LEGAL QUESTIONS AND ANSWERS

Q: What is a will? 

A: A will is a written document which, after your death, directs how your individually owned property will be distributed, who will be in charge of your property until it is distributed and who will take care of your minor children if the other parent should die. You should remember that the term "property" under the law includes real estate as well as all other possessions and rights to receive money or items of value. Most property can be owned either individually or jointly with another person.

Q: Do I need a will?

A: Yes. You do not have to be wealthy or near death to do some serious thinking about your will. As a matter of fact, the less property you own the more important each dollar becomes and the more you need a will. Property which is jointly owned with another with the right of survivorship and insurance payable to a named beneficiary are not subject to the provisions of your will but almost everybody has property which will be subject to the provisions of a will. The jointly owned property will be governed by the terms of your will if the co-owner should predecease you. (Even jointly owned property must be dealt with in preparing death tax returns.)

Q: What if I die without a will?

A: If you die without a will, your property shall be distributed according to New Jersey statutes. The procedure is complicated – and the law makes no exceptions for persons in unusual need or for your own wishes.

Here is the way your property will be divided if you die without a will. A major change in State Law, effective September 1, 1978, provides that your spouse will receive the first $50,000 plus one-half of the balance of your individually owned property if you are survived only by your spouse and descendants born of your marriage to such spouse or by your spouse and a parent. If there is a descendant of a prior marriage, your present spouse will receive one-half of your individually owned property. Any share not passing to your spouse, or your entire estate if you are not survived by a spouse, will be divided among children, or descendants of deceased children, if any, or will pass to your parents, grandparents, or their descendants. In addition, your spouse may retain a lifetime right to one half of the income from any interest in real estate you owned, if the real estate was acquired before May 18, 1980. Your spouse will receive your entire estate if you die leaving no descendants or parents. Your spouse will probably be appointed as the administrator of your estate. If you have no spouse, there may have to be an agreement among your nearest relatives as to who will be the administrator. A bond will have to be purchased to insure that the estate is properly administered. Another bond will be obtained if you have minor children. Your will can name the person who will administer your estate and can provide that no bond be posted.

You can avoid the rigid provisions of the law – and distribute your property according to your own wishes – by having a will.

Q: Can I keep my husband or wife from getting my property?

A: Under a recently enacted law, your spouse is entitled to a share of your estate. This is called the elective share provision. If you’re thinking of limiting the provision for your surviving spouse, you should check with an attorney.

Q: May I change my will?

A: Yes. A will may be modified, added to, or entirely changed at any time before your death provided you are mentally and physically competent and desire to change your will. You should consider revising your will whenever there are changes in the size or circumstances of your family or the size of your estate. For example, when your children are young, you may think it best to have a trust for them so that do not come into absolute ownership until they are mature (for example, 25 years of age) but when they grow older and you have had a chance to observe them you might think that they should have absolute ownership earlier or later.

Q: What is a "self-proving" will?

A: In 1978 New Jersey Law was amended to permit a "self-proving" will. A self-proving will is one whereby a notary acknowledges the signatures of the attesting witnesses. This procedure allows the will to be probated without testimony from a witness to the will. If a will is not self-proving, a witness to the will must appear before the Surrogate. If both witnesses are deceased or unavailable, then someone must appear in Superior Court to provide the signature of the witnesses as well as someone to prove the signature of the decedent, otherwise the will may not be permitted to probate, thereby causing an intestacy.

Q: Can I probate a copy of a will if the original cannot be located?

A: An application to probate a copy of a lost will can only be made in the Superior Court.

Q: Can a will save money?

A: Yes. Your estate will be subject to administration whether or not you have a will and in most cases a will reduces the cost by eliminating the requirement of a bond. With a well drawn, will you may also reduce death taxes and other expenses. You may be surprised by the amount of taxes which can be saved by a carefully considered estate plan.

Q: How do I make a will?

A: A will must not only be prepared within the legal technicalities prescribed by law, but should also be prepared so that it leaves no question regarding your intention. Many times even a simple will drawn by a layman raises questions of interpretation which must be resolved by expensive court proceedings. For these reasons, drafting a will requires the professional learning, skill and experience which only a practicing attorney can provide. Your attorney might also be able to suggest ways of reducing death taxes which would more than pay for his/her fee.

Q: What is probate?

A: Probate is the process whereby a will is proved to be valid by a Surrogate, who has the authority to determine the authenticity of such a documents. It also involves appointing an individual to administer an estate when someone dies without a will. Application is made to the Surrogate of the county where the decedent resided at the time of death. Certain qualification forms would need to be signed by the personal representative of the estate. No probate can be completed until the day following the tenth day after death. If there is no will, the administrator of the estate must post a bond that represents the full value of the estate and file renunciations from any individual that has a prior or equal right to be appointed. A properly drafted will will waive the requirement of a bond.

The Surrogate, as part of the probate process, will issue letters and certificates evidencing the appointment of the individual to the estate which will allow them to access and transfer assets such as bank accounts, stocks, bonds, etc. Once probate is complete, the personal representation of the estate has sixty days to notify the heirs at law, next of kin and beneficiaries that application was made for probate.

Q: Does jointly owned property pass through probate when one owner dies?

A: It depends on the form of joint ownership. Real estate owned by husband and wife as "tenants by the entirety" becomes the sole property of the survivor immediately upon death and the property is not subject to the probate process. If two or more persons other than husband and wife own property as "joint tenants with rights of survivorship" the property will similarly pass to the survivor outside of probate. An interest in real estate owned as "tenants in common" passes to the heirs of the deceased person through the probate process, according to the terms of the will or if no will then by the laws of intestacy.

Q: Am I entitled to compensation for acting as an executor of an estate?

A: Yes. Executors and administrators are entitled to "corpus" commissions of 5% of the first $200,000 of estate assets, 3½% on the excess over $200,000 up to $1,000,000 and 2% on such other percentage as the court may determine on the excess over $1,000,000. If there is more than one executor or administrator, an additional 1% corpus commission may be allowed by the Court for each additional executor or administrator. In addition to corpus commissions, an executor or administrator is entitled to income commissions of 6% of income earned on estate corpus during the administration of the estate.

Q: What is New Jersey Inheritance Tax?

A: N.J. Inheritance Tax is a tax on the right to receive an inheritance or property at the time of someone’s death and is determined by the relationship of the beneficiary to the decedent. There is no tax imposed on a transfer to a spouse, child, adopted child, step-children, grandchildren, parent or grandparent. On a transfer to a brother or sister of the decedent, a wife or widow of a son of the decedent or husband of widower of a daughter of the decedent the first $25,000 is exempt. Any amount over that up to $1,100,000 is taxed at 11%. Any other beneficiary (other than those entirely except such as charities or educational institutions) will be taxed after the first $499 at the rate of $15% up to $700,000 and 16% on anything over that amount. [Depending on the size of the estate, Federal Estate Tax may also apply. It is suggested that you seek the guidance of an attorney or accountant to address those concerns.]

Q: How soon must state inheritance taxes be paid?

A: N.J. Inheritance Tax returns must be filed and the tax paid within eight months after the date of death to avoid interest.

Q: Are unpaid inheritance taxes a lien on property?

A: Yes. To sell real estate you will need to obtain "tax waivers" from the New Jersey Inheritance Tax Bureau. The waiver is filed with the County Clerk in the county where the property is located. Land held by husband and wife as tenants by the entirety need not be reported and may be transferred without a waiver. Other property, such as bank accounts and certificates of deposit may be subject to a lien for unpaid taxes and will not be released until the appropriate waivers are received.

Q: Can I contest the validity of a will?

A: A will can be contested if it does not comply with the statutes which set the legal requirement for a valid will or if the person making the will did not have the requisite "mental capacity" or was subject to "undue influence" when the will was signed. If you believe that there may be grounds to contest a will, you should immediately contact an attorney to investigate the circumstances. There are strict time limitations on contesting a will.