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Estate Planning

Estate Planning and Eminent Domain: Condemnation of Estate Property

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Two days after Mrs. McLure passed away, the State of New Jersey decided to build a school on the exact spot where her house was located. Her five adult children had just begun to plan funeral arrangements when they received a “Complaint in Condemnation” in the mail; they hadn’t even met with her attorney or reviewed her will.

Can New Jersey take their mother’s house from them?

Condemnation, also known as eminent domain, is the power of the government to take private property for an important public purpose (e.g., building a school or extending a highway). When the government takes property in this way, the State and Federal Constitutions require that the property owner be paid “just compensation” (usually fair market value) for the property taken.

In some ways, the condemnation of property in an estate can actually make things easier for the beneficiaries. Rather than dealing with a piece of property that often needs to be sold through a realtor and the profits split amongst the heirs, there is a lump sum of money that can be readily divided.

However, there is one important issue to keep in mind if estate property is condemned: before the government can take the property, it needs to make an effort to negotiate a fair price with the property owner. If the owner is deceased, then it’s up to the heirs to assert their right to negotiations.

This is important because these negotiations, if successful, can save the heirs substantial legal costs down the road. If the heirs don’t step up and assert their right to negotiations, then the government can proceed to condemn the property at a price it determines; the heirs would have to dispute the price in future litigation proceedings.

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