643.75 per month.
For couples with modest assets, the CSRA and MMMNA may provide adequate protection. But for couples with significant savings these protections may still leave the community spouse facing financial hardship after a Medicaid spend-down.
What Is a Medicaid Divorce?
A Medicaid divorce is exactly what it sounds like: the couple obtains a real, legal divorce for the primary purpose of restructuring their assets. If done properly the divorce allows the Medicaid applicant spouse to qualify for Medicaid while allowing the healthy spouse to retain a larger share of the marital estate than Medicaid’s spousal protection rules would otherwise permit.
This is not a separation, a legal fiction, or a paper transaction. New Jersey requires an actual divorce. The parties must satisfy the grounds for divorce under New Jersey law — most commonly irreconcilable differences under N.J.S.A. 2A:34-2(i), which requires only that the parties have experienced irreconcilable differences for a period of six months. Establishing grounds is generally straightforward. The harder questions involve asset division, legal capacity, and Medicaid’s scrutiny of the resulting property settlement.
How Divorce Can Help: The Mechanics
Under New Jersey matrimonial law, divorce entitles each spouse to an equitable distribution of marital assets. “Equitable” does not necessarily mean equal — courts consider a range of factors, including each spouse’s financial needs, health, and ability to earn income. In the context of a Medicaid divorce, the parties’ attorneys will negotiate a property settlement agreement (PSA) that awards the healthy spouse a disproportionate share of the marital estate — often well above 50 percent — based on their demonstrated need to support themselves independently.
Once the divorce is finalized and assets are distributed pursuant to a court order, Medicaid should treat the applicant spouse’s eligibility as a single individual. The assets awarded to the now ex-spouse are no longer counted when applying for Medicaid. If the applicant spouse’s retained assets fall below Medicaid’s $2,000 limit, they may qualify for long-term care Medicaid.
Critically, under New Jersey law, a court order transferring assets to the community spouse will supersede Medicaid’s spousal resource rules. This is the legal foundation that makes Medicaid divorce viable in New Jersey: the court’s equitable distribution order takes precedence over Medicaid’s default calculation of spousal assets.
The Transfer Penalty Risk: Proceed with Caution
The most significant legal risk in a Medicaid divorce is the transfer penalty. Medicaid imposes a look-back period of 60 months, during which any asset transfers for less than fair market value are penalized with a period of ineligibility. A divorce property settlement that awards the community spouse an outsized share of marital assets could be characterized by Medicaid as a disqualifying transfer — unless the division is properly structured and supported by documented findings.
New Jersey Medicaid does not simply accept a property settlement agreement at face value. The agency will scrutinize the terms of the divorce decree and the underlying rationale. A PSA that reads like a Medicaid planning document, with no independent factual basis for the proposed distribution, is unlikely to survive that scrutiny.
This is why Medicaid divorce requires coordinated representation by both a matrimonial attorney and an experienced elder law attorney. The two bodies of law must work together, and a misstep in either domain can result in a significant period of Medicaid ineligibility at precisely the moment care is most urgently needed.
The Legal Capacity Question
One of the most difficult issues in Medicaid divorce planning is legal capacity. When a spouse is suffering from a condition that impairs cognitive functioning, their ability to participate in — and consent to — divorce proceedings must be carefully evaluated before any action is taken.
If the Medicaid applicant spouse lacks capacity, the question becomes whether a Power of Attorney gives the agent authority to pursue or consent to divorce on their behalf. Most “standard” Powers of Attorney in New Jersey do not explicitly authorize the agent to file for or consent to divorce proceedings. This is a significant gap. Families contemplating Medicaid divorce as a potential future strategy should ensure that their Power of Attorney documents are drafted broadly enough to address this contingency — or that the question is addressed before capacity is lost.
If no Power of Attorney is in place and the applicant spouse lacks capacity, it may be necessary to pursue guardianship before any matrimonial proceedings can commence. That adds time, cost, and complexity to an already complicated situation.
The Emotional Reality
No discussion of Medicaid divorce is complete without acknowledging what it asks of a couple. For a husband and wife who have been together for many years, the idea of filing for divorce — even “on paper” — can feel like a profound betrayal of the relationship, regardless of the financial logic. Many families ultimately decide against it for this reason alone, and that is a completely legitimate choice.
Some couples find it helpful to think of the divorce as a legal and financial restructuring that does not change the nature of their relationship. They may continue to care for one another as spouses in every meaningful sense. The legal status changes; the relationship does not have to. But this reframing does not work for everyone, and it should never be minimized or dismissed.
Divorce can also impact Social Security survivor benefits, inheritance rights, life insurance beneficiary designations, and existing estate plans. Every one of these downstream consequences needs to be evaluated before proceeding.
Alternatives Worth Considering First
Before pursuing a Medicaid divorce, families should work with an elder law attorney to evaluate whether less disruptive alternatives can achieve comparable results. Depending on the facts, these may include:
- Irrevocable Medicaid trusts: Assets transferred to an irrevocable trust more than five years before a Medicaid application are not counted.
- Convert Countable Assets to Exempt Assets: Converting countable assets into exempt ones — such as home improvements, paying off a mortgage, purchasing a prepaid funeral trust, or buying a Medicaid-compliant annuity — can reduce countable assets without a transfer penalty.
Final Thoughts
Medicaid divorce is one of the most emotionally complex strategies in the elder law toolkit. It is also, in the right circumstances, a legally sound and financially significant option that can protect a community spouse from genuine impoverishment. The key words are “right circumstances.” This is not a strategy to pursue without extensive legal counsel from attorneys who understand both New Jersey matrimonial law and Medicaid eligibility rules. The financial, legal, and emotional stakes are too high for anything less. If you are facing a situation where one spouse needs long-term care and you are concerned about what that means for the other, contact your attorney to discuss options.
