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» Elder Law Issues and discussions on topics of interest.
» Estate & Trust Administration Articles of interest to Executors, Trustees and Beneficiaries, particularly in probate and trust matters.
» Medicaid, Income & Asset Protection for long term care Issues and discussions on topics of interest.
» Social Security & Medicare Issues and discussions on topics of interest.
» Special Needs Trusts Key topics to protect a disabled child, grandchildren, family members and others.
» Veterans' Benefits for long term care Learn eligibility for assisted living and home-based waiver programs and other articles of interest.
» Wills & Trusts Protecting your family and yourself if the unexpected happens.
Speaking Events
Fredrick P. Niemann, Esq. was recently the featured speaker in Colts Neck, NJ at a seminar entitled Investments & Estate Planning for Trusts and Wills for High Net Worth Individuals.
Estate & Trust Administration, Including Probate
Executors, trustees and beneficiaries each have rights and obligations to each other. Who's protecting your interests?
"During a difficult period in my life, I called upon Scarinci Hollenbeck to help me as executor to my father’s estate. Mr. Niemann stayed with me every step of the way. He is very professional in his manner and dealings, not only with me but with the attorneys, law firms, creditors and others involved in the probate of my father’s estate. I am very satisfied with his services."
—Ralph Cafaro, Manalapan, NJ
The death of a person is devastating, especially when that person was someone you love. A family needs to deal with its grief, yet the world moves forward and demands that obligations are met and affairs are finalized.
There are bills to pay and property to transfer. The wills and/or trust seem clear, but perhaps you feel like you do not know where to begin or exactly what to do. We can offer you some guidance. If you are an executor, administrator or beneficiary of an estate, we can answer your questions. We have helped clients resolve issues they were confronting. We have coordinated the transfer of assets to beneficiaries and we have paid bills and taxes and filed returns. We have also assisted family members whose loved one died without a will, helping them to understand the process required to finalize their estate.
PROBATE AND TRUST LAW AND THE PROBATE PROCESS
An estate is the total property owned by a deceased individual prior to the distribution of that property in accordance with the terms of a will or trust or, when there is no will or trust, by the laws of inheritance in the state where the decendent lived. If proper planning of the estate has not been done, this process can be complicated. Several things happen during this procedure:
- The will or trust is proved to be valid or invalid.
- The property covered by the will or trust is verified.
- It is determined how the property is to be distributed.
- Unpaid creditors of the decedent are given the opportunity to file claims against the estate.
- Fees and taxes for the administration of the estate are approved and paid.
- The assets of the estate are distributed.
PRESERVING ESTATE ASSETS
An experienced estate and probate attorneys and elder law specialist can suggest options for preserving estate assets. Reducing estate taxes is just one way that an estate can retain more of its wealth for the decedent’s heirs.
WHAT IS PROBATE?
Probate is the court process for gathering a decedent’s assets, paying taxes and claims and distributing assets to the beneficiaries. Generally, probate is only necessary when a person dies with assets in his or her own name alone. Assets in a living trust, jointly held or with a beneficiary designation do not have to go through probate. Probate is often looked at in a negative light – sometimes rightfully so, but not always.
Problems in probate occur because of one or more of the following:
- Poor planning and lack of information.
- The notion that the kids can worry about it because you will be gone.
- Procrastination.
- Not wanting to deal with unpleasant subjects.
- Waiting to let the surviving spouse “take care of things” and he/she cannot or does not.
- Fear and misinformation about trusts, wills and other important estate planning tools.
- Poor legal advice.
AVOIDING PROBATE
Although the probate process serves many purposes, it can be slow and expensive. You may consider having an attorney perform estate planning so your loved ones may not need to go through the probate process.
We regularly assist our clients to navigate the probate process and guide them through trusts and other techniques in an effort to avoid probate and properly plan their estate.
PROBATE IN NEW JERSEY
Proper administration of a decedent’s estate involves a variety of steps. When an individual passes away, an executor is typically appointed in a will to handle the administration of the estate. In the absence of a will, an administrator is appointed. Regardless of title, either is the representative of the estate and is legally responsible to ensure that all necessary steps are taken to comply with the laws regarding creditors, taxation, and distribution to beneficiaries.
In New Jersey, the executor must initially file the will for probate with the Surrogate of the county in which the decedent resided at the time of his or her death. After this step is taken, the executor is charged with the responsibilities of opening an estate account from which any claims against the estate are to be paid and to re-title the assets from the decedents name into the name of the estate. In order to undertake these steps, a tax identification number must be acquired because an individual’s social security number becomes invalid upon death. In addition, the executor should file a variety of forms with the Internal Revenue Service and the Surrogate to ensure that he or she is not held personally liable for any debts of the estate.
There are three primary taxes which are levied upon an individual’s death: (1) the federal estate tax, (2) the New Jersey State Transfer Inheritance Tax, and (3) federal and state income taxes. The executor needs to determine whether or not the first two taxes are to be paid. However, the income taxes must always be addressed by an executor on income generated on estate assets between the decedent’s date of death and the date of distribution to beneficiaries.
In order to properly conclude an estate, an accounting must be given to all beneficiaries and a release and refunding bond signed by each beneficiary which is then filed with the Surrogate in which all beneficiaries acknowledge the receipt of their share of the estate, discharge the executor from further obligation to the estate, and accept pro rata responsibility for any proper debts imposed upon the estate subsequent to receiving distribution.
In many cases, a trust is established either as part of a will or as an independent document. The trustee has a very serious responsibility to all beneficiaries of the trust. The trustee is responsible for complying with the Prudent Investor Act. This law requires that the trustee invest the trust assets prudently. Prudently means that not only must the assets be preserved but they must be invested for grown for the benefit of the beneficiaries. Non-professional trustees are best advised to delegate this function to professional trustees or trustee advisors. Family member can continue to serve as trustee under this arrangement.
Another law, which the trustee must comply, is the Principal and Income Act. Under this act, certain items are designated as income and other items are designated as principal. This is extremely important under trust law, as it will affect distributions to various beneficiaries. Periodic accountings must be rendered by the trustee and they must comply with the Principal and Income Act.
In addition to these two laws, the trustee must file appropriate tax returns. These include federal and state 1041’s, which are income tax returns for the trust and K-1’s, which are given to beneficiaries to indicate income distributions. A trustee beginning to serve in that capacity must be careful not to take on liability for acts not properly done by the executor. An executor, an administrator and a trustee have significant personal liability to taxing authorities and to all of the beneficiaries of an estate. A good faith effort by the fiduciary to be fair and reasonable will not protect the fiduciary from this liability. Serving as fiduciary is a complex undertaking, which should not be attempted without professional assistance.
CONTACT US TODAY
To speak with an attorney, please call Fredrick P. Niemann at 888-800-7442 or email him at info@njelderlawcenter.com to set up a consultation at your convenience.