By Fredrick P. Niemann, Esq. of Hanlon Niemann, a Freehold, NJ Probate Estate Administration Attorney and Law Firm
In our last post about finalizing an estate, I discussed several key obligations that New Jersey estate and probate laws placed upon an executor or administrator. Let’s continue the discussion.
Distribution of Estate to Beneficiaries
What is the role of the Executor in getting the assets of the estate to the beneficiaries? The answer often depends on the nature of the assets to be distributed. There is distribution of non-probate assets, (2) distribution of specific bequests, (3) distribution of the residuary estate.
While perhaps surprising to many readers, non-probate assets are outside the scope of an Executor or Administrator’s responsibility to the estate. Non-probate assets are not counted in the Executor’s or Administrator’s commission or bonding obligation. An Executor has knowledge of the existence of non-probate assets, information regarding said assets should be given to the beneficiaries of assets, but that’s it. In my opinion, the Executor should go no further.
What are non-probate assets? First, non-probate assets consist of assets such as life insurance, annuities, individual retirement accounts, and other retirement plans known as qualified plans. These assets are paid directly to the named beneficiaries. Said accounts or policies are only paid to the estate if there is no named beneficiary, which then makes them probate assets subject to the jurisdiction of the Executor. If there is a named beneficiary, the Executor or Administrator should simply provide a certified copy of a death certificate to the beneficiary so that he/she may claim the proceeds from said accounts or policies. If no beneficiary is named, the Executor or Administrator will provide Letters Testamentary to the financial institution holding said asset and will refer that asset to be retitled or paid over to the estate.
Then there are pay on death accounts commonly referred to as transfer-on-death (TOD) or paid-on-death (POD) accounts. These are generally bank accounts, but are also utilized with government bonds as well (ie., EE, US Savings bonds, H bonds, etc.). To claim these funds, the TOD or POD beneficiary must provide a certified copy of the death certificate to the custodian. The beneficiary can obtain a copy of the death certificate at the municipality where the decedent resided at the time of his/her death.
Finally, assets can pass by law under New Jersey’s survivorship statute. Examples include accounts listed as joint tenants with right of survivorship. To claim the funds, the death certificate is produced by the surviving account holder and, by law, the funds are transferred to the joint surviving account holder.
With respect to real property, it is a misconception that legal title has to be immediately revised to remove the decedent’s name. Not true. It is not necessary to transfer the ownership of property by deed from the estate to the surviving owner. When the property is finally sold or conveyed, the grantor will merely recite the predecessor’s death in the deed recital.
Today, many financial institutions will only release one-half of the jointly owned/non-probate assets to the legal survivor until a waiver is obtained by the State of New Jersey, unless the beneficiaries are Class A beneficiaries (i.e., spouse, parent, children, or other lineal descendants). Whereupon the assets will be released immediately if a Form L-8 is executed at the financial institution. For more remote relatives and beneficiaries, some or all of the asset will not be released until a tax waiver is received from the state of New Jersey.
To discuss your NJ probate or estate administration 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.