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.