Estate Administration

Important Responsibilities

If you have ever been named as executor or administrator of the estate of a deceased person, you are well aware of the many responsibilities the personal representative must assume. The process of administering an estate involves collection of assets, payment of debts and inheritance taxes, and distribution to the beneficiaries.

County Surrogate

Probate

The process of estate administration begins when the personal representative appears at the County Surrogate's office ten days after the death of the decedent (deceased person). At this time, the Surrogate requires the following:

• Death Certificate
• Will
• Petition for Letters of Administration (if there is not a Will)
• Estimated Value of Estate Assets
• Proof of Identification
• List of Potential Beneficiaries, including:
• - relationship to decedent
• - approximate ages
• - dates of death
• Check for Fees

Letters Testamentary

A decedent is said to have died testate if he/she left a valid Will. Upon receipt of all of the above, the Will is probated and Letters Testamentary are issued to the individual named in the Will as Executor of the Estate.

Letters of Administration

A decedent is said to have died intestate if he/she did not leave a Will. After the filing of a Petition, the Surrogate will issue Letters of Administration to the individual appointed by the Court to act Administrator of the Estate.

Personal Representative

The personal representative, either the Executor or the Administrator, is now responsible for the property of the estate. The personal representative must:

• Keep the property separate
• Exercise prudent judgment in:

- preserving the property

- selling the property

- investing the property

• Be faithful to the interests of those to whom the property will ultimately be distributed.

Stages of Administration

There are six stages of Estate Administration for which the Executor or Administrator is responsible:

Order to Limit Creditors

The first stage involves publishing a notice to creditors. When the personal representative appears at the Surrogate's office, he/she should specifically request an Order to Limit Creditors. This provides that creditors of the estate must make claims within six months of the date of the Order or their claims will be barred.

Inventory

The second step is to prepare an inventory of the assets of the estate. This is generally done by making an informal listing of all of the assets of the estate. The listing should be divided into the following categories:

• Real Estate
• Bank accounts, CD's and/or Securities
• Personal Property

Payment of Debts and Expenses

Thirdly, the personal representative must manage the financial affairs of the estate including the payment of debts and expenses. Another listing should be made including:

• Debts of the Decedent - due and unpaid prior to the date of death

Expenses of the Estate - anticipated for the next nine months In order to facilitate proper accounting and recording of payments, the personal representative should open an Estate Checking account. The Executor or Administrator may withdraw up to one-half the balance of the accounts in the name of the Decedent by presenting a Surrogate's Certificate and the bank book. The bank will prepare a check made payable to the estate. A copy of this check should be made and it should then be deposited into the Estate Checking account. The balances left in the decedent's accounts are only obtainable with a New Jersey Inheritance Tax Waiver.

Inheritance / Estate Tax Return

Next, the personal representative has the responsibility of filing an inheritance tax return with the State in which the decedent lived, and possibly a Form 706, US Estate Tax Return, with the IRS. This return must be filed and any taxes due must be paid within eight months of the date of death to avoid interest penalties.

Accounting

After the preceding stages are completed, an accounting should be prepared reflecting all financial transactions. An accounting is a statement showing the following:

• Assets of the Estate
• Income from Assets
• Liquidation of Assets
• Payments of Debts/Expenses
• Interim Distributions
• Remaining Property

Distribution

Finally, the personal representative must distribute the assets of the estate to the beneficiaries in accordance with the will or the State Laws concerning intestacy. Upon distribution, a Refunding Bond and Release should be filed with the Surrogate's Court for each beneficiary. This releases the personal representative from further responsibility for the estate.

CONCLUSION

The time to consult an attorney is BEFORE you assume any of the above responsibilities. An attorney will assist you in each stage of probate to ensure that you have fulfilled all legal requirements.

Probate FAQ's - here are answers to some interesting questions