Acting as the executor of an estate is a daunting process to most people. It is particularly difficult when the person who passed away was a close family member or friend and the executor is experiencing a great loss. Generally, the executor is responsible for submitting the will for probate, gathering and valuing the estate assets, opening an estate, checking account, paying legitimate debts of the estate,filing an inheritance and/or estate tax return,if necessary, and distributing the assets to the beneficiaries in accordance with the Will.
Although there are simple estates where an attorney is not necessary, individuals will often require some professional guidance and hire an attorney to assist them. Some estates have a variety of more complex issues to deal with such as significant debt, out of state property, post-mortem estate planning, filing of estate and inheritance taxes returns, and/ora buy-out of estate property. I give clients the option of taking over certain responsibilities, while I handle the more complex issues and preparation of documents, minimizing the legal expense. I guide the executor in fulfilling his or her responsibilities and assure that everything is handled appropriately.
The first step in the process is admitting the Will to probate through the county Surrogate where the decedent resided at the time he or she passed away. The Surrogate will issue Letters Testamentary, also called “Short Certificates,” which gives the Executor the authority to act on behalf of the Estate.The executor must also determine the legitimate debts of the estate and Notice of Probate must be sent to all next of kin of the decedent. Most estates will also require a tax identification number and that an estate bank account be opened.
The wxecutor must gather and value the assets,through a variety of means, and determine which assets are “probate” assets and which pass by “operation of law,”either as payable on death or owned as joint tenants with rights of survivorship.
The executor or payable on death beneficiary may find that a lien has been placed on a bank account by the state and that only 50% of the account may be accessed.This is how the New Jersey Division of Taxation assures that any estate or inheritance taxes get paid.In that event,a waiver must be obtained from the New Jersey Division of Taxation in order to release the balance of the account. If the beneficiaries are all “Class A” and the gross estate is less than $675,000, a simple form may be filled out (L-8), otherwise an estate and/or inheritance tax return must be filed to obtain the waiver.
New Jersey has both an estate and inheritance tax. If the gross estate (not including debts and expenses), including probate and non-probate assets, is $675,000 or greater an estate tax return will have to be filed. If the net estate(after deducting debts and expenses)is greater than $675,000, then estate taxes will be due.For a beneficiary who is not a spouse, civil union partner, child, stepchild, or parent/grandparent,inheritance tax will be due, depending upon which class they are in and how much they are receiving,and a return must be filed.
In finalizing the estate, an informal accounting will ordinarily be completed. The beneficiaries will approve the accounting and execute a “Release and Refunding Bond” acknowledging receipt of the distribution and agreeing to refund any portion,if necessary,in the event an unexpected debt or other estate expense arises after the distributions have been made.