Executor Duties & Timeline in New Jersey

Welcome to Straight Forward Estate Planning with Pedrani Law. Hey everyone, welcome into an on your episode of Straight Forward Estate Planning with Pedrani Law. I am your host, Mike Leon. I'm here with Attorney Keith Pedrani, the founder of Pedrani Law LLC, and Keith's been helping families all across New York and New Jersey create clear, practical estate plans and navigate probate with confidence. Today, we're going to be talking about what an executor is responsible for and how the probate timeline typically unfolds in New York and New Jersey. Keith, it's good to see you. Happy New Year to you and yours. Let me ask you first. What does being named an executor, what does it actually mean in practical day-to-day terms for someone? Happy New Year to you too, Mike, and thank you for having me. In terms of being named an executor, the best way to think about it is that you're going to be the project manager for that person's estate. If you accept the role, you're going to see it through from start to finish. You'll be responsible for making all distributions. You'll be responsible for documentation, asset preservation, answering to the heirs, and really acting as a representative for the estate with financial institutions, with the government with accountants, lawyers, any other professionals you might deal with in your duties of administering the estate, really, it all does fall on you, so when you're considering whether or not to accept your role as an executor or executor, personal representative, however, it's phrased. You do want to, don't kid yourself, it is a big responsibility. Keith, what usually happens at that very beginning stage, someone just passed away, no assets have been gathered, no accounts have been touched. What kind of usually happens in that very beginning phase? The tendency is for people to panic a little bit and think that you have to do everything at once, which you don't. In fact, in New Jersey, you actually have to wait 10 days after the person passes away before you can even probate the will. There is a little bit of a buffer built in right off the bat. What you don't want to do, I'll start there, what you don't want to do is start giving out material assets or property or anything like that. You might have some relatives or people coming up to you saying, John really wanted me to have his card collection and we talked about it very often and I'd like to swing by the house later and get that or things like that. They could be innocent, they could end up being accurate, but right away, none of that can happen. Nothing can really start to happen until you're issued those letters, testamentary from the surrogates court. You can take some common sense steps to protect assets, usually in most cases, the biggest asset is the home. If there's other properties too, you can take the same steps there but basically make sure they're secure, make sure the mortgages are being paid, make sure the taxes are being paid, make sure the utilities aren't getting shut off or anything like that. If there's no one, now living in those homes or other properties, make sure they're locked, they're secured that somebody's at least doing a drive by on them during the period and before they're going to be distributed. You can take those steps to secure the assets and you should but don't start distributing anything, don't start making any promises and really your first priority should be to secure and then to find the original will hopefully that's easy enough and start figuring out where things are. So Keith, once the estate is open with the surrogates court, what are some early tasks that tend to make the most coordination or require organization? So the first thing you typically have to do, I'll assume for the purposes of this episode that the person who passed away had a will, a valid will, you're able to locate the original will. So we're going to assume no issues there. They passed away in test state, it's kind of a different ballgame if you can't locate the original will and you definitely know there was one that's a different set of facts for a different episode. So for this episode, we'll just assume that you have a valid will. You're going to go to the county surrogate where the decident passed away. So let's assume they passed away in Mergen County for this episode so you would go to Hackensack, you would file the, you would give them the will and you will get a questionnaire that you have to submit along with that. After you submit the questionnaire and the will, you will have to notice the errors and next of kin and this is not, this notification is not limited to those who are actually named in the will. It is expanded to those who would have inherited had there been no will. So this step often creates some confusion because you're notifying people who may not be named in the will. And if they've never been through that process before, it can create some understandable confusion. Why am I being notified if I didn't inherit anything. They need to be and the purpose for that is to essentially, number one, inform them that the person passed away, number two, inform them that a will has been submitted to probate. And within that time, they can file a caveat with the surrogate's court and later on, if they let the time pass, they would have to file a complaint with the superior court in New Jersey if they have an issue with it. But early on, that does create a bit of confusion that you have to notify and then you also have to submit a proof of mailing to the surrogate's court. So that early on does create some coordination challenges and you do have to be on top of that. Later on, the rest of it, that's really in every case, you're going to have to notice the years and everything like that. Later on, it gets a little bit more fact specific if there's going to be an inheritance tax, which New Jersey doesn't have in a state tax, but they do have an inheritance tax. And that is defined by the relationship of the person inheriting to the decident. So you have class A, B, C, and D, and E beneficiaries. If you are a class A beneficiary, that's, you know, father to son, you're not going to pay an inheritance tax. If you're outside of the immediate family, like a niece or a relative that's further removed, tax does come into play. The state of New Jersey does place a lien immediately on assets, and it's on you as the executor to prove that either the taxes are paid or the taxes aren't applicable before the state will issue a lien waiver to allow you to then distribute the assets. Speaking of assets, let's go into the real estate part of this because I know that could potentially add an extra layer. How does kind of the managing, the maintaining, selling a home potentially? How does that fit into the executor's responsibilities? Like we said, Mike, it's usually the largest asset, and, you know, in proportion to where you're spending your time, it's probably going to be the one that you're looking at. You're spending the most time preserving. And it's definitely going to be the one that's the most, I'll say, difficult, but really it's more time consuming the process to get rid of the house. So we'll assume that for the purposes of this episode, the house is going to be sold, and that the will is placed no restrictions on it, or the will has actually specified that the house should be sold. There are other situations, of course, where a life estate might be left to a part, or the house might be left to someone who's going to keep the property, but in this event, let's just assume it's going to be sold. So the first thing that you have to do goes back to what I had said, you know, immediately after death. You're the physical property. You know, make sure that everything is on, make sure that there's no damage that's occurring because you, as the executor, you are responsible for not letting the asset degrade. So let's assume that that's all done. You should be in contact with the, if there is a mortgage company, you should be in contact with the lender to work out what you can work out, or just to make sure that the mortgage is continuing to be paid, hopefully out of the state funds, if there's liquidity, you have to loan money to the estate, and that's a different, you know, that gets into a little bit more complicated territory, but that can be done as well. You want to make sure that the property taxes are paid, that way a lien does not accrue on the property. You want to make sure that the insurance, the homeowner's insurance policy is either continued with an endorsement or transferred into the estate instead of the person who's passed away, avoid any issues with potential claims, typically, you know, the banks and insurance companies deal with this every day, they usually have a process. You may not like the process, but, you know, it can be time-consuming in and of itself, but you have to deal with it. There's really no way around it. So once that's all taken care of, and we're in a position where, all right, the utilities are on, the property tax are being paid, mortgage is taken care of, the insurance company is aware and recovered. After that, again, assuming a sale, you're going to want to bring in an appraiser. So the appraiser is going to value the property, and as the executor, that's going to take that responsibility off of you, and you're going to have a professional report to point to, and if any of the beneficiaries don't agree with the appraisal, they can go out and get their own appraisal. I don't recommend that, you know, there's some situations where that's warranted, others where it's really just a waste of money, and, you know, between one appraisal, and if you're selling the property, what the sale price ends up being, it's kind of hard to dispute later on that the sale, you know, wasn't for fair market value. But once it comes to selling the home, it's really as if, you know, you were I were selling our home, it's going to be sold by the estate. So the executor is going to be signing over the deed, not in their personal capacity, but in their capacity as the executor for the estate of John Smith. That's how they'll deed over the property to the eventual buyer. The house cannot be sold until after the lien from the state of New Jersey is removed. So, you know, you're looking at, if you have just all class A beneficiaries, you're looking at likely just an L9 needing to be filed to get that cleared for sale. If there is, if there are beneficiaries that do have to pay the inheritance tax, then you're looking at a full tax waiver, and that can take a while. But once that's issued, then the house can be sold. You're likely going to, you know, again, if there's a mortgage, you would pay off the mortgage with the sale of the house. If there had been any tax liens accruing or any other debts that were secured by the property would be paid or should be paid at closing. And then after that, the proceeds would be distributed according to the will. So it would come into, you know, by that time, you should have a bank account opened in the name of the estate in order to open the bank account. You have to get a tax identification in EIN, which you can get directly from the IRS website. It's a fairly straightforward process. You have a separate tax ID, separate bank account, and that way when you sell the house, all the proceeds go into the estate bank account. Those funds are like any other funds that are in the estate. You have to pay out any just debts, pay out any creditors, and then you distribute from that account. Do families, when they come to you, do they underestimate how long the process can take and what other factors can potentially influence the timeline from the beginning to the end of it? Sure. So I think people fall into one of two camps and that's, you know, they've been through it before themselves, either, you know, kind of once removed and watching a family member go through it and kind of understand that it's a complicated process, or, you know, number two, they're ignorant of it and they think it moves a lot faster than it actually does. So the really, in New Jersey, it's not as long as you would think, but it's also not instantaneous. It's good to think in terms of a year, I would say that that's a good baseline to start with and what can complicate that is, you know, complexity, creditors, and conflict. So complexity would be, you know, either your larger states, or just, you know, estates that can be a modest size that just have a lot of moving parts to them, a lot of different instructions, a lot of different specific requests. Maybe there's a charitable contribution in there, which adds another layer. So you want to think in terms of a year, because once you send out that notice, that notice the next of the can we referenced earlier, if the, the people being notified are in New Jersey, they have four months to make their complaint, if they're outside, or file a caveat, or make the complaint. If they're outside in New Jersey, they have six months. So right there, you have a, you know, ten day, let's say, and you move as fast as possible. After ten days, you probate the will, then you get out, the notice is, you know, that's four to six months where somebody can bring a, bring a challenge, try to, you know, say, oh no, no, there's a, there's a will that was signed after that, or whatever it may be. Creditors typically have nine months to make a claim. So, you know, that's another factor to consider. You can make distributions before that nine month period is up, utilizing, you know, what they call release and refunding bonds, which essentially means you make the distribution to the beneficiary, but they have to sign a legal document stating that, you know, they understand that if a creditor of the estate comes back after the distribution is made, they agreed to pay back what they were distributed out. So the money comes with the string of, hey, if a creditor claim comes after we pay you out, you have to give that money back to the estate, they're not on the hook for anything above what they've been paid, just that money, and typically it's combined with a release for the executor to just say that the beneficiary is acknowledging this is the proper distribution and they're not owed anything else under the will. So, you know, with the, those two kind of deadlines, the fact that you might, you're dealing with financial institutions trying to get accounts moved, which financial institutions and the government, it's pretty close on who's more difficult to deal with. I, you know, I've had Vanguard hold up in a state longer than the state of New Jersey, you know, just being very obstinate and difficult, and really their goal is to just hang on to the money as long as they can every day that they hold it, they make more money on it. And of course, there are boxes that they have to check, there aren't things that they have to be careful of, but that that is also, it's hard to dispute, that the delay is certainly in their favor. So, you're dealing, and you have to also keep in mind, and I'm not trivializing it, the death is very personal to you, people die every day, this is just another day at the office for the bank, for the surrogates court, for any other government institution you're dealing with, it's, you know, taking number, getting in line in many cases, and that can be difficult for people to understand. Yeah. No, it's great advice for sure, Keith, I can't take you enough for the time, the insights in explaining all this to the audience. Appreciate it as always. All right. Thanks, Mike. And thank you to everyone out there for listening to this installment of Straight Forward, A State Planning with Padrani Law. If you want to learn more about Keith's work, you want to schedule a consultation with the team, do me a favor, visit Padrani law.com. Thank you for listening, but before you go, do me a favor, hit like, subscribe, leave a review in comment or share the episode with someone who needs to hear it. I am Mike Leon. We'll see everybody next time. Thanks for watching. Be sure to hit that like and subscribe button and leave us a review in the comments.