Every estate administration is slightly different due to the terms of the decedent’s Will or Trust, the amount and composition of the decedent’s assets and the types of beneficiaries. However, each estate goes through the same 3 stages:
Probate. The first stage is when the Will is offered for probate at the local Surrogate’s Court. This is a simple process in which the executor presents the Will and then he/she is issued Letters Testamentary. This document gives the Executor the authority to carry out the decedent’s wishes as set forth in the Will. If there is no Will, an Administration is opened where the Administrator is issued Letters of Administration (after proper notice to all other potential Administrators and obtaining an Administration Bond). Letters Testamentary and Letters of Administration give the estate representative the power over the decedent’s assets and the ability to settle any liabilities.
Gather Assets; Pay Liabilities. The second stage is gathering together all the decedent’s assets, determining their value, paying any debts or liabilities (including taxes if any) and filing any necessary tax returns. Until the tax returns are filed and approved (or a waiver is completed because no taxes are due) New Jersey has a lien on your assets and they cannot be fully distributed.
Closing the Estate. Once the tax returns are approved, New Jersey will issue a Waiver, which releases its lien on the assets. The Executor then normally accounts to the beneficiaries what came into the estate, what went out, and what is left to distribute. This informal accounting is coupled within a “Release and Refunding Bond” where the beneficiaries agree to their distribution, waive any claim to be entitled to more, and release the Executor from liabilities. The accounting and “Release and Refunding Bonds” will act to close the Estate.
The Executor/Administrator has many responsibilities beyond these. Since most people are taking on the job of Executor/Administrator for the first time, it can be overwhelming. Many Executors/Administrators seek professional advice because their lack of experience in that role potentially opens them up to liability and claims from the beneficiaries or tax authorities.
The Executor/Administrator is entitled to retain an attorney to assist with his or her responsibilities. The Executor/Administrator is entitled to pay the attorney a reasonable fee from the assets of the estate as an administration expense.