A death occurs. Suddenly you must take action to settle your loved one’s final affairs. What do you do next? Your essential job, if you are the executor, to amass and protect all the estate assets and property and to identify and pay all of its debts and taxes, then transfer the assets and property to the beneficiaries. To carry out this responsibility, stay focused on the basic steps:
Step One: Obtain Authority to Act
- A. Find the will and submit it with a death certificate to the County Surrogate to obtain Letters of Executorship (aka Letters Testamentary).
- B. If you can’t find the original will, do you have a copy? Have you checked with the
decedent’s lawyer? Lawyers often hold a copy of their clients’ wills, and you may
submit a copy to the County Surrogate for probate. - C. If there is no will, the law presumes that your loved one has died intestate, without a will. You will then ask the county surrogate to issue Letters of Administration.
You (or the person identified in the will as the named executor) will need these Letters to demonstrate to a variety of people and institutions (banks, creditors, custodians, trustees, government agencies, and any other involved third parties) that you have the authority to act on behalf of the estate.
Step Two: Identify All Property and Notify the Beneficiaries
Once you have probated the will, your next duty is to notify, in writing, all the beneficiaries who are named in the will and all the decedent’s next of kin. It is the executor’s legal duty to diligently research and discover the location of all of the decedent’s property, both real and personal, and the whereabouts of all of the beneficiaries and next of kin who are named in the decedent’s Last Will and Testament.
Step Three: Obtain Tax ID
The executor must apply to the Internal Revenue Service for a Federal Tax Identification number for the estate.
Step Four: Open an Estate Account
Next, the Executor must use the tax ID number to open an estate checking account with a bank or other depository for estate monies and assets.
Step Five: Amass Property and Debts
The executor should find and secure all of the decedent’s assets, including real property, personal property, bank accounts, and investment accounts. The executor should conduct an inventory of all the decedent’s assets. This list should include a brief description of the property as well as its purported value. The executor should put all potential creditors on notice by publishing a notice in a local newspaper. Creditors have nine months to submit a claim. The executor is also responsible for making a list of all outstanding bills, medical debts, credit card debts ,mortgages, and taxes owed.
Step Six: Pay Debts
Organize and pay all uncontested debts. Resolve any contested debts.
Step Seven: Establish Appropriate Valuation
The government requires the value of the decedent’s assets and property be established as of the day of death or immediately thereafter.
Step Eight: Pay Financial Obligations
Pay any of the estate’s financial obligations. This may include accountant’s fees, counsel fees, and the executor’s fees. The executor is entitled by law to a fee or commission, although many family members choose not to take one.
Step Nine: State Tax Waiver
Apply to the State of New Jersey for a tax waiver. For the estate to qualify, you will have to pay all of the estate’s death and inheritance taxes. If no taxes are due, you may file a form to demonstrate the estate is tax-exempt. Once you demonstrate the estate is exempt, the state will issue a waiver. You will then present it to the county clerk for filing and the estate will be released from any state tax lien.
Step Ten: File Income Tax Returns
File the appropriate estate, inheritance, and income tax returns. You’ll want to pay close attention to the statutory timelines to avoid interest and penalties.
Step Eleven: Disburse Assets
Once you have satisfied all of the estate’s obligations, you should disburse the remaining estate assets to the beneficiaries as directed by the will (or by law if the decedent died intestate). Before you release to each of the beneficiaries, have them sign a Refunding Bond and Release for the amount they have received. Have the
Releases notarized and file them with the County Surrogate’s Office. Failure to do so may subject you to personal liability.
Step Twelve: Transfer Property
You’ll need to transfer title (aka change of ownership) from the decedent’s name into the name of the beneficiary.
Remember:
Throughout the process, you have a fiduciary duty, the duty to act in the best interest of the beneficiaries who will ultimately receive the assets and property of the estate.