Whenever estate planning involves the transfer of a business or real estate, environmental issues can be important drivers. Owners and operators of real property are strictly liable for the remediation of any contamination on the property regardless of who caused the contamination. Often families are unaware of the environmental obligations and liabilities associated with their properties and businesses. This is especially the case for long-held family businesses and real estate. Planning requires getting an understanding of the values of the assets and potential liabilities associated with them.
The transfers of these assets may trigger a requirement to investigate and remediate properties under the New Jersey Industrial Site Recovery Act (ISRA) which requires investigation and remediation of properties that are deemed “industrial establishments” when they are transferred or when operations cease at any location. Industrial establishments include properties that have been used for a wide variety of uses including any manufacturing, various types of distribution and repairs operations. It is important to know about ISRA including certain exemptions for transfers by devise or to family members and to trusts whose beneficiaries are family members. Sales to third parties will not be exempt.
Beyond ISRA, the New Jersey Spill Act requires all owners of contaminated properties to report the contamination and clean it up. Estate planning should take into account environmental requirements so that families can leave a legacy that does not include the complications of unresolved environmental liabilities.
As the law continues to evolve on these matters, please note that this article is current as of date and time of publication and may not reflect subsequent developments. The content and interpretation of the issues addressed herein is subject to change. Cole Schotz P.C. disclaims any and all liability with respect to actions taken or not taken based on any or all of the contents of this publication to the fullest extent permitted by law. This is for general informational purposes and does not constitute legal advice or create an attorney-client relationship. Do not act or refrain from acting upon the information contained in this publication without obtaining legal, financial and tax advice. For further information, please do not hesitate to reach out to your firm contact or to any of the attorneys listed in this publication.