How to Finalize and Wind Up a Probate Estate in New Jersey (Part I)

By Fredrick P. Niemann, Esq. of Hanlon Niemann, a Freehold, NJ Probate Estate Administration Attorney and Law Firm

By statute and case law, the Executor under a Last Will is required to settle a decedent’s estate expeditiously and efficiently and to distribute estate assets to designated beneficiaries. After collecting and then itemizing estate assets and paying the decedent’s debts and death taxes, the Executor or Administrator should do what is necessary to close out the estate. In order to accomplish this goal, the Executor or Administrator must account to the estate beneficiaries when he or she proposes to be officially discharged from this position.

An estate can be closed in one of four fashions: (1) the funds can simply be distributed directly by the Executor or Administrator to estate beneficiaries; (2) the funds can be distributed to heir(s) after he or she signs a Release and Refunding Bond where each waives his or her right to a formal accounting; (3) distribution can be made after the beneficiaries each execute a Refunding Bond and Release following receipt of an informal accounting; or (4) an Order has been signed and filed by a Court following the filing of a Verified Complaint and Order to Show Cause for approval of the Executor’s (or Administrator’s) formal or informal accounting to the heirs.

An Executor or Administrator by law is able to make distributions of estate assets directly to the intended beneficiaries with little or no formality and little or no paperwork. However, this formality is not without risks. Typically, the estate representative (executor, administrator) will not be discharged by the Surrogate’s Court unless Refunding Bonds and Releases are signed and filed. If the Last Will or administrator’s appointment required a bond to be posted, the bond will continue to be imposed and the costs of discharging the bond will be the Executor’s personal responsibility. Although an Executor most often doesn’t have to be bonded, an Executor waives the protection of a Refunding Bond and Release by not having such a document signed by each beneficiary prior to distribution to him or her. Few attorneys will allow a client to close an estate without a signed release and refunding bond from each beneficiary.

It is not unusual for families with little r no conflict with a straightforward probate proceeding to execute a Refunding Bond and Release without requesting any accounting or information from the Executor or Administrator. By doing so, however, the beneficiaries of an estate are placing themselves at some degree of risk, especially if the executor was in fact dishonest. This is because the execution and filing of such bonds closes out the estate and discharges the Executor or Administrator from his/her position without further legal liability. I’ll discuss this subject further in my next post.

To discuss your NJ probate or estate administration matter, please contact Fredrick P. Niemann, Esq. toll-free at (855) 376-5291 or email him at fniemann@hnlawfirm.com/. Please ask us about our video conferencing consultations if you are unable to come to our office.

 

Posted in Probate.