Following the Procedures for Estate Administration Can Avoid Problems
by Linda Ershow-Levenberg, Certified Elder Law Attorney (C.E.L.A.) Copyright 1997, First appeared in: Union County Senior News Updated February 2010
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When you find yourself in the position of having to administer the estate of someone who has died, there will be a lot to do. The purpose of this article is to take away some of the mystery about probate, and to help you do things the right way from the start. It is generally advisable to consult with an attorney and to have one available to help you along the way, but there is a lot you can do yourself with the proper guidance.
1. LOCATE THE LATEST WILL, IF THERE IS ONE. The Will appoints an Executor to administer the estate. If there is no Will, an interested person can apply to the Surrogate to become the Administrator of the estate.
2. OBTAIN CERTIFIED COPIES OF THE DEATH CERTIFICATE. You may need many of them.
3. GO DOWN TO THE COUNTY SURROGATE, with the original Will (if any) and an original death certificate. They will issue the Letters of Appointment, and will explain all steps necessary to become the administrator or executor. Sometimes it is necessary to post a bond, which you purchase through a local commercial bonding company. Although you cannot actually handle estate property until you receive your official Letters, there are other preliminary tasks you can take care of.
4. MAKE LISTS OF THE NAMES AND ADDRESSES OF ALL OF THE HEIRS, AND OF THE BENEFICIARIES UNDER THE WILL. All these people have to be notified in writing that the estate is being administered.
5. IDENTIFY EVERY SINGLE ITEM OF ESTATE PROPERTY: track down the location and identification of all property in which the deceased had any ownership interest, including out of state property. Every single piece of property and funds, whether owned solely or jointly, will have to be “administered” in some way so that it passes to the appropriate person. If the person died owning property in another state, you will have to contact an attorney in that state to find out whether you need to start probate proceedings there. Locate and identify all bonds, IRA’s, stocks, real estate, partnership interests, bank accounts, sources of income, etc.
6. GET DATE-OF-DEATH VALUATIONS FOR ALL PROPERTY.
7. MAKE LISTS OF ALL UNPAID BILLS, SO THEY CAN BE PAID. The funeral home has priority status for payment, as does the government for any unpaid taxes or Medicaid liens. The law specifies the order of priority for all the creditors. There may be liens against some of the property. If there are more debts than assets, you will have an insolvent estate and there are special procedures which the Surrogate can help you with.
8. OBTAIN A FEDERAL TAX I.D. NUMBER AND SET UP THE ESTATE BANK ACCOUNT TO RECEIVE THE ESTATE’S INCOME (such as rent) AND CONSOLIDATE THE ESTATE’S ASSETS. As the estate’s administrator, you will have to account for every penny that comes through the estate.
9. TAX RETURNS: Once you know the size of the estate, your accountant or lawyer will advise you on which state or federal tax returns will have to be filed and when. New Jersey places a Transfer Inheritance Tax on transfers to people other than spouse, children, grandchildren and ancestors. These taxes must be paid before anyone receives their distributions. Sometimes, under a Will, most of the bequests are to exempt beneficiaries such as children or parents, but there is one gift to a non-exempt person. In that case, the inheritance tax will have to be paid or there will be legal problems later on. The people in Trenton who handle the estate tax questions can be reached at 609-292-5033 and are quite helpful.
10. Except for joint ownership situations, remember that no heir or beneficiary should be given any property from the estate until the taxes and debts have been paid.
11. NOTIFY THE ATTORNEY GENERAL IF THERE ARE ANY CHARITABLE GIFTS UNDER THE WILL.
12. PAY THE CREDITORS IN ORDER OF PRIORITY.
13. TRANSFER JOINT PROPERTY TO THE SURVIVING JOINT OWNER OR BENEFICIARY. Special forms and procedures must be used for each kind of transfer. Certain surviving joint owners can obtain release of the funds in joint bank accounts by filling out an L-8 at the bank, if no tax is due. Others can only receive 1/2 the asset until the tax returns have been processed and the “tax waivers” have been issued.
14. CARRY OUT THE TERMS OF THE WILL OR FOLLOW THE DISTRIBUTION PATTERN SPECIFIED UNDER THE STATE STATUTES. When you finally distribute the estate, you will have to provide an accounting to all of the heirs and have them sign RELEASE AND REFUNDING BONDS as a condition for getting their share.
The estate administration process should go swiftly and smoothly if it is done carefully.
The Estate attorneys of Fink Rosner Ershow-Levenberg help you manage the burdensome details of probate, wills, trusts and Life Estates. To make an appointment or speak to an attorney, call 732-382-6070 or contact us online.