Understanding the Probate process in New Jersey through select Questions and Answers:
Q1: What is Probate?
A1: Probate is the process of administering the estate of someone who has died.
Q2: How does Probate work?
A2: In New Jersey, unlike many other states, the process is not overly complicated, time consuming, or expensive. The process begins with filing the decedent’s Last Will and Testament with the local Surrogate. If the Will is accepted and if there are no objections, the Surrogate opens the estate by appointing the estate’s Personal Representative (i.e. Executor). If the decedent does not have a Will, then the decedent’s next of kin can petition the Surrogate to open the estate. The order of business is to have someone named to step into the shoes of the decedent and to act in his or her place.
Q3: How long does the Probate process take?
A3: Probate and the administration of a decedent’s estate can take anywhere from nine months to several years to complete. In cases where estate or inheritance tax returns are required to be filed, these returns cannot often be completed until about 8 or 9 months after the death of the decedent (and sometimes it takes much longer). And once filed, it often takes applicable taxing authorities months to complete the audit.
Q4: I have been named Executor. What’s the first thing I need to do?
Q4: Before doing anything, you should speak to an attorney. Just because you have been named as Executor does not mean you need to or should accept that responsibility. You need to first understand what’s involved given the information you have available. Executors are fiduciaries and are legally responsible for their actions. Executors can be sued for the actions they take that are improper under the law.
Q5: What are some of the Executor’s responsibilities?
A5: The Executor must marshal and protect the assets of the estate, inventory the assets and debts, and make periodic reports to all interested parties. The Executor must pay all debts of the decedent, to the extent possible, file any required tax returns, pay all taxes that may be owed, and eventually distribute the assets in accordance with the decedent’s Will. In many instances, the Executor will also have to account, either formally or informally, to the estate’s beneficiaries detailing all financial decisions that have been made.
Q6: Are assets such as Life Insurance Policies and 401(k) plans subject to Probate?
A6: Not really. Since these assets get paid without respect to the provisions of a decedent’s Will, the Executor generally has no control or say in how these assets are paid. These assets pass outside of probate. However, it is important to remember that these assets may still comprise part of the decedent’s taxable estate, for tax purposes, and taxes must be collected and paid by the Executor. Executors often face challenges in administering an estate with both probate and non-probate assets in the absence of a clearly articulated estate plan.
Q7: Are Executors entitled to compensation for the work they do?
A7: Yes. The law explicitly provides that Executors are entitled to compensation. Under New Jersey law this compensation is fixed by statute. For example, a $1,000,000 estate will generate a commission of $38,000 for the Executor.
For more information about the probate process in your county, contact us today.