Notice of probate from a litigator’s perspective

Many of the estate administrations we handle come to us midstream.  Many people, when they learn they’re named as executor in a Will, begin the probate process without counsel;  I have a lot of respect for people who try to minimize the costs to the Estate by doing the work themselves, and maybe even more for those who know when they’ve done all they can do and need the assistance of a lawyer.

Now, it’s almost always the case that an unrepresented personal representative won’t have done things quite as we would have, and probably the most common oversight is the notice of probate.  In New Jersey, Rule 4:80-6 requires that a personal representative send all beneficiaries and other parties in interest (spouse, heirs, next of kin) written notice that the Will was probated, including the date and place of probate, and stating that a copy of the Will will be provided to them upon request.  Proof of mailing has to be provided to the Surrogate within ten days after the notice is sent.

More often than not, when I ask a new client who’s serving as personal representative about the notice of probate, the client explains that all the beneficiaries know about the Will already.  From a practical point of view, this makes excellent sense;  why send formal notice to someone of a fact they already know?  From my point of view as an estate litigator, this misses one of the primary functions of the notice of probate.  The case In the Matter of Fanny Green, Deceased is one of the things I’m thinking of when we prepare a notice of probate.

Notice of probate protects the Estate and the personal representative from later Estate litigation.  Until the notice of probate requirements are met, we cannot have confidence that the probate won’t be challenged down the road.  The Fanny Green case makes clear that, even when a beneficiary or party in interest has actual knowledge of the probate, the personal representative is not relieved of their responsibility to give notice of probate, and a Will challenge can be brought long after it would ordinarily be barred.  Notice of probate isn’t merely a nice thing to do;  it’s an important part of the personal representative’s duty, and it’s a perilous thing to ignore.

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Sidenote:  as common as it is for the notice of probate to be overlooked, it is even more common for the proof of mailing requirement to be forgotten.  Happily, the case law makes it fairly unlikely that the mere failure to file the proof of mailing will leave the Estate vulnerable.  Which is not to say it should be ignored.

New Jersey Ancillary Administration: Part 2 – Ancillary Probate

In the majority of cases that come into my office, actual ancillary probate is not necessary.  If the decedent died with a Will in an another state owning property in New Jersey, most of the time it’s real property – that is, real estate – and as I discussed earlier there’s no need to go through ancillary probate in such cases.

To my knowledge, there are no reported cases directly concerning ancillary probate;  I assume that this reflects both how relatively uncommon it is and also how relatively straight-forward.   The procedure is of course available and might be desirable in some instances even when only real property is in New Jersey.  (If, for instance, the decedent owned real property in several counties in New Jersey, recording the Will in each county may be more trouble than simply probating the Will in one.)  The governing rule is N.J.S.A. 3B:3-26, which says simply:

When the will of any individual not resident in this State at his death shall have been admitted to probate in any state of the United States or other jurisdiction or country, the surrogate’s court of any county may admit it to probate for any purpose and issue letters thereon, provided the will is valid under the laws of this State.

The application, then, is made to Surrogate;  narrowly speaking, the Superior Court has jurisdiction as well and the application could begin there, but unless the Estate is contested in the jurisdiction of domicile there is no reason I can think of to begin in the Superior Court.  In practice, the personal representative produces an exemplified copy of the Will and proof of the out-of-state probate.  The exemplified copy of the Will must be produced for obvious reasons, and the record of the out-of-state probate must be produced because you can’t have ancillary probate in New Jersey if you don’t have original probate somewhere else.   In most other respects, the procedure essentially follows ordinary probate in New Jersey.

I feel obliged to give my tax warning whenever I’m talking about an out-of-state Estate.  New Jersey’s inheritance tax, if due, must be paid within 8 months of the decedent’s death.  In addition, the personal representative should be aware that New Jersey’s Estimated Gross Income Tax requirements can be onerous.

Dying without a Will: the most surprising intestacy law in Pennsylvania and New Jersey

My office is nearly on the border between Pennsylvania and New Jersey, and I recently posted about what I consider the most significant difference between the intestacy rules in the two states. The intestacy law most likely to surprise a client is another matter.

What happens if I die without a Will? When I’m asked that question, there’s one group of people who will almost always call for appointment the following day. Married couples, or domestic partners in New Jersey, with no children and living parents, are very often shocked to discover that the parents will inherit if one of them dies without a Will.

Pennsylvania nearly divides the Estate equally between the surviving spouse and the parent or parents of the decedent. The spouse receives the first $30,000.00 plus one-half of the balance of the Estate, and the rest passes to the parents. If most of the couple’s worth ends up in the Estate of the deceased spouse, the survivor may be left with a considerable financial hardship.

New Jersey is more measured but does not exclude the parents entirely. The surviving spouse or domestic partner receives the first 25% (subject to certain minimum and maximum amounts) and then 75% of the balance of the Estate. So, for instance, if the total Estate assets are $250,000.00, the surviving spouse or domestic partner receives $62,500 as the first 25%, and then $140,625.00 as 75% of the balance. The parents of the decedent receive the remaining $46,875.00

Measured just by the reaction of my clients, neither scheme is what most couples intend. And when the newly motivated couple does come in to have a Will prepared, it’s quite uncommon for them to leave any part of their Estate to their parents.

Dying without a Will: the most significant difference between Pennsylvania and New Jersey

In mind of the fact that estate planning is a significant part of my firm’s practice, it’s surprising how often I’m asked: what happens if I die without a Will?

We are a few miles from the Delaware river separating New Jersey and Pennsylvania, and of course the answer to the question depends on which side of the river you happen to live on. I think it’s fair to say that the rules of intestate succession represent each State’s best guess as to what most people would want if they had left a Will. Pennsylvania and New Jersey guess differently, and one area seems especially critical in my practice.

While there really is no “typical” family as far as I can tell, I am thinking about the married couple who have children together and no children by anyone except their spouse. If one spouse dies, and leaves no Will, what happens?

In New Jersey, the surviving spouse (or domestic partner) inherits 100% of the Estate. The children receive nothing. In Pennsylvania, the surviving spouse receives the first $30,000.00 and 50% of the balance of the Estate, and the remainder goes to the children.

In mind of the fact that younger couples are even less likely than older ones to make a Will, this distinction can have a dramatic impact on the lives of the survivors.

New Jersey Ancillary Administration: Part 1 – Avoid Ancillary Administration by Recording the Will

When handling a decedent’s Estate, one common and sometimes thorny problem is property owned by decedent in another state. Often, the only option is to conduct what is called ancillary administration in the second state, which generally is the equivalent of a second complete administration in that state.

In New Jersey, ancillary administration can often be avoided through the simpler process of recording the decedent’s Will. An executor or administrator of an out-of-state decedent’s Estate can avoid ancillary probate by recording the Will when:

• The only property in New Jersey that’s affected is real estate.
• The decedent left a Will, and the Will has been admitted to probate in another state.
• The Will probated out-of-state meets the requirements for a valid Will in New Jersey.

Figuring out the best approach in any particular Estate is pretty fact-sensitive; the legislative scheme is a garden of forking paths and there are alternative approaches if any of the items I’ve listed here aren’t satisfied. In broad stroke, though, these are the requirements, and they’re often easily met. Once a Will has been properly filed, the New Jersey real estate can be transferred or sold as easily as if a full administration had been undertaken.

It’s worth noting that, when I’m contacted about handling ancillary administration in New Jersey, more often than not the only Estate property in New Jersey is real estate. (Sidenote: the whole question of ancillary administration for the handling of real property can be avoided in life through estate planning, and it may be advisable to do address the problem presented out-of-state property in the estate planning process.)

The two conditions that must be met — that there’s an out-of-state probate and that the Will would be valid in New Jersey — are rarely a stumbling block. I don’t think I’ve ever encountered an Estate where the decedent managed to completely avoid probate in their home state but left Estate property in New Jersey. The question of what constitutes a valid Will in New Jersey is something I’ll be writing about soon, there’s been some interesting cases recently, but the short answer is that, if a Will is valid anywhere, it’s likely valid in New Jersey.

The mechanics of recording a Will are considerably simpler than a full ancillary administration, and can be handled entirely in the Surrogate’s office without application to the court in most instances.

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Last word is a couple of a tax warnings. First, New Jersey will impose an inheritance tax of up to nearly 16% on the value of the property if the proceeds pass to (almost) anyone other than a spouse, parent, or child of the decedent, and that tax must be paid within 8 months of the decedent’s death. In addition, on the sale of the real estate, New Jersey will require the payment of an Estimated Gross Income Tax at closing; the amount is calculated by formula but in any event is no less than 2% of the gross sale price. This probably merits its own discussion another day.

Avoiding Administration of Small Estates

Except where a married couple has had careful estate planning, more often than not the death of the first spouse creates an unexpected estate administration problem. It’s very common for nearly all of the couple’s assets to be held jointly and transfer to the surviving spouse, but there is almost always one or two assets that are in the name of the decedent alone. The most common problem asset I encounter is the decedent’s automobile; most people title their vehicles in one name alone, and the surviving spouse may think that he or she must go through a full estate administration to obtain clear title to the decedent’s vehicle, even if no other Estate assets exist.

Prudently, New Jersey has made special provision for small intestate Estates, in N.J.S.A. 3B:10-3 and -4. Under these statutes, when the total value of an intestate Estate will not exceed $20,000.00, the surviving spouse may sign an affidavit and obtain all of the powers of a personal representative. The affidavit, which will be prepared by the Surrogate’s office, simply states the residence of the decedent and the natural of the decedent’s assets.

If there is no surviving spouse, surviving heirs may proceed similarly by affidavit, except that the estate cannot exceed $5,000.00.

Clearly, these rules are inapplicable to higher asset decedents and to couples who have done careful estate planning. But for a surviving spouse left with only a used car in the decedent’s name alone, the rules thoughtfully allow the cost of full Estate administration to be avoided.