As Executor, it is imperative to keep accurate records as to any expenses that you have paid on behalf of the Estate, either personally or through the funds contained in the Estate checking account. It is also important that you create an inventory list of all personal property (tangible and intangible) and real property, including their values, that belonged to the decedent at the time of death. As the Executor of the Estate, you owe a fiduciary duty not only to the Estate but also to the beneficiaries. This fiduciary duty includes an obligation to the heirs of the Estate to preserve all of the assets of the Estate, pay the debts of the decedent, pay any taxes due and provide an accounting of your actions and payments made. Generally, distribution of estate assets should occur only after the appropriate tax returns have been filed, all taxes paid and all other estate debts have been satisfied. Please note that failure to pay any required taxes or failure to prudently perform your duties as Executor may result in personal liability. Below are the various tasks that must be performed before the Estate can be closed, and your role as Executor terminates. We would be happy to assist you with these duties.
In certain circumstances, the executor may conclude that the best way to distribute the Estate is to sell the home and divide the proceeds according to the terms of the will. If this is the case, we will be happy to provide legal services in connection with the sale of the home.
If at any time you become unwilling or unable to perform your duties as Executor, please contact me immediately so that we can discuss possible courses of action. Should you have any questions or need any assistance with the below, do not hesitate to contact me.
- Obtain 5-10 death certificates;
- Probate the will (an action in court may have to be brought to have the will recognized as a valid will) and obtain 5-10 Letters Testamentary (please note that it will be necessary for you to appear in person before the Surrogate for this). To probate the will, an information sheet along with the original will should be sent to the County Surrogate’s Office. To complete the information sheet, you will need:
- Name, address and date of death of decedent
- Executor’s social security number
- Name, address and age of beneficiaries and next of kin
- General itemization of assets in Decedent’s name alone along with the approximate value
If there is no provision for a waiver of the bond, then a bond must be posted with the Surrogate’s Court;
- Provide notice to all beneficiaries and heirs within 60 days after the will has been probated;
- Open an Estate Account and transfer the Estate assets to the Estate Account;
- Obtain verification from each financial institution of the value of the decedent’s other assets (CDs, checking accounts, savings accounts, IRAs, pension plans, stocks and bonds) on the date of death;
- Draft a letter to all known creditors of the decedent to ascertain and verify debts;
- Marshall the Estate Assets;
- Prepare an inventory of all of the decedent’s personal property;
- Obtain the value of the decedent’s real property;
- Maintain fire, liability, casualty or other insurance to property that is the property of the Estate;
- Re-title brokerage accounts that exist in the decedent’s individual name to the name of the Estate with the TIN/EIN of the Estate (unless the decedent named a beneficiary for any brokerage accounts);
- Timely file the final Federal and State Income Tax Returns (due April 15) for the decedent. Income prior to her death is reportable on the personal final income tax return, and includes the period beginning January 1 and ends on the date of death. The Estate’s fiduciary income tax return should report all income and deductions of the Estate from the day after the date of death through December 31 (or until the closing of the Estate, if it is closed before December 31). A Federal Fiduciary Income Tax Return must be filed for any fiscal year of an Estate which has a gross income of $600 or more or has a beneficiary who is a non-resident alien. The New Jersey Fiduciary Income Tax Return must be prepared and filed if the Estate’s gross income exceeds $10,000;
- Timely complete L-8 and L-9 waiver forms or New Jersey Estate and Inheritance Tax Forms as applicable. The State of New Jersey automatically places a lien on all property for unpaid estate and inheritance taxes. If the total value of taxable Estate assets is less than $675,000, then L-8 and L-9 tax waiver forms must be completed for the personal property and real property as long as all of the beneficiaries are Class A beneficiaries. If the total value of taxable Estate assets is greater than $675,000 or if any of the beneficiaries are not Class A beneficiaries, then it will be necessary to file an Estate/Inheritance tax return and pay the applicable taxes within eight (8) months after the date of death. If the appropriate waiver forms/tax returns are not filed, then the liens for potential unpaid taxes that will be placed on the real property will remain. Therefore, we recommend that rather than waiting until the eighth month to complete/file the waiver forms/tax returns, that they be completed as soon as possible and that a good-faith estimate of the amount of estate tax that is due (if any) be sent to the State of New Jersey. This should expedite the obtaining of tax waivers so that should you decide to sell the real property, it can be transferred without a lien;
- Prepare an accounting of the Estate. The accounting is a record that sets forth all of the assets of the Estate that came into the hands of the Executors, appreciation and depreciation of Estate assets in the possession of the Executors, and all amounts paid by the Executors for administration expenses, taxes owed by the Estate, the decedent’s debts, and distributions to the beneficiaries;
- If you will be taking a commission for being Executor of the Estate, it will be necessary to compute the amount of the commissions before the filing of the Estate tax returns. As an Executor, you are entitled to a total commission amount of:
- 6% on all income received by Estate from the date of death to December 31 (or the date of distribution, whichever is earlier).
- The Executor is also entitled to a total commission of 5% on the first $200,000 of Estate assets that pass under the Last Will and Testament and a total commission of 3.5% on the assets of the Estate that pass under the Last Will and Testament over $200,000 but under $1,000,000. Please note that the value of property held by the decedent and another as joint tenants with right of survivorship, in trust for another, or payable on death to another, is excluded from the amount on which the executor’s commission is computed. You are also permitted to receive a commission on real estate that is actually sold by you.
- If there is more than one Executor, then the commission amount may be increased by the statutory rate.
Please be advised, however, that any commissions received by you are considered taxable income to you and must be included as part of your income on your personal tax returns.
- Perform a child support judgment search for each beneficiary who will receive a sum (either in money or in assets) in excess of $2,000; and
- Prepare Release and Refunding Bonds for each beneficiary.
- Make distributions to the Beneficiaries.
We here at the law firm of Bathgate, Wegener & Wolf are ready to assist you in the administration of your loved one’s estate. Should you have any questions or would like to set up an appointment to discuss the specific details of the Estate you are handling, please contact one of our Probate and Estate Administration attorneys. Contact us today at 732-363-0666
Photo by Melinda Gimpel on Unsplash