Probate is the formal act of filing a deceased  individual's Last Will and Testament and appointing a fidicuary, known as an Executor or Administrator, to administer the decedent's estate.  In most situations, probate in New Jersey is a very simple process that does not involve lengthy court proceedings or expensive probate fees.  Probate fees are based on the number of pages in a Will, costing $100 for the first page and $5 for each additional page. 

In general, the duties of an Executor or Administrator are as follows:

1.   Probate or Administration.

Probate of a Last Will and Testament or application for Letters of Administration if the decedent did not have a Will.  The probate of a Will cannot occur until ten days after the decedent’s death and must be probated in the county in which the decedent resided when he/she passed away.  Probate of a will is a simple procedure and requires the Executor to appear at the Surrogate’s office to sign a Petition for Probate, a Power of Attorney, and an Affidavit of Qualification.  The Petition for Probate requests that the decedent’s Will be probated and that the applicant be appointed as Executor/Administrator.  The Petition for Probate is accompanied by a certification that all of the information contained in the petition is correct.  The Power of Attorney authorizes the office of the Surrogate to accept service of process in any cause in which the estate is sued.  The Affidavit of Qualification is a statement that the Executor will administer the estate according to the laws of New Jersey.  The Executor must also commence a child support search to ensure that there are no outstanding child support judgments against any of the beneficiaries of the estate.  

Letters of Administration must be issued when the decedent died intestate, which means without a Will.  An application for administration of an intestate estate may be made at any time after the death of the intestate decedent.  If the intestate decedent was married at the time of passing, the surviving spouse has a right to apply for the letters of administration.  In order to be appointed, the administrator must appear at the Surrogate’s office and sign a Power of Attorney and an Affidavit of Qualification, as described above.  Administrators are usually required to post a bond to insure that they will perform their duties correctly. 

Once the Will has been probated or letters of administration have been issued, the Surrogate’s Office will issue Surrogate’s Certificates.  These certificates are the official court orders that appoint the applicant as Executor or Administrator of the estate. 

2.  Notice of Probate

Within 60 days after probate, the Executor/Administrator must inform the beneficiaries that the decedent's Will has been   probated.  A copy of the Will must be sent to each beneficiary.  The beneficiaries are generally notified by sending them a letter via certified mail, return receipt requested.  This notice allows beneficiaries to have the opportunity to contest the probate of the Will or the appointment of the Executor as the representative of the estate. 

3.  Charitable Bequests

If a charitable bequest is left in the Will, a copy of the Will and notice of the bequest must be sent to the Attorney General’s Office in Trenton, New Jersey.

4.  Estate Checking Account

The Executor/Administrator must open an estate checking account to pay bills of the estate.  In the case of bank accounts in joint names of the decedent and a spouse or children, and accounts in the name of the decedent alone where the spouse or children would be the transferee of these assets, the funds may be obtained by filing an Affidavit and Waiver, called a Form L-8, with the bank.  A Form L-9 is used for the transfer of real estate.  These forms, however, cannot be used when an estate is subject to the New Jersey Gross Estate Tax or the New Jersey Inheritance Tax.  In other cases of joint bank accounts, the remaining surviving joint tenant can withdraw one-half of the balance immediately.  The remaining balance can be withdrawn after the Estate or Inheritance Taxes are paid and the State of New Jersey issues a wavier indicating that no further tax is due.

In the event that the decedent held bank accounts in his/her name only, the Executor/Administrator can withdraw one-half of the balance of any account by bringing a Surrogate’s Certificate to the bank.  The bank will make a check payable to the Estate for up to one-half of the amount on deposit.  The Executor/Administrator can use these funds to open an estate checking account, which will be used to pay estate expenses and debts. 

5.   Paying Bills

The Executor/Administrator must pay all valid debts of the estate with funds from the estate checking account.  Payment is to be made in the following order: (1) reasonable funeral expenses, (2) costs and expenses of administration, (3) debts and taxes; (4) reasonable medical and hospital expenses of the decedent’s last illness, (5) judgments entered against the decedent, and (6) all other claims. 

The Executor/Administrator will have to give notice to any known creditors of the estate.  Generally, a creditor has nine months from the decedent’s date of death to present a claim to the Estate, and an Executor can be held personally liable for a claim if he/she distributes the assets of the estate before the nine month period had elapsed.  However, a valid claim must be paid if the claim is presented before the estate has been completely distributed to the estate’s beneficiaries.  Many times, the balance of a claim can be negotiated for a lower amount. 

6.  Marshalling Assets

The Executor/Administrator must collect all monies owed to the estate, collect all assets of the estate, and take charge of same.  If an insurance policy is made payable to an estate, the Executor/Administrator should make an application to get the proceeds.  The application will require a Surrogate’s certificate, a death certificate, a claim from the insurance company, and a copy of the insurance policy. 

7.   Inventory

The Executor/Administrator must make an inventory of the estate.  The inventory is a list of all of the personal assets of the decedent.  Although it is not usually required, the Court may order the Executor/Administrator to file such an inventory.  If an inventory is filed, the Court will require two independent appraisals of the property. 

8.   New Jersey Inheritance Tax

If applicable, the Executor/Administrator must file an Inheritance Tax Return and pay any inheritance tax that is due.  (8 months after death).  The New Jersey Inheritance Tax is imposed on probate or non-probate assets that pass to any individuals that are NOT spouses, parents, children, grandchildren, and great-grandchildren of the decedent or charities.  The rate of the tax applied to each portion of the estate depends upon the relationship between the decedent and the beneficiaries.  The Inheritance Tax Return includes a list of all of the decedent’s property, including real estate, interest in a corporation, and all other property.  Estate expenses, such as funeral and attorney expenses, are deductible on the inheritance tax return.  Insurance proceeds that pass to a beneficiary that is named on the policy are not subject to the New Jersey Inheritance Tax.

9.  Income and Estate Taxes

It may be necessary for the Executor/Administrator to file an Income Tax return (1040) for the decedent, and if necessary for the estate.  The decedent’s final return is due on April 15 of the year following death, just as if the decedent would have filed had he/she lived.  A return may be necessary to claim a refund owed to the decedent. The Executor/Administrator will file a separate income tax return (1041) for the Estate if the Estate earned $600 or more in gross income after the decedent’s passing.   

10.   Federal Estate Taxes 

If the estate is subject to Federal Estate Taxes, the Executor/Administrator must file a Federal Estate Tax Return and pay taxes that are due.  (9 months after death).  This tax is imposed upon the transfer of the entire taxable estate and must be filed for the estate of every citizen or resident of the U.S. where the gross estate exceeds the sum of $3,500,000 for 2009.  In 2010, the Federal Estate Tax is scheduled to be repealed, but will be reinstated at $1,000,000 in 2011.   

11.  New Jersey Estate Tax

If the estate is subject to New Jersey Estate Taxes, the Executor/Administrator must file a New Jersey Estate Tax Return and pay taxes that are due.  (9 months after death).  A taxable estate for New Jersey Estate Tax purposes starts at $675,000 and is taxed at a sliding scale up to 15%.  The tax is imposed on the full amount of the estate and not just the amount that exceeds $675,000.  Although the tax applies to all estates of New Jersey residents that exceed $675,000, in reality it is imposed only on the portion of the estate taht asses to spouses, children, and grandchildren.  Any other beneficiaries would be subject to the New Jersey Inheritance Tax.    

12.    Improper Claims 

The Executor/Administrator must protect the estate against improper claims.  Creditors have 9 months from the date of the decedent’s death to present claims against his/her estate.  The Executor/Administrator does not have to accept a creditor’s claim and may choose to dispute the claim.  For instance, some creditors may submit bills that cannot be collected because the statute of limitations has run out.  Where the estate does not have sufficient funds to pay all of the claims, the estate is insolvent, and the laws of the State of New Jersey dictate how and when creditors will be paid.

13.   Distributions

The Executor/Administrator must distribute the bequests according to the Will, obtain refunding bonds and releases from the beneficiaries, and file these documents with the Surrogate’s Office. 

Refunding bonds and releases are documents that the beneficiaries sign to indicate that they have received their inheritance from the Executor, but also that they agree to refund any portion if necessary to pay a valid creditor or estate tax liability.  Once the beneficiary has received the full amount of the inheritance to which he/she is entitled, the document also releases the Executor from his or her obligations to that person.

14.   Record Keeping

The Executor/Administrator must keep a record of all transactions concerning the estate.  This includes keeping records of all income to the estate and all distributions and expenses paid from the estate. 

15.   Accounting

The Executor/Administrator may be required to make a final accounting to the Court.  Usually this accounting is informal and does not require a Court appearance.  An informal accounting must be approved by all interested parties (beneficiaries) and the Attorney General of the State of New Jersey (in the case of a charitable beneficiary).  If an interested party wants to challenge the  accounting, then a formal Court hearing would be necessary.

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