When the debts of an estate are uncertain, an executor AKA Personal Representative may apply with the Surrogate for an Order Limiting Creditors. This order is simply a notice to creditors that they are to present to the fiduciary within 6 months of the date of the order their claims in writing, under oath, specifying the amount claimed by them and the particulars of the claim. This enables the fiduciary to determine within a reasonable length of time whether the estate is solvent. It also assists the fiduciary in settling the estate without any undue delay. If an Order Limiting Creditors has been filed and the claim of a creditor is not presented within 6 months, then the fiduciary can distribute assets and not be liable to any creditor who has presented a claim. If a claim is presented to a fiduciary, it need not be accepted. The fiduciary has 3 months in which to dispute the claim. If the claim is disputed, then the claimant must commence an action on the claim within 3 months after receiving the notice of dispute. If the creditor does not commence an action within that time, the fiduciary would not be liable to him/her with respect to assets delivered or paid over before the commencement of any action.

After the Will has been entered into Probate, the executor must within 60 days of the date of the probate do Notice of Probate (R.4:80-6) to all beneficiaries under the Will and to all persons who would have inherited by intestacy (those next of kin listed on the Application For Probate). The notice in writing will state that the Will has been probated, the place and date of probate, the name and address of the executor and a statement that a copy of the Will shall be furnished upon request. A proof of mailing must be filed with the Surrogate within ten days thereof. If the names and addresses of any of those persons are not known, or cannot by reasonable inquiry be determined, then a Notice of Probate of the Will must be published in a newspaper of general circulation in the county naming or identifying those persons as having a possible interest in the probate estate. If by the terms of the Will property is devolved to a present or future charitable use or purpose, like notice and a copy of the Will must be mailed to the Attorney General of the State of New Jersey.

The executor AKA Personal Representative is required to pay the debts of the decedent and any taxes due, to perform a Child Support Judgment search on each beneficiary, to make distribution to the beneficiaries, and if required, to provide an accounting of his/her administration of the estate. An informal accounting may be requested by only the next-of-kin given on the Application for Probate or beneficiaries named under the Will and should not be requested until one year from date of probate. If the executor AKA Personal Representative refuses to comply with the request, an action may be brought in the Superior Court Probate Part for a formal accounting.

A Surrogate will deny probate of a Will if the Will was not properly executed or the witnesses cannot be located and proper execution cannot be proven.

The Surrogate may not act when (1) a caveat is filed before entry of the judgment (2) a doubt arises on the face of the Will or a copy of the Will is presented (3) a non-resident’s Will is offered for probate and has no assets in that county (4) the Surrogate certifies the case to be one of doubt or difficulty; or (4) a dispute arises as to any matter.

If, after a Will has been probated, another Will of a later date is found or if, after letters of administration have been granted, the existence of a Will is discovered, a Complaint and Order To Show Cause must be filed with the Superior Court- Probate Part. If on the return date, any person in interest contests the admission to probate of the after-discovered Will, the procedure followed is that of any other Will contest. If no contest is lodged, the later Will is proven before the Court. The estate will then be administered and distributed according to the terms of the after-discovered Will.

It should be noted that all papers that are filed with the Superior Court-Probate Part are filed with the Surrogate who is Deputy Clerk of that Court.

Succeeding executor occurs when a prior executor who had qualified has died.

The probate process is initiated with the presenting of the original Will together with the original death certificate to the Surrogate by the executor. If the purported Will is adjudicated to be valid then the Application for Probate, an Authorization To Accept Service of Process and an Executor Qualification are prepared by the Surrogate.

The executor AKA Personal Representative will sign the Application for Probate in which he/she has asked the Surrogate to pass on the validity of the Will and to file it with the Superior Court. This application contains information on the executor and the next of kin. The next of kin given must be of the same degree of kinship had the decedent died intestate. This allows for any of the listed next of kin to contest the probate if cause arises even if not a named beneficiary in the Will.

Before an executor can perform his/her duties, an Authorization To Accept Service of Process (Power of Attorney) must be executed in favor of the Surrogate empowering the Surrogate to accept service of process in any cause in which the fiduciary, in his/her capacity as such, is a party. If someone sues the estate and personal service cannot be effected, service of process may be made upon the Surrogate. The Surrogate must mail a copy of the process to the fiduciary at the address on the Authorization.

The executor must sign the Executor Qualification that he will administer the estate according to law.

Under N.J.S.A. 3B:3-4 a Will prepared after 1978 should be “self-proved”. This meaning that there is certain language at the end of the Will in which the testator and two witnesses attest that the instrument is a Last Will and Testament, the testator is over 18 years of age, of sound mind and under no undue constraint in signing this instrument. An Attorney at Law or Notary Public must swear and subscribe to this. A Will properly self-proved may be admitted to probate without further proof of proper execution.

When a Will is not “self-proved” one of the witnesses must appear before the Surrogate to execute a Proof of Witness. If the witness to the Will is outside the county or the state at the time of probate, proof of the execution of the Will must be submitted on the deposition of the witness. At the time of application, the Surrogate will order a commission to another Surrogate (in state) or notary public (out of state) to take oath in the jurisdiction where the deposition is to be taken of the witness to the Will. A copy of the Will with an Order signed by the Surrogate requesting the deposition of the witness and the Proof of Witness form are sent to the person commissioned. The deposition of the witness is then taken under oath and certified by the person commissioned. The Proof of Witness is returned to the Surrogate.

In the case where both witnesses are deceased and the Will is not “self-proved” the signatures of both the witnesses and the Testator must be proved. One person may prove the signature of both witnesses.

When the Will is properly proven the Surrogate will enter a Judgment Admitting Will To Probate and issue Letters Testamentary which certifies the Will and is the authorization for the executor AKA Personal Representative to act on behalf of the estate.

The Surrogate will also issue an Executor Short Certificate which the executor AKA Personal Representative uses as proof of his/her authority to transfer or sell assets of the deceased. The number of short certificates needed will depend upon the number of institutions or agencies in which an asset needs to be dealt with for transferring the asset to the estate.

Stay tuned next week for Article III of The Probate Process In New Jersey.

The Probate Process In New Jersey – Article 1

Before the probate procedure is initiated it is necessary to determine whether there is a need to probate the Will. A Will does not need to be entered into probate if there are no assets in the decedent’s name solely.

If the decedent has assets in his/her name alone then the Will must be probated regardless of the value of the estate. You probate in order to nominate an executor AKA Personal Represenative who is given the authority to transfer the assets both real and personal to the estate.

It is necessary at the outset to ascertain certain information in order to probate the Will.

1. Check the death certificate to determine which Surrogate’s Court the probate will be entered. The probate must be done in the county where the decedent resided.

2. Check the Will to be sure that it is the original Will, not a conformed copy. Only an original may be entered into probate.

3. Determine who the named executor AKA Personal Represenative is in the Will and whether he/she will qualify.

4. Check to see if the Will is “self-proved” N.J.S.A. 3B:3-4. If not, a witness needs to be located to execute a Proof of Witness. .

5. List all the assets of the decedent in order to determine the number of short certificates that will be requested.

6. List all next of kin with names, addresses and ages, if minors. If there are any deceased next-of-kin then their issue must be named.

The probate of a Will can not occur until the eleventh day from the date of death. The procedure may be initiated in the Surrogate’s Court earlier but the issuance of short certificates will not occur until the eleventh day. This ten day period allows for the filing of a caveat by the proper degree of kinship or beneficiary in a prior last Will. 

Stay tuned next week for Article II of The Probate Process In New Jersey.

Recent studies indicate that most people that are 50 and older are not ready for retirement and likely won’t be, even when they reach full retirement age. If you do not want to become one of those people that lose that retirement dream, the best thing that you can do is start saving and planning now, before it is too late.

Cut Expenses Now – To help you save for retirement you can start by reducing your spending now. There are plenty of ways that you can do this. Reduce your trips to the local convenience store to buy bread and milk; instead save it for when you make a trip to the grocery store. Try generic products instead of name brands; most are of equal quality but cost much less. The money you save with these strategies can go toward retirement.

Invest – Take advantage of investment opportunities. If you company offers a 401k, start contributing now. You can also open an IRA account and even think about real estate investments. The more your money grows over the years, the more financially secure your retirement will be. In addition to this, good investment strategies can actually make early retirement a real possibility.

Know Your Number – The key to a comfortable retirement is knowing what you’ll need to live without struggling. After all, it doesn’t do you any good to save if you don’t know how much you need to put back. You may not be able to figure your number down to the penny, but you should be able to come up with a good monthly estimate. Multiply this by the average number of years you can expect to live past retirement age, and you’ve got a starting point. Now add some extra for longer life, medical emergencies and maybe some travel as well, and your number should be pretty accurate.

• A change of mind regarding distributing benefits
• A change in your property and assets
• Your receipt of an inheritance
• A change in tax laws and your decision about setting up a Trust or other accounts

There are two ways to change your Will. The first is to create what is known as a Codicil. This is basically an amendment to your Will and is attached to the original version.

You can have multiple Codicils attached to your Will and they can be used for a variety of purposes such as changing a beneficiary’s name, adding property and/or bequests and even deleting or amending language found in the original version.

The other option for changing your Will is to draft a new document that replaces the first. This is a good option if you have major changes to your Will or if you already have multiple Codicils and would like to simplify the document.

Of course, before you make any changes to your estate plan, you should consult with a qualified attorney. If you’d like to learn more about drafting or changing a Will, contact our office today.

Annuities work much like an insurance policy – you pay in your specified premiums and the annuity will guarantee you a specified amount later on.

With an insurance policy of course, you must first suffer some sort of loss, but with an annuity, the only trigger is your retirement. You pay money into your annuity now – be it a lump sum or through monthly payments – and then upon retirement, you receive a regular payment from the insurance company or other financial institution that holds your annuity.

You can opt to receive payments on an annual, quarterly or even monthly basis and you can also structure the annuity to continue paying your spouse after you’ve passed away. In addition, if you die before you’ve collected the specified amount from your annuity, you can structure it so that it pays a lump sum to your beneficiaries, once again taking on the qualities of a life insurance policy.

Annuities can either be fixed return or variable return and this distinction will affect how much money you receive. A fixed return ensures that you receive a set amount each month, regardless of how your investments perform in the marketplace. A variable return on the other hand, will adjust your amount according to the growth or decline of your investment. That means that if your investment goes up, so does your monthly payment, but it can also go down as well if the market takes a turn for the worse.

Of course, your retirement plan should include other investing tools such as a 401k or IRA. To learn more about planning for retirement and coordinating your retirement with your estate plan, contact our office today.

The reason for diversifying is simple: investing money means risk. But if you investment in several financial instruments, you essentially reduce that risk since the chances of one failing can be covered by benefits from the others. For example, if you put all your money in technology stocks and that sector of the financial market suffers a depression, then your losses would be very high.

However, if you have a mix of technology and infrastructure stocks, as well as others, the slump in the tech stocks could be covered by the infrastructure and other stocks. Asset allocation is all about wise selection of investment options.

In addition to fluctuations within a given field or specialty, risk can also vary depending upon the type of investing tool you’re using. Stock for example, are typically riskier than bonds, so having a balanced spread between the two can help lower your risk as well.

You’ll also want to look at mutual funds and money market accounts – both good investing options for investors who want to see growth but also need to minimize risk.

You’ll also want to ensure that some of your investments are liquid, meaning you can access their value relatively easily and without paying large penalties for early withdrawal. This gives you an emergency fund if you need it while still earning a reasonable return on your money.

Of course, there’s no way to explain everything you need to know about investing in one article. Instead, you should seek the help of a qualified financial planner before deciding on any investment strategy.

If you have established a living trust, you’ll likely be the trustee as well, and will designate someone to take over that role after your death. You’ll want to consider all the responsibilities of a trustee when choosing that person, and consider hiring a professional trustee if you do not know anyone capable of carrying out those responsibilities.

Proper assessment of the estate can make the difference between beneficiaries receiving the full amount left to them and getting less than fair market value of assets. Similarly, if the taxes and fees are not properly assessed and paid, there may be setbacks and more fees later on for those that have received a distribution. Also remember that depending on the year of death, you may need to file federal estate tax in addition to standard income taxes.

Some estates may have instructions that require other tasks, such as setting up multiple trust funds. In some cases, you may want to employ a professional with knowledge of trust administration or licensure in a particular area to help you carry out specific instructions. Your role as trust administrator may last nearly a lifetime, or may be complete within a couple weeks.

In the best case, you will select or be selected as the administrator of the trust during the estate planning process. This will ensure that both you and the trustor are clear on how details will be handled, and that you are confident in your ability to complete this role.

Unfortunately, this is not always the case and you may find yourself in over your head. Should you have questions or need assistance with trust administration, consult with a qualified estate planning attorney as soon as possible.

Tax Benefits

You can deduct the money you deposit into an IRA from your taxable income, thus reducing your tax burden. This tax shelter saves many investors a great deal each year, since this portion of their income is no longer taxable.

Another tax benefit to an IRA is that as the account matures, the money remains tax deferred. Your money will only be taxed when regular retirement distribution begins. You’ll never have to pay penalties or extra taxes, unless you take money out early. This tax sheltering applies to traditional IRAs. If you invest in a Roth IRA, you may be eligible for greater tax deductions.

Who Is Eligible?

Anyone who receives earned income and is under 70 can apply for an IRA. The only issue that arises is how much of your contribution is tax-deductible each year. If you or your spouse has other retirement accounts through work, your deductibility may be restricted in certain cases. Your tax deductibility may be phased out when you reach a certain modified adjusted gross income (MAGI): if you and your spouse make between $83,000 and $103,000 and file taxes jointly; if you are single and make between $52,000 and $62,000; or if you are married, filing separately, and make between $0 and $10,000. AGI (adjusted gross income) refers to your income after allowable deductions are made; MAGI refers to your total income after some of those deductions are added back on.

Is an IRA for you?

An IRA is a good option for you if you do not have other retirement plans through your employer, or if you want to supplement those plans. There is no such thing as over-planning for retirement.

There are two basic types of trusts: a Living Trust and a Testamentary Trust. A Living Trust is created during your lifetime and you can benefit from the assets held within the trust while you are alive. A Testamentary Trust on the other hand, is implemented after your death and only your beneficiaries will receive benefits from the assets. This type of trust is typically executed via instructions in your Will

The Three Roles

There are three different roles involved in most trust agreements. Depending upon the type of trust, these three roles may or may not be filled by the same person.

The first party to a trust is the trustor, also referred to as the donor or grantor. This is the person that creates the trust, i.e., you. As trustor, you are basically transferring title of certain assets to the trust to accomplish a specific set of goals.

It may be that you just want to help your heirs avoid probate and streamline the distribution process after you’re gone or perhaps you want to provide for a disabled dependent. There are actually a number of concerns a trust can address so choosing the right one for you is as important as funding it with your assets.

The second person involved is known as the trustee. This is the person that will manage the assets in the trust and in many cases, that role may initially fall to you. After you’re gone, your chosen successor trustee will step in and manage the assets on your behalf.

The last person is the beneficiary – this is the party or parties who will benefit from the assets in the trust. Again, you might be the primary beneficiary of your trust while you’re alive and then after you’ve passed on, your children would become the beneficiaries of the trust.

Revocable Trusts vs. Irrevocable Trusts

In addition to the distinction of living or testamentary, a trust can also be revocable or irrevocable. This simply indicates whether the trust can be changed or not.

A revocable trust for example, can be changed and/or revoked at any time by the trustor, without the approval of other beneficiaries. A Living Trust is a good example of this type of trust, allowing you to set aside assets for your heirs and help them avoid probate after you pass away.

An irrevocable trust on the other hand, cannot be changed by the trustor without approval of the beneficiaries. This type of trust drastically limits your control and access to the assets but in doing so, provides some extra protection from creditors and lawsuits.

Choosing the kind of trust you need requires some professional assistance. If you’d like to learn more about the different types of trusts and their benefits, contact our office today.