What do I do if I have been named the executor of an estate?
If you’ve been named the executor of someone’s estate, it means that you were one of the most trusted individuals in the decedent’s life. This duty can be a way to honor them if you can follow it from the perspective of a labor of love. At the same time, if you are grieving the loss of a loved one, you probably do not want to be worrying about diving into hours of paperwork, nor sorting their finances out like a puzzle. Usually, the executor of an estate has time to discuss the fine details with their loved ones before they pass. But if you feel lost, we can provide you with legal guidance and resources during your time of need.
While the big picture may feel heavy to look at, with the counsel by your side, you can have a smoother journey through this rigorous process. There are also a few steps you can take to feel more confident in your duties. First, you’ll need to thoroughly understand exactly what your role is, and what your loved one entrusted you to accomplish.
The dependable New Jersey estate planning attorneys at Van Dyck Law have decades of experience and can help you through managing your loved one’s wishes. Whether you need help executing an estate plan or are grappling with a lack of clear guidance, we are here to assist you as the estate’s administrator.
What Exactly Is an Executor of an Estate?
The executor of an estate is, simply put, the person entrusted to manage their loved one’s estate following their passing. They are responsible for handling the estate through probate (as applicable) and also ensuring that the last wishes the decedent had for asset distribution are carried out.
In New Jersey, the executor may also be referred to as the estate administrator, or the Personal Representative appointed to manage the administration of the estate. Typically, most of a person’s assets (and liabilities too) will be transferred to their estate, and it is the responsibility of the executor to settle any pending or incomplete debts. However, in some cases, you may have much of the estate transferred into a trust prior to the decedent’s death, whereupon the trustee assumes the role of administering that part of the decedent’s legacy.
The executor of an estate is recorded in the applicable will. However, if no will was ever created, or the decedent otherwise neglected to name an administrator, a close family member can apply with the court to be appointed.
The estate administrator is in charge of keeping all assets until they can be properly distributed to whomever the beneficiary is according to the will. They have a fiduciary duty to act in the best interests of the estate as a whole, rather than their own. It is required that the assets of the executor and their loved one remain separate, so they must organize these assets in an account created for the estate.
An executor of an estate is also responsible for paying all creditor claims as well as estate administration costs, the latter of which will be paid out of the value of the estate. They may also be reimbursed for any reasonable out-of-pocket fees (including legal costs), and are first to be paid by the estate before any beneficiaries, once creditor claims have been resolved.
What Are Some of the First Steps as an Estate Administrator in New Jersey?
Gaining control of somebody else’s entire life of assets and belongings can make you feel overwhelmed with endless tasks. What you really need is to focus on, though, is the order in which to complete everything.
The best thing to remember is that not everything has to be done today; you have time to organize your thoughts and start tackling your responsibilities one step at a time.
The first thing you’re going to want to do is to find the original will. This can actually turn out to be one of the most complicated tasks for some families. If this is unattainable, that’s okay too. Sometimes there will be a copy laying around, or you can ask your loved one’s lawyer if they retained one to put together their estate plans. From a copy, you can often create a valid ‘original’.
In New Jersey, the probate process begins automatically, regardless of if the person had a valid will or not. The probate process varies by state, and sometimes by the municipality. It is essentially the legal process where the county Surrogate Court resolves all claims on the estate then distributes the necessary documents to complete the deceased’s final wishes, as represented in their last will and testament.
You’ll also need to obtain a tax ID for your loved one’s estate, considering their social security number can no longer be used. After you have this, you can open a bank account in the name of the estate to keep their assets separate from your own.
Another important first step is to take inventory of your loved one’s personal belongings. One of the most common disruptions to the distribution of an estate involves family or friends feeling as though they should be able to take what they believe the deceased would have wished for them to have. Even if you agree, it is important to document everything that will be transferred from the deceased to a beneficiary, even if it is just sentimental knick-knacks. All of these assets must remain in the estate until it has been cleared by probate for distribution.
How Should I Handle the Decedent’s Last Year of Taxes?
One of the most daunting responsibilities of an executor is to accurately complete the decedent’s taxes for their final calendar year. Not only must you complete federal and state income taxes, but the executor must also determine if the deceased owes any Inheritance Tax or Estate Tax.
Fortunately, you will only ever owe one or the other. “You will never pay more than the higher of the two taxes,” according to the New Jersey Executor Tax Guide.
One of the benefits of completing federal taxes within an estate is that, unlike a trust, you have the option of filing with a calendar year or fiscal year. A fiscal year is a twelve-month period that ends on the last day of any month that is not December. An attorney can give you more information about the most strategic decisions to make when it comes to this process.
Managing Creditor Claims and Contests
The administrator of an estate in New Jersey is also responsible for managing claims on an estate. Most often, these claims come from creditors to whom the decedent owed a debt. The administrator must use the value of the estate to pay these claims, in order of priority of debt.
Further, in some cases, the administrator must handle other claims or challenges to the will, including those that allege the will being entered into probate is invalid. In these cases, the administrator has a fiduciary duty to make a good-faith effort to determine the most valid and most recent copy of the will and to defend against claims they feel go against the intentions of the decedent.
Find a Knowledgeable New Jersey Estate Planning Attorney to Help Guide You
You’ve just been given a lot of information. Fortunately, this is not the end of the road. Now that you have a better understanding of what your responsibilities are as the executor of a loved one’s estate, now you can reach for resources and legal assistance.
The attorneys at Van Dyck Law Group have decades of experience guiding executors through their loved one’s estate plans, and we are ready to help you too. Schedule a no-obligation consultation with an attorney by calling (609) 293-2562, or you can contact us online!