By Fredrick P. Niemann, Esq. of Hanlon Niemann, a Freehold, NJ Probate Estate Administration Attorney and Law Firm
In our last post about finalizing an estate, I discussed several key obligations that New Jersey estate and probate laws place upon an executor or administrator. Let’s continue our discussion today.
I mentioned that you can legally close an estate without an accounting to beneficiaries but New Jersey probate laws clearly allow beneficiaries the right to an accounting regarding the affairs and transactions of the estate. This principle was affirmed in a NJ Superior Court decision which stated:
“It is elementary that the Executor is under a duty to account for the assets of the estate coming to his or her possession or knowledge; and if, through failure of his or her fiduciary duty, he or she is unable to do so, each is chargeable with their full value. It is a primary duty of one exercising such trust functions to gather in the assets of the estate; and in the discharge of this duty, to use only such care, skill, diligence, and caution as a man of ordinary prudence would practice in like matters of his own, it is also held to the utmost good faith.”
In fulfilling a fiduciary relationship, the estate representative is governed by the “prudent person” standard which in lay person’s terms means being “reasonably alert and responsible”. Where the fiduciary fails to fulfill his/her obligation, “the beneficiaries and others with an interest in the estate may file exception(s) with the probate court, challenge the account in respect of the sufficiency of the disbursements made, and the Executor may be personally surcharged with the economic consequences of his/her failure of duty.” The term “surcharged” means, simply “penalized dollar for dollar” for what they screwed up and cost the estate.
An accounting may be filed in an “informal” or “formal” manner. An informal accounting is a general summary of the assets obtained by the Executor/Administrator, as well as income received and spent by the estate, disbursements made by the estate, distributions made by the estate, and proposed final distributions. In many instances, an informal accounting will summarize classes of expenditures rather than make line-by-line itemizations. I will go over more about this subject 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.