Losing a loved one is an emotional and challenging experience, and dealing with the legalities of their estate can add another layer of complexity. In New Jersey, the probate process is the legal procedure through which a deceased person’s assets are distributed and their final affairs are settled. Understanding this process is crucial for both executors and beneficiaries.
What Exactly is Probate?
Probate is the court-supervised process of validating a deceased person’s will if one exists and administering their estate. The primary goal is to ensure that the deceased person’s debts are settled, and their assets are distributed in accordance with their wishes or state law.
What Could It Cost?
Total costs vary based on a few factors:
- Your state
- Size of the estate
- Complexity of the Estate Plan
- Whether or not someone contests any part of your plan
Getting Started
Typically, the process begins by filing the decedent’s will with the Surrogate’s Court in the county of residence. Without a will, the court follows intestacy laws to ascertain how assets are distributed. If there is a will, it is submitted along with the petition. If there is no will (intestate), the court will appoint an administrator to oversee the estate.
The Crucial Role of Executor Appointment in Probate
When a will specifies an executor, that individual is responsible for supervising the probate process. When no executor is designated, the court appoints an administrator to carry out this duty.
Collecting Assets and Creating an Inventory
The appointed executor or administrator is responsible for assembling an inventory of the decedent’s assets. This could include:
Real Estate: The executor/administrator must locate and assess any real estate owned by the deceased. This includes primary residences, vacation homes, or investment properties.
Financial Accounts: A thorough search for bank accounts, savings accounts, and investment accounts is essential. Statements and related documents must be collected for a complete financial overview.
Personal Property: Items such as jewelry, art, vehicles, and personal belongings need to be identified, appraised, and documented.
They also must compile a detailed inventory:
Documentation: All relevant documents, including titles, deeds, and financial statements, should be gathered. This ensures accuracy and transparency in the inventory.
Professional Appraisal: For high-value items or complex estates, seeking professional appraisers can help determine the fair market value of assets, facilitating the inventory creation process.
There are however some assets that do not need to go through probate. Those include:
- Retirement accounts for which a beneficiary was named
- Life insurance proceeds
- Pension plan distributions
- Property held in a living trust
- Funds in a payable-on-death bank account
- Securities registered in transfer-on-death form
- U.S. savings bonds with a named beneficiary or co-owner
- Wages, salary, or commissions (up to a certain amount) owed to the deceased person
- Vehicles that go to immediate family members under state law
- Household goods and other items that go to immediate family members under state law (in some states).
Debts and Claims
Executors must notify known creditors of the probate proceedings, giving them an opportunity to file claims against the estate. Creditors will be given a specific time frame to process their claims. In addition, any debts against the estate will be paid out with the assets prior to distribution to the beneficiaries.
Estate Distribution
After debts and expenses are settled, the court must approve the final distribution of assets. The remaining assets are then distributed in accordance with the decedent’s will or, in the absence of a will, in accordance with New Jersey’s intestacy laws.
Taxes and Fees
For estates in excess of $13.61 million in 2024, a Federal Estate Tax may apply. Although New Jersey does not have an estate tax, it is one of the few States that imposes an inheritance tax. The inheritance tax is not based on the size of the estate, but who receives the estate. There is no inheritance tax imposed on transfers to a parent, grandparent, spouse, domestic partner, child or stepchild (Class “A” beneficiaries). Inheritance tax is, however, imposed on transfers to siblings (Class “C” beneficiaries), nieces, nephews, friends, and everyone else other than charities. (Class “D” beneficiaries). These taxes are imposed on probate and non-probate assets (with certain exemptions). Executors must know potential estate taxes and navigate the proper filing procedures.
Contested Assets
In cases where the validity of a will or the ownership of assets is contested, the executor/administrator may need to navigate legal challenges. Professional legal guidance becomes invaluable in such situations.
