Frequently Asked Questions (FAQ) About Probate Estate Administration

j0422365-150x150Written by New Jersey Probate Attorney Fredrick P. Niemann, Esq.

I get asked a lot of questions about estate administration and probate so I created a list for you of these common questions with answers about probate and estate administration that I often run into when advising my clients.  I hope they are a helpful tool for you.  Of course, if you have a different question or need to meet with me, you can contact me toll-free at (855) 376-5291 or email me at fniemann@hnlawfirm.com.  I’m always glad to discuss your questions in person, video conference or by phone.

FAQ’s about Probate and Estate Administration in New Jersey 

Q: Who’s responsible for administering my will or trust?

A: The executor you name in your will carries out the instructions set forth in the will. A trustee of a trust created in a will plays a similar role, but usually for a much longer time- typically until all assets are distributed to the beneficiaries. A family member, child, friend or financial institution may be named to act as a co-executor or co-trustee.

A trustee is also usually given some discretionary authority over trust funds and if and when distributions should be made to beneficiaries.

While the titles of executor or trustee may sound simple, the responsibilities of executors and trustees are considerable. They include paying or negotiating with creditors, notifying and paying beneficiaries and creditors, filing the final income tax return and managing any investments.  It’s a responsible position.

Q: Does a court play any role or have any involvement with a trust or will under a typical probate matter?

A: One common reason for setting up a trust, rather than a will, is to avoid court proceedings and probate.

Wills must be filed in the probate court to be probated, meaning they become public documents. Court proceedings can be but generally are not costly and time-consuming. If the will is contested, probate can sometimes taking as long as a couple years. If there is a will contest on contentious family relatives, delays can be longer. A trust avoids probate if not contested.

The use of a will is more common in states like New Jersey with simpler probate procedures. These are no court hearings with an uncontested will. Usually the presence of only one person , often the executor or a family member is required to probate a will.

With a trust, your assets are simply transferred to the designated trustee (or trustees) upon your death. A brief “pour-over will” usually declares that any remaining assets be transferred into the trust upon your death.

You can also set up a “trust within a trust” or a trust within a will, usually for a single beneficiary.

Q: What happens to the debt I leave behind during probate?

A: Whether you have a will or a trust (or neither), any debt you have at the time of your death will need to be settled. If your assets aren’t liquid, creditors could force the sale of your property to get paid.

Of course, a trustee or an executor can and often do negotiate with creditors to repay debts over time.

Q: Are there benefits to setting up a trust vs. a will?

A: One reason some people prefer trusts is that it makes it easier to handle your health care and personal activities of daily living if you become medically incapacitated. You can stipulate in your trust that your assets be used to pay for your care, and the trustee will then be able to disburse money from your estate without going to court.

Without a trust, the person who becomes your guardian can run into complications getting power to tap your assets and pay your necessary expenses.

Q: I am the Executrix of my mother’s estate. She named me Executrix in her Last Will. I inherited the family home, as a joint tenant with my siblings together with all the house contents. Combined, the house and contents have a total value of approximately $430,000. My brother and sister equally inherited the remainder of the Estate – all cash and investments totaling $500,000, before taxes. In New Jersey, the law requires me to advertise for any creditors for a period of six months, and usually any payments to the beneficiaries will not be paid until the final taxes, expenses such as legal and accounting fees, are established. I am fairly confident my mother has no outstanding debts, so I went ahead and released a portion of my brother’s inheritance to him because he needed the money. Now my problem is my brother is demanding his full share even before the estate is closed, final taxes paid and creditors’ claims wiped out. Am I being unreasonable as Executrix if I refuse to release the full share to my brother as beneficiary?

A: This is a really great question! It’s a judgment call. I probably would not disburse just yet but wait until a reasonable period of time elapses. If you are confident that you have enough funds to cover the remaining estate expenses, most beneficiaries will welcome a distribution before the balance of the estate is paid out. But beware! You should keep in mind that, as Executrix, you are personally responsible to cover all estate expenses. If you distribute all of the assets to the beneficiaries and it turns out that you don’t have enough money to cover the expenses, you will be personally responsible for the deficiency unless the beneficiaries return enough of their inheritance to cover the remaining costs. If as Executrix you’re not absolutely sure about the remaining expenses and the likelihood of getting reimbursed from your siblings if the money runs out, then it is perfectly legal to withhold a final distribution until all expenses have been determined and/or paid. If you make an early or partial distribution, be sure to withhold sufficient amounts to cover all estimated expenses. This is the advice I give to all Executors.

Q: My father-in-law passed away this February in Florida. He had no life insurance and $7,500 in his bank account. His only asset is his house which has a reverse mortgage on it. After the sale, the net proceeds of his estate will be less than $25,000. To this point, the monthly bills, medical expenses, funeral expenses, lawyers’ fees and other expenses may be greater than $25,000, leaving nothing to pay unanticipated expenses and beneficiaries. Are the beneficiaries personally responsible for the estate debts; is the Executor?

A: No, you’re not individually or as executor. It appears the estate is insolvent. Beneficiaries are never liable for estate expenses unless they have received a distribution from the probate and/or non-probate estate. If there is not enough funds to pay creditors, New Jersey’s probate code dictates a priority for paying creditors. Typically, expenses of administration, such as filing fees, executor commissions and attorney fees are paid first, then funeral expenses, then federal and state taxes, followed by expenses of the decedent’s last illness and then debts. You should contact an experienced probate attorney for guidance.

Q: My brother is named the Trustee of my father’s Living Trust in New Jersey where he recently died. Another brother is the Executor of his Last Will (that’s a big mistake!). The three of us are all beneficiaries of the Estate and the Trust. As a beneficiary, I thought it was a good idea to research some good information about the real estate he owned to maximize the most out of its sale. Now here’s my question: Does the Trustee have any legal obligation to consider my research? Does he have to respect my opinion? My concern is that he may hire some realtor who doesn’t know the market, thereby squandering what our father left to us. Do I have any rights to vote on who he may hire to sell the property to make sure we all get the most we can get out of it? Or, does he simply have all the say over how it is handled? Is there a final word on how the estate is dispersed? Do I have any rights to have my opinion considered? Like for instance, can I contest who she decides to have as a realtor?

A: This is a very well thought out question. It mixes and matches the role of Trustee and Executor. Both are distinct. As Executor or as Trustee (I think you mean Trustee of your father’s Trust) your brother is legally responsible for handling your father’s Trust. While he can consider your opinion, he is responsible for making all of the final decisions. One undisclosed issue is the length of the trust for you and your siblings. If your father’s Trust terminated upon his death, you and your other siblings should immediately list the house for sale since the sale decision will directly affect your inheritance. If your father’s Trust continues for a period of time, let’s say until one of you attains a certain age (say 40), then your Trustee brother must make the best decision for managing the Trust until it terminates with or without your input. As I indicated above, he has the say whether or not the property is sold depending on how much of your father’s Trust is a continuing Trust. However, he will be responsible to you and your siblings as beneficiaries for the decisions he makes. Any beneficiary can object to a Trustee’s decision. In order to have that decision legally reversed, a beneficiary must file an action with the Chancery Court, Probate Division, and the court would have to agree with you. Not a likely outcome based on these facts.

Q: My daughter’s grandmother has died. In her Will executed in 2009, she left cash to her nephew and niece and her house with all its contents to my daughter. My nephew is the Executor. The value of the house is estimated at $300K. The furniture is worth perhaps another $5,000+. It is believed that there was also some jewelry of considerable value (perhaps $20K) in the house. The grandfather was a jeweler and the grandmother often spoke of the beautiful jewelry he had made for her. A few years ago, the grandmother was defrauded by investment “crooks” out of most of her cash (which was estimated to have been about $150K). A small repayment has since been made by the thieves, about $25K. Under the circumstances – i.e., the house and contents are worth a lot more than the lost cash assets. The Executor has asked my daughter to consider sharing the proceeds of the sale of the house with the nephew (Executor) and niece (his sister). Thinking that it may well have been the intention of the grandmother to share her Estate equally between her granddaughter and her nephew/niece, my daughter was inclined to honor the proposal. It has recently come to light that the grandmother’s jewelry has already been removed from the house. The Executor has informed my daughter that his sister took the jewelry and gave it to her daughters. Needless to say, my daughter is now less inclined to “share.” The question is – what is the legal liability of the Executor in allowing the inappropriate distribution of the jewelry? Is there a criminal penalty, or merely an obligation to “make the Estate whole?”

A: The Executor of any Estate has a legal obligation to distribute the assets of the Estate to the named beneficiaries who are legally entitled to receive those assets. Executors are legally required to protect Estate assets during the period of administration until they are distributed to the beneficiary(ies) who are entitled to receive them. It sounds like the Executor in this case allowed assets that belong to your daughter to be taken by someone else. Then again, jewelry is not “house contents”, it’s personalty. Does the Will address personalty? The Executor has an obligation to recover the jewelry unless your daughter chooses not to pursue her rights to this property. The remedy for any wrongdoing or mismanagement by the Executor, if not worked out between the parties, is through the probate court in the county of your residence.

Q: My late husband recently died. His Will named his sister as Trustee over the children’s Estate. I am named as the personal representative (Executrix) of his estate but most everything we owned was jointly owned by us in our names. Can I cause a court to override to remove my sister-in-law as Trustee over my childrens’ Trust since my husband and I own everything together and my three children are minors in my custody?

A: Probably not, in fact no, unless… Here’s my reason. First look at the terms of the Trust. If the Trust language gives the beneficiaries the right to remove the Trustee, you might be able to exercise that right on their behalf if they are minors since they cannot make that decision themselves until they are adults. If the Trust does not permit removal of the Trustee, you probably have to petition the probate court for removal of the Trustee and the appointment of yourself as the successor Trustee. But don’t waste your money foolishly. You need a strong reason to remove a trustee, i.e., senility, substance abuse, indifference, etc. Speak to an experienced New Jersey probate attorney.

Q: My father passed away recently and did not have a Will. My siblings and I have not had any contact or relationship with him for more than 45 years. We were recently sent a letter from an attorney regarding his assets. This letter was generated because of the concerns of my father’s two surviving sisters. They are looking for one of us to be appointed the administrator of his Estate. The problem is we DO NOT want to have anything to do with him or his Estate. Can one of us be forced to take care of the Estate?

A: This is a really good question and I see this a lot in my practice. Here’s the low down. No! No one can be forced to serve as Executor or Trustee regardless of whether he or she is named (nominated) in the Will or Trust. You can just refuse! You never volunteered for the job. However, someone needs to serve as the Executor of your father’s Estate. If a family member is not willing, the probate court will appoint an individual or bank to serve, if there is money. I’d read the Will to see if it’s in your economic interest to serve as Executor. You might be pleasantly surprised.

Q: My father has just recently passed and had no Will. My brother and I have been taking care of most of his debts and monthly payments through his checking account, (of which I am a legal signer). There is very little money left in the account after paying most of his medical bills, but there is an IRA that has about $10k in it. The IRA custodian is asking for a certified copy of the death certificate, which we have. In addition, they are requesting a certified copy of our appointment as Trustee/Executor of his Estate, which we do not have since there was no Will or Trust. They are also asking for an IRA distribution form from the Executor, which we can fill out if an Executor is appointed. The main question is how can my brother or I become the Trustee/Executor after the fact? Do we have to hire an attorney? There is only a very small amount of money left and it seems that after hiring an attorney, there wouldn’t be much left for the rest of the expenses. How should we handle this?

A: What a potential waste of money if your dad failed to name beneficiaries to the IRA. Typically, an IRA designates a beneficiary. The beneficiary, technically, is responsible for recovery of the IRA proceeds. If there was no designated beneficiary on the account, the account proceeds are payable to the Estate of the account owner and the Executor (personal representative) makes the claim. So, that’s your answer. New Jersey has an option for settling a small Estate. The process involves the appointment of an Executor (personal representative) to handle the decedent’s affairs. An attorney is usually not necessary in this type of proceeding. You should contact the Surrogate of the county in which your father died for more information about this procedure.

Q: My father passed away in January of this year. His sister, my aunt, is the Executrix and the Trustee of his estate, and I am the beneficiary. I have asked several times for an accounting of the estate, but each time she has refused to advise me. I am 21 years old and I’m trying to go back to college. My father’s Will specifically recites that his Trustee (my aunt) is authorized to distribute principal and interest in such amounts as the Trustee shall determine reasonable to provide for college or professional training for my son (the beneficiary).” She and the accountant want me to be responsible for my living expenses during school. They want to sell my dad’s house (where I live) even if I go back to school. Do I have legal recourse? Can I object? What are her legal obligations and how do I protect myself?

A: I’ve run into this issue several times. Both outcomes were different for all parties involved. As trustee, your sister must follow the terms of your father’s trust. In doing so, she is empowered to sell the house if, in her judgment, it is the best thing to do to carry out the purpose of the trust. As a beneficiary, you have the right to an accounting of the trust’s activities at least once a year. If you have not done so already, I suggest you make your request for accounting in writing. If, after a reasonable amount of time has lapsed, you do not get a response, hire a lawyer who will petition the court to order her compliance.

Q: Can you explain to me in simple English the differences between an Executor vs. Trustee?

A: Sure, it’s quite simple. An Executor is responsible for finalizing a decedent’s probate Estate. A probate estate is an estate where the person died owning property that was in the decedent’s individual name. The Executor is responsible for marshalling and collecting the property, paying the final expenses and taxes owed by the person before and after death, and distributing the property in accordance with the decedent’s Will, or if he or she did not leave a Will, in accordance with New Jersey law. The job of an Executor ends when the property is distributed to the beneficiaries, which takes between 5 months to 18 months.

A Trustee on the other hand, is responsible for the property that is placed in, or is owned by the decedent in a Trust. A Trust is a legal entity created in accordance with New Jersey law but is not subject to New Jersey probate. The Trustee’s job is to manage the Trust property for the benefit of the beneficiaries named in the Trust. This responsibility often extends for many years and can extend to several generations, depending on the terms of the Trust. The Trustee’s duties end when the Trust, by its terms, terminates and the Trustee distributes the Trust property to the beneficiaries named in the Trust.

Q: If I am nominated under a Will or Trust to be the Executor or Trustee, should I agree to serve?

A: That’s a tough answer. Generally, I would advise yes, but not always. It often depends on your willingness to assume legal responsibility for the Estate or Trust. You should evaluate whether or not you are mentally and emotionally prepared to begin the settlement process (i.e., gathering assets and important information, handling legal and regulatory filings, managing financial details of the assets and investment, dealing with heirs, etc.) and your willingness to make the time commitment.

Q: If I am named Executor or Trustee, am I legally required to serve?

A: The short answer is “No”. Being named in a Will or Trust does not legally obligate you to serve, if you feel you shouldn’t. You must accept the nomination before you assume any responsibility. You can decline serving by signing a document called a “Renunciation”. But even after you have accepted the position you are not obligated to continue. You can resign, however, once you begin serving you will not be relieved of responsibility until someone else takes over.

Q: Is there somewhere I can go to find out what my responsibilities as an Executor and/or Trustee are?

A: First, begin by reading the Will or Trust thoroughly. A well-written document will contain specific instructions for the Executor or Trustee to follow. An attorney or other Estate/Trust professional can be contacted to explain the duties and responsibilities that apply under the Will or Trust and local law and guide you through the process. It’s often not that hard.

If you are willing to make the time commitment and seek professional assistance when you need it, you should be able to handle the job. The size of the Estate or Trust, how complex it is and your level of knowledge in handling financial matters will determine to what extent you will need help from an attorney, CPA or other professional.

Q: My Executor refuses to contact me. Do I have any legal recourse to force him into his obligations?

A: Absolutely. New Jersey Estate and Probate laws require an Executor to provide a beneficiary with an accounting and information concerning the administration of the Estate. I suggest you call me to set up an appointment to learn about the specific state statutes that require this and bring it to the attention of the Executor. In extreme situations, you may have to compel the Executor to provide you with this information through the Superior Court by filing an Order to Show Cause against the Executor. This process always works.

Q: Can the Executor/Trustee who resigns choose who takes over his/her duties when he/she cannot or will not fulfill their obligation, or will a judge decide who takes over? For example: can the person named as Executor choose a family member as substitute Executor/Trustee or will the judge choose to appoint a bank Trustee who will possibly deplete the funds of a long term (28 years) Trust?

A: The answer begins with a review of the Last Will or Trust. You must first look at the Will to see if an alternate Executor is named. If no alternate is named in the Will, then a court will name a successor. The court will typically name a family member, but sometimes will appoint a bank if the bank is willing to serve.

Q: My brother lived with my mother for the last 10 years (rent free) of her life. He helped with the maintenance and remodeling of the house on occasion. My mother recently passed and left the house to all the children equally. I am the Executor/Trustee of the Estate. My brother is attempting to buy the house, however, he is vacillating on his decision and is extremely possessive on any and all items in the house. I stated that I need a decision about whether he is buying the house, or we are going to put it on the market. I also told him that starting next month he will be charged “rent” for the premises. He is livid. I thought that as Executor it was my job to be fair to all beneficiaries, not just one. How does the law in New Jersey view this type of circumstance?

A: An Executor/Trustee has a duty to preserve and make all assets productive for the benefit of all beneficiaries. This means that you have a duty to charge your brother rent because he is benefiting from the property and you and the other beneficiaries are not. One way to handle this is to deduct from his share the fair market rent for the period he occupies the house from your mother’s date of death. You should, however, inform him of the rent (which should be a reasonable fair market value) and his method of payment. Again, you are responsible to all beneficiaries and cannot allow one to benefit to the detriment of the others.

How Long Will It Take?

Q: My grandfather recently died. He supported himself by buying high-risk mortgages. Now we have mortgages that have 20 and 30 years left to pay, five heirs, and we don’t know what to do. Should we resell the mortgages and split the proceeds and be done with it? Can we assign the mortgages to an LLC we may create to take ownership and have the mortgages pay automatically to an account that will disperse the funds to the LLC and from there have the LLC disperse to the beneficiaries? It’s a mess. Please help!

A: This is a common problem, and yes it is a mess. You basically have three options. First, as you mention, the mortgages can be sold to a third party and the proceeds split among the beneficiaries in accordance with their respective ownership interests. Second, one or more beneficiary(ies) can purchase all or some of the mortgages and disburse the funds to the beneficiaries. Third, the mortgages can be distributed (i.e., ownership put into the names of the beneficiaries or an LLC) and an agent appointed, either one of the owners or a third party, to collect the principal and interest and make distribution to the beneficiaries/owners until the mortgages mature. You should seek professional assistance and work closely with the beneficiaries.

Q: The Estate is worth about $2 million. There is a Will naming about 12 beneficiaries. There is no litigation. Two years have already passed since the decedent died and no settlement has been reached. How long should probate of an estate of this size and number of beneficiaries take?

A: New Jersey, like most states, allows for a “reasonable” amount of time to settle an Estate. Once the Federal Estate Tax Return (Form 706) and the N.J. Estate Inheritance Tax Return (IT-R) has been filed (within 8/9 months of date of death) and the time period to absolve the Executor from personal liability has elapsed, the Estate should be ready for distribution. However, there could be extenuating circumstances, such as estate litigation, the sale of a business, etc., absentee heirs overseas or out of state that could delay the distribution and closing. Two years should be a reasonable amount of time and at this point. You should ask the Executor for a time frame for making final distribution or provide a reason why a distribution cannot be made at this time. If you are not satisfied with the response, consult an experienced probate attorney.

Q: If cemetery lots were owned by the decedent, and they are sold by the three children, must the monies received be split among all those named in the Will? Our lawyer told us only the house is considered part of the Estate – not the personal belongings inside, etc. There was another person named in the Will besides the three children. Therefore, we need to know this information about the cemetery lots in order to follow the law.

A: What does the Will say? Does it say “all property”? If the decedent owned the cemetery plots in his or her own name, the plots, or the proceeds if they were sold, must be distributed in accordance with the terms of the decedent’s Will. The only exception would be if the lots were specifically bequested to the children and therefore not part of the probate estate.

Q: As Trustee, I am looking at distributing the household items in my deceased parents’ house to the four beneficiaries. We are inventorying the “items” and seeing which beneficiary wants them before attempting to dispose of them. Disposition will be by donation, and/or sale. One sister does not want anything and feels ALL items should be put up for sale. Three others disagree. In addition, the other sister residing in the house is wanting to purchase the house and feels all items should remain in the house. She is also making it very uncomfortable, allowing us in the house to inventory and clean. She strongly objected to even items being taken to Goodwill. How in the world does one handle this type of situation?

A: First of all, as Trustee, your job is to follow (specifically) the terms of the Trust. If, for example, the Trust directs that all tangible personal property is to be distributed to all four beneficiaries in equal shares, then each of you should select the items you want and the rest can either be sold or given away. To equalize the distribution, differences should be adjusted by increasing or decreasing what each beneficiary gets from the rest of the Trust assets so that the net value each receives is the same. If there is no provision for tangible personal property, then it becomes part of the residuary of the Trust and is distributed accordingly. If you decide to dispose of these assets in another way, such as giving some of it to charity, you should get the approval of the other beneficiaries, preferably in writing, especially if these items have value. Majority approval might be sufficient in your jurisdiction. If not, you may want to seek court approval if the items have significant value. As Trustee, you have the legal authority to access Trust property to carry out your Trustee duties.

Q: I am the executrix of my father’s estate, which consists of a home with a large mortgage. Since we have been unable to sell the house, I have had to let the house go into foreclosure. None of the beneficiaries want it or can afford it. Do I have any PERSONAL liability or anything I need to do other than just let it go?

A: You do not have any liability if the estate is insolvent. Just follow the laws of New Jersey governing an insolvent estate.

Q: My question concerns a request by the executor to me as a beneficiary of my late father’s estate, to sign a waiver called a “Release and Refunding Bond” prior to the actual distribution of my share of the estate. This document says I waive any (further) claims against the estate. I have been told that if I do not sign this waiver, I will not get my inheritance as Executor of the estate and funds will be collected from the estate to cover possible future claims and litigation expenses. Is this request legal?

A: Yes, it is and it is a very common practice, though many beneficiaries object to its use, just like you. Executors and trustees often ask the beneficiaries for approval, and release from liability, of their estate administration. This is a reasonable request as an executor should not be held liable “forever” for his or her administration unless he has committed a breach of his duties. However, the executor or trustee cannot make this a condition for distribution. Distribution must be made in a reasonable amount of time and cannot be pre-conditioned on your approval. If you do not release the executor/trustee, he or she must seek approval of his administration through the Chancery Division of New Jersey Superior Court.

Fred Niemann, NJ Estate Administration Lawyer

Fred Niemann, NJ Estate Administration Lawyer

Well, I covered a lot of questions and answers, didn’t I?  If you need to speak with a knowledgeable and caring attorney about this matter, please call me toll-free at (855) 376-5291 or e-mail me at fniemann@hnlawfirm.com and set up an office consultation at your convenience.  It’s my pleasure to serve.

Fredrick P. Niemann, Esq., NJ Probate Attorney