Previously on this blog, we discussed the important steps to take when a loved one passes away. After taking time to grieve, gather important documents such as a will or trust and assess the deceased’s financial situation. If there are probate assets, i.e., those in the decedent’s individual name with no joint owner and no beneficiary designation, you may be faced with filing for probate. This entails filing the decedent’s will in the Surrogate’s Court of the county in which they were domiciled or pursuing administration in the absence of a will. As experienced estate administration attorneys, we are here to guide you through each step of the probate process.
Is There a Valid Will?
Your initial step involves establishing whether the departed left behind a legally valid will. The designated executor should be the one to present the original signed will and any codicils to the Surrogate’s Court for authentication. The Court will examine the will to determine if it was executed in accordance with New Jersey’s legal requirements. The testator must have been at least 18 years of age and of sound mind when making their will, and it must be signed by two witnesses. New Jersey does allow holographic wills, which are handwritten, provided they are in the testator’s handwriting and signed by them. Conversely, if there is no will, the next of kin files for administration instead. In this scenario, the state’s intestacy laws dictate who inherits from the estate.
File the Petition
At least 10 days after the date of passing, you can initiate the probate process by submitting the will to the Surrogate’s Court. This entails the preparation of a probate petition and submission of the death certificate. The probate petition will include the closest heirs, as determined by New Jersey law. In the event there is no will, the petitioning administrator is usually one of the closest heirs of the decedent.
Upon confirming the validity of the will and ensuring all requisites are duly met, the probate judge will appoint you executor or administrator. You will receive Letters Testamentary of Letters of Administration granting you the legal power to collect and safeguard the decedent’s assets. These letters essentially give you legal authority to act on behalf of the estate. Depending on the will provisions and the size of the estate, you may be required to obtain a surety bond to protect the interests of estate beneficiaries and creditors.
Notify Heirs and Beneficiaries
As executor, you must notify all heirs and beneficiaries that a will has been probated. This is to be done within 60 days of the date of your appointment. This written notice informs interested parties that probate proceedings have begun and that an estate representative has been assigned. At the heart of this notification is the acknowledgement that heirs and beneficiaries are entitled to request a copy of the will, should they so desire. If heirs cannot be located or identified after a thorough and diligent search, a Notice of Probate must be published in a newspaper of general circulation in the county of the decedent’s domicile. It’s worth noting that one compelling reason we routinely steer our clients away from probate is that heirs and beneficiaries have the opportunity to question the validity and legitimacy of the will. In New Jersey, will challengers have 4 months from the date of the executor’s appointment to file an order to show cause contesting the will’s validity. For this reason, a large number of estate litigation matters begin at this stage of the probate process.
Identify and Inventory Assets
The core of an executor/administrator’s duty is the gathering and preservation of the decedent’s assets. As the estate representative, it is your job to ascertain the existence and status of various assets, spanning bank, retirement, and investment accounts, real estate holdings, vehicles, personal property, and anything else the decedent owned. You will create an estate account to hold the estate’s funds as you liquidate assets and close accounts. For significant assets, you may need to secure professional appraisals. It is important to obtain date of death balances for valuation and tax preparation purposes. Search for the deeds to any real estate to determine how each property is titled. Assets with joint owners generally pass to the surviving owner upon the presentation of a death certificate. Those with beneficiary and transfer on death designations pass to the named beneficiaries. Create a comprehensive inventory and keep thorough records, as you may be required to present them upon request and for tax preparation.
Handle Estate Debts and Creditors
Typically, the will provides clear instructions for the executor regarding the settlement of the estate’s debts and financial obligations. This encompasses the reimbursement of funeral expenses and legal fees, which are commonly covered once an executor or administrator assumes their role. All known creditors must be notified that an estate representative has been appointed. Creditors have 9 months from the date of death to file a proof of claim against the estate. The executor/administrator then has 3 months to pay or reject any such claim. If the estate is insolvent, meaning debts exceed the amount of estate assets, creditors are paid in hierarchy based on their priority according New Jersey law. When grappling with substantial debt and the potential involvement of creditors, the guidance provided by a proficient estate administration attorney becomes of paramount importance.
File Necessary Tax Returns
Executors and administrators are responsible for filing the deceased’s final income tax return. While New Jersey no longer imposes an estate tax at the state level, sizeable estates may still need to file a federal estate tax return. Presently, individuals are subject to the federal estate tax only if their estate’s value surpasses $12.92 million ($25.84 million for married couples). New Jersey does, however, impose an inheritance tax on certain transfers. The inheritance tax levied depends on the beneficiary of the asset. For example, spouses, children, grandchildren, parents, and stepchildren pay no inheritance tax. More remote beneficiaries, such as siblings, spouses of children, cousins, and friends must pay upwards of 16% tax on their inheritances. You will be responsible for obtaining inheritance tax waivers from the New Jersey Division of Taxation, which act as proof that inheritance tax has either been paid or is not owed.
Distribute Remaining Assets
After all expenses, debts, and taxes are settled, you can proceed to the distribution of estate assets to the named beneficiaries. Any specific bequests of money and property should be made first. The remaining pool of funds, the residuary, should be distributed based on the percentages stipulated in the will, or divided among the heirs according to New Jersey intestacy laws. To formalize this process, each beneficiary should sign a Refunding Bond and Release Form, which is filed in the Surrogate’s Court. This form serves a twofold purpose. Firstly, it acts as an acknowledgment of the executor or administrator’s fulfillment of their responsibilities, resulting in their release from any further obligations related to the distribution and beneficiary. Secondly, it requires the distributee to return all or part of their distribution to the estate should an unforeseen debt be discovered.
Winding Up the Estate
It is important to keep in mind that the timeline for the probate process in New Jersey can vary significantly based on a variety of factors. The complexity of the estate, the potential for disputes among family members and beneficiaries, and the efficiency of the court system can all impact the duration of probate. As part of the estate closing process, an informal accounting is usually presented to the beneficiaries. At this juncture, beneficiaries can either approve the informal accounting or they can request a formal accounting be submitted to the Surrogate’s Court. With all necessary tax waivers secured, appropriate tax returns filed, outstanding debts settled, and distributions made, the executor/administrator’s role reaches its conclusion. Acknowledging that the probate process can be both daunting and intricate, we are here to provide you with the guidance to navigate these multifaceted responsibilities, ensuring your loved one’s wishes are properly carried out. Should you require support with estate administration, please don’t hesitate to contact Choi Law Firm. Your peace of mind is our priority.