A colleague just told me about this situation. It’s a perfect example of why you should see a lawyer to check-up your estate plan from time to time.
Decedent’s Last Will and Testament appointed 3 executors, all of whom predeceased her. The estate’s attorney helped the decedent’s grandchild file the application at the County Surrogate’s Court to be appointed as Administrator CTA, which means “administrator with the Will Annexed.” The Will contains a waiver of bond, but the Surrogate must impose a bond requirement since the bond waiver only applies to executors named under the Will. The bond is issued by an insurance company to protect the estate against ill deeds by the administrator.
The probate estate assets that will be managed by the Administrator of this estate are more than $12 million. The annual cost of the bond will be thousands and thousands of dollars; it has to be renewed each year until the estate is fully disbursed. The applicant needs to pay the initial premium, but can be reimbursed later by the Estate. Aside from the possibility that this applicant might not even personally qualify for such a big bond, they are understandably concerned about the cost of the bond to the estate over time.
As is often the case, the law has a remedy. New Jersey has a statute that allows the potential administrator, with consent of the estate’s beneficiaries, to file a court petition to “waive the bond or reduce the amount of bond for good cause shown, including the need to preserve assets of the estate.” The outcome can’t be guaranteed, of course, and it’s always possible that one of the estate’s beneficiaries would oppose the request. Not to mention the necessity to expend thousands of dollars on court costs and attorneys fees.
An ounce of prevention is worth a pound of cure, as the old saying goes. Pull out your estate plan documents and read through them every few years, especially when you learn of the death or incapacity of anyone who’s been given a responsibility under your Plan. Get a check-up! A Trust amendment or a Codicil to the Will might go a long way to preventing the need for expensive legal work later.
Call us for advice on creating and updating your estate and trust plan …………….