Probate and Estate Administration
Probate and estate administration are not the horror show some make it out to be. If a Will is properly executed and nothing unforeseen arises, it can be a straightforward process.
What is probate?Probate is the court-supervised process that may be needed after a person passes. It gives a person, normally a surviving spouse or close family member, the authority to pool the decedent's assets, pay his or her debts and taxes, and transfer remaining assets to those who are named in their Will.
Is probate necessary?Probate may or may not be necessary. The process is required if the deceased had assets in his or her name only.
Can "non-probate" assets may be transferred to their new owners without probate?Yes, they include:
Assets owned by the deceased with someone else in joint tenancy with right of survivorship or tenancy by the entirety. They pass by law automatically to the surviving owner.
Assets for which beneficiary was named outside of the Will such as IRA's, 401(k) plans or payable-on-death bank accounts.
-Life insurance proceeds or pension benefits payable to a named beneficiary.
-Assets part of a revocable living trust.
What if there is no Will or valuable property?If there is no Will or valuable property, surviving family members could use New Jersey's simplified probate procedures, which are quicker and less expensive than regular probate. This may be an option for a small estate in which:
The value of all the assets do not exceed $20,000 and the surviving spouse or domestic partner is entitled to all of it without probate, or
There is no surviving spouse or domestic partner and the value of all of the assets does not exceed $10,000. One heir, if given written consent by the others, can file an affidavit with the court and receive all the assets.
How is probate handled in New Jersey?Probate in New Jersey is handled by the surrogate's court in the county where the deceased lived. Typically, if things go smoothly, the process can take less than a year. If there's a Will, the person named to be in charge of the estate (the executor if a male, executrix if a female) makes a request to the court to be formally appointed. If there is no Will, or there is no executor available to serve, a person may ask the court to appoint him/her to become the administrator (male) or administratrix (female).
The surrogate's court will issue:Letters Testamentary (for a will) or Letters of Administration (if an administrator is named). This allows the person to:
Gather, organize, inventory and keep secure the deceased's assets
Pay debts and taxes
Distribute the remaining property as the Will, or without a Will, as state law directs.
What else should I know about probate and estate administration?The executor or administrator has authority over assets that go through probate. Complete and accurate records of how estate assets are handled and distributed must be maintained. Receipts, bills and bank statements may need to be submitted to the court.
Before probate can close, the executor or administrator submits an accounting, a document outlining the assets, disbursements of estate money to pay bills and proposed distributions to inheritors. If the accounting is approved by all the beneficiaries, a formal approval from the court isn't required. An administrator or executor may be held liable for losses if the estate's assets are lost, if assets are used for personal purposes, there was a conflict of interest in transactions or assets were wasted. A person serving as an administrator or executor should retain legal counsel to avoid these problems and to ensure the estate administration is handled properly.
If the estate is complex enough, it may also be a good idea to retain an accountant's services. The fees for these services would be paid from the estate, not paid personally by the executor or administrator, with the approval of the court.