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 placed upon an executor or administrator. Let’s continue our discussion today. Today I want to further discuss the topic of a formal accounting in estate administration.
A formal accounting is typically generated in one of three circumstances: (1) a complex estate in which the beneficiaries and the Executor or Administrator agree upon the process; (2) where required by the Attorney General of New Jersey when a charity(ies) is involved; and (3) when agreement cannot be reached upon an informal account by estate beneficiaries and the Executor or Administrator whereby the executor can only be discharged by an order of the Superior Court.
In complicated estates, it may be necessary to generate a formal accounting to satisfy that all beneficiaries that there has been full disclosure, accumulation and distribution of estate assets and the handling of an estate by the executor. Wherever possible, avoiding a formal accounting is in everyone’s best interest because of its cost. But if agreement cannot be reached, all parties can agree that a formal accounting can be used to close out an estate. In this instance, a Court Order is not necessary. Refunding Bonds and Releases will suffice and the estate will conclude.
Often, the Charitable Trust Section of the Attorney General’s Office may require a formal accounting in order to finalize an estate when 501(c) charities are involved. By law, Notice of Probate must be sent to the Charitable Trust Section of the Attorney General’s office whenever a charity is a beneficiary under a Will. If there is a specific bequest, the Charitable Trust Section does not require an accounting, however, when a charity or charities are remainder residuary beneficiaries, the State can require a formal accounting.
Most frequently, a formal accounting is filed when the Executor (Administrator) is unable to voluntarily secure signed Refunding Bonds and Releases from all beneficiaries after attempts to obtain same through the use of an informal accounting. To finalize the estate and to be discharged from his/her responsibilities, the Executor must obtain a Court Order of Discharge. To accomplish this, the Executor or Administrator must file an Order to Show Cause and Verified Complaint with an attached formal accounting. The Complaint will seek an Order from the Superior Court (Chancery Division/Probate Part) (a) approving the Executor’s or Administrator’s accounting, (b) approve the payment of all fees and costs incurred by the estate; (c) approve the Executor’s or Administrator’s commissions; and (d) discharge the Executor or Administrator from any further liability to the estate or its beneficiaries.
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.