By Fredrick P. Niemann, Esq. of Hanlon Niemann & Wright, a Freehold, NJ Estate Probate Administration Attorney
Often times a parent’s estate works its way through the N.J. probate court with a family member serving as the personal representative (i.e. executor, trustee, etc.) of the Estate. Often there are several children named as beneficiaries. Each knows for a fact that their parent left a lot of cash ($$$) in the house but the personal representative does not repot it as part of the estate on the estate tax return. He or she says that they will give the cash privately and not to worry, but they do. They are afraid of what might happen if there’s an audit.
The executor in this case is not living up to his/her fiduciary duty as a personal representative. He/she is required to provide accurate accountings to the probate court. He/she is as you suspect, playing with fire. If reporting the additional cash would put the parent’s estate potentially into taxable territory, the family member is effectively a tax cheat. If the estate is ever audited and it comes to light that the money was not reported, he/she could be in legal trouble, both civil and criminal. You could end up liable, too. But even if the money does not push the estate over the taxable threshold, a family member, fiduciary is still duty-bound to report it.
I know it’s tempting just to take the cash but legally that is not a choice I can ethically say to make. A family’s mental health and sense of calm is also very important. An updated and accurate accounting and possible tax return can then be filed. There’s a good chance that even with the “cash” there will still be no death tax payable.
To discuss your NJ Estate Administration & Probate matter, please contact Fredrick P. Niemann, Esq. toll-free at (855) 376-5291 or email him at firstname.lastname@example.org. Please ask us about our video conferencing consultations if you are unable to come to our office.