New Jersey Probate, Estate and Trust Administration
Serving Clients throughout Bernardsville, NJ, Somerset County and the Surrounding Areas
How does probate work?
The phrase estate administration generally refers to the process of collecting a decedent’s assets, paying the decedent’s debts (including all taxes due after the decedent’s death) and distributing the decedent’s assets to those who are entitled to receive them. Although every estate administration presents its own unique circumstances and challenges, the process of administering an estate in a modern world is usually much more complex and time consuming than most people realize. Estate administrations present the person administering the estate with numerous requirements and tasks that must be performed in a timely manner, and most people simply do not have the knowledge, the skill or the time required to properly complete them. Unfortunately, many people will attempt to administer the estates of their loved ones without professional assistance, and they eventually become frustrated, confused and intimidated when they encounter procedures/issues with which they are not familiar. As a result, such people either encounter substantial difficulty in completing certain tasks or unknowingly fail to fulfill all of their responsibilities (which will likely lead to some form of litigation or other adverse ramifications).
Like estate administrations, the administration of trusts is also much more complex and time consuming than most people believe. While some trust administration issues are common among all trusts, there are many different types of trusts that are designed to achieve different goals, and each type of trust presents unique circumstances, challenges and rules that must be followed precisely in order to avoid adverse consequences. To say the least, however, just like with estate administrations, the assistance of experienced professionals is absolutely essential to the proper administration of most trusts.
What should I know about the probate/administration process?
The New Jersey Probate Code, in conjunction with common law and New Jersey Court Rules, set forth the rules which govern the administration of estates in New Jersey. The “probate process”, which is just one step in an overall estate administration process, is designed to allow those interacting with an estate to confirm that they are in fact working with the estate’s authorized representative. The probate process in New Jersey is relatively simple and inexpensive. Once a “personal representative” (either an Administrator or Executor, whichever applies) is appointed by the applicable Surrogate, further Court supervision of the overall estate administration process is not required in New Jersey (but may be sought by either the personal representative or any “interested party”). The probate process in New Jersey essentially consists of an acceptance by the Surrogate of the decedent’s Will and an authorization that the Executor named in the Will (or the Administrator in the absence of a Will) has the authority to transfer assets out of the decedent’s name.
Within 60 days of the date of probate of a Will, a notice of probate must be sent to all beneficiaries under the Will and to all of the decedent’s heirs. Proof of the mailing of the notice of probate must be filed with the Surrogate's Court within 10 days.
What is the difference between Probate and Non-Probate Assets?
Only "probate assets" are distributed in accordance with a person’s Will (if they had a Will) or pursuant to the New Jersey intestacy statute (if they died without a Will). Upon someone’s death, their “non-probate assets" will pass either by operation of law or by contract. An estate’s personal representative generally only has legal control only over the decedent’s probate assets. Nonetheless, many aspects of an estate administration involve both probate and non-probate assets (e.g., both probate and non-probate assets are included in a decedent’s taxable estate).
What are the primary duties of the Personal Representative?
After they are formally appointed, the primary duties of the personal representative (Executor/Administrator) of an estate are to collect the decedent's assets, pay the decedent's debts (including applicable taxes) and distribute the decedent's remaining assets. Although that may sound simple, it is much more complex that most people know.
In order to fulfill their responsibilities, the personal representative must prepare an accurate inventory of the decedent's assets and debts. Among other things, they must ascertain the manner in which the title to each asset was held at the time of the decedent's death (e.g., individually, tenants in common, jointly, POD, etc.), as well as determine the value of each asset on the date of death. Depending on the specific type of asset, determining the value of each asset may involve very complex rules and procedures, and properly distributing the asset out of the estate may require several steps.
The personal representative of an Estate may also need to prepare and file many different types of Tax Returns in connection with the administration of an Estate. The following is a list of potential tax returns that may need to be filed by an Estate's personal representative: Federal Gift & GST Tax Return (Form 709), Federal Estate Tax Return (Form 706), New Jersey Inheritance Tax Return, New Jersey Estate Tax Return, Federal and New Jersey Individual Income Tax Returns, Federal and New Jersey Fiduciary Income Tax Returns and other States' Estate, Inheritance and/or Income Tax Returns.
While most New Jersey estates are settled without any formal Court approved accounting, an estate’s personal representative will usually submit an informal accounting to all interested parties and obtain their consent and release thereto. A personal representative may, however, choose or be required to settle the estate with a formal accounting and obtain Court approval before being discharged of any liability/responsibility.
While the foregoing mentions several of the primary duties of a personal representative, it would be impossible to identify and discuss every legal issue, financial issue or administrative step that might arise in, or be applicable to, a particular estate administration.
Being a personal representative of an estate is a very big and important job.
It’s okay to ask for help.
So you see, there is more than a little pressure on the personal representative. As a result, it is essential that the representative work in concert with an experienced estate administration attorney, like William C. Varian, Jr., Esq., to guide the representative and/or the estate beneficiaries during the administration process … and avoid all of the hidden landmines.
At Varian Law LLC, we can assist anyone with the administration of an estate regardless of whether the planning documents were drafted by us or another attorney. We can assist the Executor/Administrator of any estate in every aspect of the estate administration from beginning to end. We also commonly work closely with the estate’s accountant in order to ensure that they are provided with all of the information that they will need to properly prepare the estate’s Income Tax Returns.
At Varian Law LLC we also assist our clients with the many complex administrative tasks associated with the administration of Special Needs Trusts, Credit Shelter Trusts, QTIP Trusts, QDOT Trusts, Revocable Trusts, Irrevocable Trusts, Life Insurance Trusts, Dynasty (GST) Trusts and many other types of sophisticated trusts. As with our estate administration clients, we also commonly work closely with the Trustee’s accountant in order to ensure that they are provided with all of the information that they will need to properly prepare the trust’s Income Tax Returns.