Probate is often assumed to be a terrible process that must be avoided. It is not. It is a common misconception that the process of probating a Will is complicated and expensive. In fact, in New Jersey, and particularly in Bergen County, probate is relatively simple and inexpensive. In Bergen County an individual can probate a Will in the Surrogate's Court, with or without the assistance of a lawyer, in approximately half an hour. You need not make an appointment, just appear between 8:30 a.m. to 4:30 p.m. on any business day with certain information and documents, as described below, and the Surrogate's Court will work with you in completing the probate process. The cost is generally $100 to $200.

What is Probate

Probate is the process which permits the transfer of assets as directed in a Will by the decedent (the "testator") to the beneficiaries (recipients) under the Will. A Will can be probated by the Bergen County Surrogate if the testator resided in Bergen County at the time of his or her death or owned property in Bergen County at that time.

Assets Under a Will

What are Probate Assets and What are Not

Not all assets must go through probate to be transferred. Some assets pass automatically (by operation of law) to other persons (beneficiaries) without the need for probate. Whether or not a particular asset must go through probate to be transferred depends on how Ownership (title) to the asset is held.

If Title to an Asset is Held
in the Testator's Name Alone

Real estate and personal property, such as bank accounts, stocks and bonds, in the testator's name alone, and monies owed to the testator, are "probate property" which are transferred in accordance with the testator's Will. These assets cannot generally be transferred without going through the probate process. However, some brokerage firms provide beneficiary designation forms which may pass these accounts without probate.

If Title to an Asset is Held by the Testator
Jointly with a Right of Survivorship

Assets held by the testator and another jointly with a right of survivorship pass by operation of law at the testator's death to the surviving joint tenant. Bank accounts, securities and real estate are often held in joint tenancy. Probate is not needed. The name on the bank or securities account application and the deed for real estate may read: "John Smith and Jane Doe, as Joint Tenants with Right of Survivorship." Be careful changing title to existing assets because there can be tax and other consequences.

If an Asset Provides for a
Beneficiary Designation

"Beneficiary designation property" is generally non-probate property which passes in accordance with beneficiary designations assigned by the testator. Life insurance proceeds, 401(k) plans, IRA's, and employee death benefits (e.g., pension and profit-sharing death benefits) and accounts held POD (payable on death) are typical beneficiary designation property. Generally, the insurance company pension plan administrator or employer will have the beneficiary's name in their records, or a copy of a form signed by the owner of the property indicating the beneficiaries. Language in the policy or plan may also be important.

When to Probate the Will

A Will cannot be probated until ten (10) days following the death of the testator. However, you may begin the process with the Surrogate's Court within this ten (10) day period. If you do so, the Surrogate's Court simply will not admit the Will to probate until after the ten (10) days.

If you are appointed under the Will to manage the estate (to be the Executor) you must first probate the Will at the Bergen County Surrogate's Court. To do this you must bring the following with you to the Surrogate's Court: (1) the original Will (which should not be unstapled or tampered with); (2) a certified copy of the death certificate (which you obtain from the municipality in which the testator died); (3) the full names and latest addresses of the closest surviving family (next of kin) and anyone named in the Will; and (4) a check (drawn upon a New Jersey bank bearing a New Jersey address, or a certified check), or a money order for probate fees. You should not fill in the amount of the check until your meeting at Surrogate's Court.

In addition, if a Will is not "self-proving," then a person who signed the Will as a witness or a "bystander witness" (one who witnessed the testator and two witnesses signing the Will but did not sign the Will as a witness) must also come to the Surrogate's Court to authenticate the Will. A "self-proving" Will is one where the testator and two witnesses sign the Will in front of a Notary Public or New Jersey attorney and the Will contains special language provided in New Jersey law (self-proving affidavits). If a Will is "self-proving," there is no need for a witness to the signing (execution) of the Will to come to the Surrogate's Court to authenticate his or her signature because the Notary Public or New Jersey attorney, before whom the witness signed the Will, effectively attests to the authenticity of the witnesses' signatures. Most Wills signed (executed) on forms made after 1979 are "self-proving." If in doubt, ask the Probate Clerk at the Surrogate's Court or an attorney.

How Does the Process Work

When you arrive at the Surrogate's Court, you will be assigned a Probate Clerk by the receptionist. The Probate Clerk will review the original Will to insure that it has been properly drawn, signed and witnessed. If there are no problems with the Will or with the items you have brought, you will sign qualification papers to become the Executor, pay the fee, and be deemed "qualified." In legal parlance, a "Judgment of Probate" will then be issued.

The Probate Clerk will ask you how many Letters Testamentary (also known as Surrogate's Certificates, or "Letters") you will need. A Letter Testamentary is the formal document appointing the Executor. You will generally need a certified copy of it (with a raised seal) for each asset to be transferred from the testator to a beneficiary. Therefore, depending on the estate, you will need several Letters Testamentary, especially if the assets are being held by several banks, brokerage firms, pension plans and insurance companies. Letters Testamentary will also be needed to sell or transfer any real estate. The cost is $5.00 each. Many Executors find it easier to get extra Letters to avoid the need to purchase more at a later date. However, some financial institutions may require that the Letters Testamentary be issued within a certain period of time. You will receive the Letters Testamentary, together with a general information brochure regarding the New Jersey Transfer Inheritance Tax, and a copy of the court rule regarding the Notice of Probate of Will, from the Surrogate's Court in the mail about 7 business days later.

Once the Judgment for probate is signed and Letters Testamentary have been issued, the Will is deemed "probated." As described in the copy of the court ruling governing "Notice of Probate of Will" sent to the Executor with the Letters Testamentary, the law requires that the Executor notify all beneficiaries and next of kin that the Will has been probated, that a copy of the Will is available upon request and the name of the Executor. This must be done within sixty (60) days from the date the Will was probated. This should generally be done by certified mail, return receipt requested. Copies of each letter and the certified mail receipts proving that each person has received notice must be saved. The Executor must then file a "Proof of Mailing" of the "Notice of Probate" with the Surrogate's Court together with a fee of $5.00 for each page of the Notice of Probate of Will.

What Comes Next?

Following probate, the Executor may then begin the process of managing the decedent's financial affairs (administering the estate). It is the Executor's duty to collect the assets, (e.g., apply to insurance companies for proceeds if the estate is the beneficiary) manage them during administration (e.g., temporarily invest cash), keep records (copies of all bills, check register, statements, etc.), pay debts and expenses, compute and pay estate, income, inheritance and any other taxes, and distribute the estate assets to the person or persons entitled. If necessary, the Executor performs these duties with the help and advice of professionals such as an attorney and sometimes an accountant, investment counselor, and/or real estate consultant, etc. Also, the Executor generally coordinates and assists with the collection of non-probate assets (e.g., IRA, life insurance, etc.), for the beneficiaries and other successors in interest of those assets, especially when the non-probate assets affect the death taxes which the Executor is responsible for computing, reporting and paying. Simply because an asset is not part of the probate estate does not mean that it is not taxable. In effect, the Executor steps into the shoes of the testator in collecting, managing and distributing the testator's assets during the period of administration.

Potential Tax Liability

There are three distinct tax liabilities to which New Jersey decedent estates and beneficiaries may be subject. The Federal estate tax and the New Jersey estate tax are imposed upon the decedent's estate. The New Jersey inheritance tax is assessed against the beneficiaries who inherit. It must be noted, tax laws are complex and fluid, therefore I recommend the use of estate attorneys and accountants in the preparation of Wills, trusts, estate tax returns and estate planning.

Federal Estate Tax

In 2006 people with estates worth $2 million or more should consult with an attorney and/or accountant who specializes in estate taxes. Federal estate taxes only apply when a decedent's gross estate at the time of death exceeds $2 million. The law is actually much more complex than this simple statement indicates. If you gave away your house while alive, but retained the right to live there (a "life estate") the value of your house will be included in your estate. There are a host of other "rights" which most people would not consider to be assets, which the tax laws may consider part of your estate and subject to estate tax. Therefore, Executors of estates which appear to be below the $2 million limit are cautioned to at least consult with an estate attorney or tax accountant to determine if the estate they are administering is in fact subject to federal estate tax.

Because of this federal tax, as well as the legal and personal complexity which accompany most larger estates, every individual with (or couple with combined) net assets that might possibly exceed $2 million (including the net value of your house, life insurance, pension and all other assets) should consult with a New Jersey attorney or accountant who specializes in estate tax planning. A proper estate plan can cost between $1,000 and $3,000 and up, depending on complexity and the size of the estate. However, this fee can be very cost effective in offsetting estate tax. People in this asset category can face large estate tax liability which can be reduced by having a properly drawn Will, durable power of attorney with gift provisions, and other planning steps.

The $2 million figure is scheduled to remain the same in 2006, 2007, and 2008. In 2009 the exemption amount is scheduled to increase to $3.5 million. The tax is scheduled to be repealed in 2010, but re-instated in 2011 with perhaps only a $1 million exclusion. Because of the uncertainty of the law as it now stands, every Executor should consider having at least a consultation with a tax professional to ascertain the status of the law at the time of any decedent's death.

New Jersey Estate Tax

In 2002 New Jersey amended its estate tax pursuant to N.J.S.A. 54:38-1 et seq. The New Jersey estate tax is a complex statute that utilizes as an exemption threshold a decedent's federal estate tax liability as if the person died 12/31/01 when the Federal Estate Tax exemption was $675,000. If an estate's value exceeds $675,000 I recommend you consult with an attorney in order to assure compliance with New Jersey estate tax requirements.

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