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What is Probate?

What is Probate

Probate is the legal procedure by which a testamentary document such as a Last Will and Testament is established to be valid. In addition, “probate” also often refers to the overall process of administering an estate, whether the decedent left a will or not.

In New Jersey, probate generally beings with the Surrogate Court. Each county has a Surrogate Court, which is overseen by that county’s Surrogate – an elected official who acts as Judge of the Surrogate Court. The Surrogate Court handles the probate of wills, guardianships of minors and incapacitated adults, testamentary trusts, and accountings of estates. Whenever there is a challenge to a Will’s validity or the acts of an estate’s representative, such matters must go before the Superior Court of New Jersey, Chancery Division, Probate Part, where the Surrogate acts as the Deputy Clerk.

So, what does it mean to “open probate?” If a person passes away and leaves behind a will, that will may be taken to the Surrogate for probate ten days after the date-of-death. The Surrogate reviews the will and information about the estate such as its value, who the heirs of the estate are, and who is appointed under the will to act as the representative of the estate. If the document meets the requirements of New Jersey law for a formal will, the Surrogate will admit the will to probate and issue “Letters Testamentary,” a document certifying that the will has been probated and naming the representative of an estate.

What’s next after opening probate?

The representative of the estate must notify all persons with an interest in the estate that the will has been probated. He or she must then gather all of theinformation about the estate – what is the nature, location and value of the assets? Did the decedent have any debts? What taxes are owed? Once the representative has marshalled the assets of the estate, debts and taxes must be paid before any heir is entitled to any money.

What taxes are owed?

In the State of New Jersey, there were traditionally two “death taxes,” the first being the “inheritance tax” and the second the “estate tax.” As of the writing of this article, there is no New Jersey estate tax – but it may return. There are also federal tax obligations. The responsibilities of an estate’s representative depend on several factors including the value of the estate, location and nature of the estate’s assets, and who stands to benefit from the estate.

What about trusts?

Sometimes, a person puts a provision in a will that creates what is called a “trust.” A trust is an arrangement where one person (called a “trustee”) manages property for another person (called the “beneficiary”) based on a set of instructions from the person who set up the arrangement (called the “settlor.”) There are many reasons a person might set up a trust. One reason is that the beneficiary is a minor and needs someone to manage money for them until they become an adult. Another reason is that the settlor wants to protect the money from creditors, or perhaps even the unwise spending habits of the beneficiary. There are also specialty trusts designed for beneficiaries with special needs that help take care of that person without upsetting their ability to receive certain governmental benefits. Many estates involve trusts, which have the potential of lasting many years beyond the administration of the estate.

So the will has been probated, debts and taxes are paid, and any trusts have been set up – now what? Now the estate’s representative can prepare to make distributions. First, the representative should prepare an accounting to show the beneficiaries how he or she has been managing the finances of the estate and proposing a distribution to the heirs. Most often this is done through what is called an “informal accounting.” In certain rarer circumstances, a “formal accounting” is required. The difference is that the formal accounting is reviewed by the Surrogate and presented to a judge for approval as part of a court proceeding. In most cases, an informal accounting is all that is required – but any beneficiary may ask for a formal accounting, so good record keeping is very important!

Once the beneficiaries of an estate have approved of an accounting and signed a promise to return any money to the estate if needed to pay just debts (called a “Refunding Bond,”) the representative can start to make payments to the beneficiaries.

My loved one passed away without a will. What do I do now?

The process is very similar. Someone must still go to the Surrogate to open probate in order for anyone to be authorized to act as the representative of the estate. Where there is no valid will, the person is said to have died “intestate” and left an “intestate estate.” One main difference is that the representative of an intestate estate gets a different title. If there is a will appointing the representative, that person is called the “executor” or “executrix.” If there is no will, the Surrogate will appoint an “administrator” instead. The administrator has substantially the same job as an executor; they must gather assets, pay debts and taxes, and make distributions. The main difference is that an administrator does not have instructions from the person who passed away describing how they want their estate to be distributed. In this case, who gets what is determined by the laws of New Jersey. If you do not want the State making assumptions about whom you would like to leave your assets, that’s a very good reason to talk to an estate planning attorney today.

What happens when the estate owes more money than it has? Unfortunately, this is not uncommon. There are many possible reasons. Did the decedent have a lot of debts? Does the state have a lien for providing medical services? Whatever the reason, when an estate has less money than it owes, it is called an “insolvent estate” and there are special court procedures for what the representative of such an estate must do.

How long does this process take? In true legal fashion, the answer is “well, it all depends…” Probate and estate administration can be a complex process. It helps to have the assistance of professionals like an estate attorney and a tax specialist who have been through the procedure before and can guide you to a satisfactory resolution for everyone involved.

This is all pretty complicated – how do I get help? Our attorneys are well experienced with the probate process and administering estates. Whether you need assistance navigating a large and complex estate or are simply looking for a helping hand after the loss of a loved one, we are here to help. Please give us a call at (609)-729-1333 to discuss how Barry, Corrado, Grassi & Gillin-Schwartz, PC may be able to assist you.

Important terms for probate and estates:

Administrator: the person appointed to administer an estate where the decedent left no will.

Beneficiary: A person who stands to receive some benefit, such as an heir of a decedent or the person for whom a trustee manages money.

Bond or Surety Bond: like an insurance policy that may be required of an executor, administrator, trustee, or guardian to protect against his or her failure to meet some obligation of the position

Codicil: Like an amendment to a Will, this is an official document which amends or alters the provision of an existing Will.

Decedent: a person who has passed away

Estate: Refers to all that a person owns, including real estate, financial accounts, and personal property.

Executor/Executrix: The person appointed under a will to administer an estate.

Holographic Will: A writing intended to be a will, in the testator’s own handwriting, but most often not meeting the formal requirements of a will.

Insolvent estate: an estate where the debts outweigh the assets available to pay them.

Intestate: refers to situations in which a person has died without a will.

Letters of Administration: The official document issued by the Surrogate naming the official representative of an intestate estate.

Letters Testamentary: The official document issued by the Surrogate confirming that a will has been admitted to probate and naming the official representative of the estate.

Probate: The legal process of offering a document to be established as a valid Last Will and Testament. Can also refer the overall process of administering and estate.

Short Certificate: A (typically one-page) document with the official, raised seal of the Surrogate confirming that Letters Testamentary or Letters of Administration were issued. Often required by banks and other institutions to prove who is authorized to act on an estate’s behalf.

Surrogate: The county official who oversees the probate process.

Testator/Testatrix: Someone who has made a will.

Trusts: an arrangement where a person is appointed to manage money or property for the benefit of another.

Will or Last Will and Testament: An official document in which a person expresses their wishes about the disposition of his or her property after death.