By Thomas D. Begley, Jr., Esquire, CELA
[This article originally appeared in The Barrister.]
There are a number of situations in a personal injury case where probate issues must be addressed. Most Personal Injury attorneys
work with experienced Probate Counsel to ensure that the process goes very smoothly. Once the Executor or Administrator has been appointed, that person may serve as Plaintiff in the litigation. If the Plaintiff dies during the course of the litigation, the Executor or Administrator may be substituted as Plaintiff on behalf of the estate. Situations Requiring Probate Counsel
• Wrongful Death Cases. One or more persons are deceased and a personal representative, either an Executor or Administrator,
must be appointed to prosecute the claim in trial court.
• Plaintiff Dies During Litigation. Occasionally, a plaintiff will die during the course of litigation, and a personal representative
must be appointed to continue the litigation.
• Settlements for Minor or Incapacitated Persons. In some states, a trial court will not approve a trust, such as a special
needs trust, for the benefit of a minor or incapacitated person. Probate court approval is required. In cases involving minor or incapacitated persons, the court frequently retains jurisdiction and requires approval of distributions. In many instances, a
budget can be submitted and approved by the court so that future court approval is only necessary for deviations from the budget.
• Guardianship. In some instances a guardian must be appointed for a minor or incapacitated person. The role of the guardian appointed to prosecute the litigation ends when the litigation is completed. In most instances involving an incapacitated person over age 18. a permanent guardian must be appointed to manage either the person or property, or both,
of the incapacitated person.
• Multi-jurisdictional Litigation. In some cases, such as mass torts, litigation involves plaintiffs in many different states. Competent probate counsel must be located in the appropriate states.
Important Steps in Probate
The Executor/Administrator’s job is to perform certain legal obligations. An Executor/Administrator can be held personally liable for failure to administer the estate properly. Administration of the estate includes the collection and management of assets, paying taxes, distributing any assets or making distributions of bequests, whether personal or charitable in nature, as the deceased directed under the provisions of the Will or as provided for in the Intestate law.
Important steps in probate include the following:
• Probate. In a case where there is a Will, the Executor/Administrator must probate the Will with the Surrogate of thenCounty in which the decedent resided at the time of death and become appointed as the Executor/Administrator of the Estate. The Surrogate will issue a Short Certificate evidencing this appointment. In cases where the individual died without a Will, Letters of Administration must be obtained from the Surrogate. The Executor/Administrator will present the Short Certificate to financial institutions and others to prove authority to transact business on behalf of the estate.
• Notice of Probate. A Notice of Probate form must be filed with all heirs-at-law and next-of-kin within 60 days after probate. A proof of mailing must be sent to the Surrogate within 10 days.
• Inventory. An inventory of all assets must be prepared and date of death values obtained. Appraisals must be obtained for all real estate and for valuable personal property. These appraisals are important to obtain a step-up in basis to the fair market value as of the date of death. This will affect the beneficiary’s future capital gains tax liability. The appraisals will also be needed to prepare and file any New Jersey estate or inheritance taxes or federal estate taxes.
• Obtain Date of Death Values. The Executor/Administrator will obtain values of all of the decedent’s assets owned by the decedent at the time of death including, but not being limited to, the personal injury settlement, tangible personal property, bank accounts, securities, employee benefits, IRAs. automobiles, businesses, life insurance policies, E and EE Bonds, H Bonds, annuities, and refunds due to the decedent.
• Employer Identification Number. An Employer Identification Number (EIN) must be obtained for the estate.
• Administration. After gathering the assets, the Executor/Administrator must see that they are properly invested. The Executor/Administrator may have to liquidate or run a business or manage a securities portfolio.
• Payment of Debts. All debts of the estate must be paid.
• Retirement Plans. Retirement assets must be analyzed and beneficiary designations must be followed.
• Life Insurance. Life insurance claims must be filed.
• Asset Preservation and Management. The Executor/Administrator will take steps to preserve assets, such as vacant real estate, including obtaining appropriate insurance and securing the property against theft and vandalism.
• Tax Returns. Tax returns must be filed including a federal and state income tax return (Form 1040) for the year of the decedent’s death. The Executor/Administrator can file these returns or arrange for the decedent’s usual tax preparer to do so. Form 1040 Estimated Tax Returns must also be filed, where appropriate. These returns must be filed by April 15, of the year following the decedent’s death. New Jersey estate tax and inheritance tax returns must be filed. The New Jersey estate tax return must be filed within nine months of the date of the decedent’s death, and the New Jersey inheritance tax return must be filed within eight months. Federal estate tax returns (Form 706) must be filed where required. This return must be filed within nine months of the date of the decedent’s death. Income tax returns (Form 1041) must be filed for any estate or trust. Gift tax returns (Form 709) must be filed where appropriate. In addition, if the decedent owned real estate out of state, the Executor/ Administrator must file ancillary probate in that state. and 111e nonresident tax returns in that state.
• Child Support. Prior to making distribution. a child support judgment search must be obtained, and any outstanding child support judgments must be satisfied from the beneficiary’s share of the estate.
• Commissions. Executor/ Administrator’s commissions must be calculated and paid. unless waived.
• Specific Bequests. If a Will has left specific bequests. those bequests must be distributed to the beneficiaries within one year of probate.
• Accounting. An accounting must be filed with all beneficiaries and a Release and Refunding Bond must be obtained from beneficiaries prior to making final distribution. There are three ways to handle the accounting. One is a Waiver of Accounting. This is typically used where there is a small. close-knit family and everyone simply signs a Waiver releasing the Executor/ Administrator from liability without a full accounting. Next, there is an Informal Accounting. The Executor/ Administrator Lists all of the assets comprising the estate, all of the income received in detail, a detail of all disbursements. a list of remaining assets and a proposal for distribution of those assets. A third way to handle the accounting is a Formal Accounting. This is an accounting that will be approved by the Court. The rules are very detailed and very specific. Generally, either a Waiver of Accounting or an Informal Accounting is the preferred method.
Who Should Serve as Executor/ Administrator?
The Executor/ Administrator should be a responsible person. Typically. it is a spouse or adult child. The Executor/ Administrator should be in a position to devote suflkient time to administering the estate, and should have enough sense to retain counsel to assist.