Getting Your House in Order

Introduction

A will is a legal document that upon a person's death explains just what the person would have wanted done with his or her property and possessions. Preparation of a will can be quite simple, and doesn't need to be expensive. 

Decisions about your wishes are best made when you are healthy, and your mind is free and clear of stress and pressures.

No one likes to think about his or her own death. We'd like to think life goes on forever, but it doesn't. And so, to help those you leave behind, you should prepare for it.

Writing a will doesn't have to be forbidding. With a little knowledge it can be made easier. Laws have been enhanced to protect those involved in the will and probate process.

This booklet is designed to answer some of the most frequently asked questions in clear, concise language, and guide you through the confusion that may follow the loss of a loved one.

There's a set procedure and chain of events for the filing of a will and transferring property. It doesn't have to be an intimidating experience. Having the correct information and the proper documents are the key.

This book is your guide. It's meant to point out the steps to take to set up a will and transfer property to your heirs and beneficiaries. But it's just that - a guide. There's no law or requirement that you must have a lawyer prepare a will. However, the risks are great. One small overlooked detail can invalidate the entire document, nullifying your intentions. There's no substitute for sound legal advice.

The Surrogate and staff will gladly answer any questions and help you through the probate process, when a death occurs.

What's a will?

A will, when properly prepared, is a legal document that tells what you want done with your property when you die. It can tell how you want your property divided and who is to receive any money, property or personal possessions. A will doesn't have to be long. It can be brief.

A will names an executor. This is the person you want to carry out your affairs and dispose of your estate. If you don't name someone, the Surrogate must do so.

Anyone 18 years of age or over, or owning real property, should have a will. Whether your estate is large or small it's beneficial to have a properly drawn will.

Why is a will necessary?

Because a will spells out your specific intentions, your heirs will know exactly what you want done.  A will can be a comfort if you've stated exactly what you want. If not, your intentions will be known.

In the absence of a will, the Surrogate must appoint an administrator, to collect assets, pay outstanding debts and make distribution according to law a surety bond that must be posted by the administrator. Then the administrator distributes the assets of the estate according to law.

A separate section later in this booklet will discuss the legal order of distribution if you die leaving no will, or "intestate".

What should a will contain?

1. Burial instructions - State just what you want done with your remains, plans for a funeral, (if you want one), and burial. You should also note if burial arrangements already have been made and paid for, with whom, whether a cemetery plot has been purchased, and where. It's a good idea to keep copies of these pre-paid plans with your will.

2. List who the beneficiaries are. Be specific with the bequests, stating exact amounts.

3. If money or assets remain, name who is to receive the remainder in specific dollar amounts or percentages.

4. List alternative beneficiaries in case someone you've named, including your spouse, predeceases you. Should the bequest go to their heirs or to someone else?

5. Name an executor. He or she is the one who will carry out your wishes for your estate. Also name an alternate in case your first choice is not able to carry out the duties. It's also a good idea to let the executor know you have selected him or her, inform the executor where to find a copy of your will, or give the executor a copy of your will.

6. If you have minor children - under age 18 - name a guardian. You should discuss this decision with the guardian-designate prior to drawing up your will. This may be one or two people who would become responsible for the actual day to day care of your children and/or be responsible for any property the children may own or inherit.

7. Provided that your executor and guardian(s) will serve without bond. This will prevent the need to set aside money from your estate for that purpose.

8. Sign your will in the presence of two witnesses, who are at least 18 years old. New Jersey requires your signature and those of two witnesses for the will to be binding. If the will is signed and witnessed before a notary public it becomes a self-proving will in New Jersey, provided it is properly worded.

What happens if you don't have a will?

If you die without a will, or "intestate," your assets and estate are divided accordingly to New Jersey's intestate laws. Whether an administrator must be appointed by the Surrogate, depends on the size of the estate. If there is a surviving spouse and the property in the name of the decedent does not exceed $20,000, an Affidavit of Surviving Spouse may be issued by the Surrogate allowing the husband or wife to dispose of the property.

When there's no spouse and the property does not exceed $10,000, a close relative can be issued an affidavit to handle the disposition.

When the property exceeds $20,000/$10,000, an administrator must be appointed by the Surrogate. A surety bond must be posted. The property is dispensed to the next of kin, according to law. Your property may not go to whom you had wanted it to. A favored niece or close, long-time friend with whom you had lived, for example, may receive nothing if you don't include them among your beneficiaries in your will.

In the absence of a will, the law states who has a right to your estate. Although it may be a clear-cut decision, (for example, naming your spouse or child your legal heir), this can take time because the Surrogate has to be sure there are no other claims. Meanwhile, final pay checks can be withheld, bank accounts that were not jointly held can be frozen, all pending the court's decision. This can cause hardship and distress.

If there are any challenges to the decisions, it can take more time, all creating more hardship and stress for your family, and all because you didn't put your wishes in a will.

When there's no immediate family, your property may go to distant relatives or even revert to the State.

What are the procedures and the course of events for probating a will?

If there's a will, it should be filed with the county Surrogate's office by the executor 10 days after the death, along with an official copy of the death certificate.

If everything is in order, and the will is self-proving, it can be probated within a matter of minutes. If the will is not self-proving, one of the witnesses who signed the will, must come to the Surrogate's office or present proof of their signature.

Once the will is probated, the executor has 60 days to notify all the heirs and beneficiaries named in the will.

When there's no will, the Surrogate appoints an administrator. Before one is appointed all other next of kin of the deceased must renounce their rights to be administrator. A surety bind is required. The Surrogate will issue a "Letter of Administration" giving the administrator the necessary authority to transfer property, withdraw money from bank accounts, pay outstanding bills and handle the other affairs of the estate. But this can take weeks, even months, and if the decision of the administrator or court is contested, sometimes even years.

When someone wants to contest a will or dispersal of the estate, he must file a caveat with the Surrogate to temporarily prevent the probating of a will or granting of administration.

Where should you keep your will?

Your will should be kept in a safe place that's easily accessible in the event of your death and where the executor can find it. Tell the executor where it is or give him or her a copy to keep. If the will contains funeral and burial instructions, it's best that your family has access to it and knows your intentions when you die so they can make arrangements in accordance with your wishes.

If a will is kept in a safe deposit box it might not be accessible on a weekend, late at night or without joint holder of the box.

When do you need a codicil?

A codicil is an additional or supplement to the original will that adds to or replaces part of the original will. When the will is offered for probate, so is the codicil.

Whenever there's change in your life, instead of drafting a complete new will, small, individual changes can be made with a codicil. Some changes that might warrant altering your will are marriage, divorce, birth or death of a child, death of a witness or executor, purchase or sale of real property or a change in financial status.

Changes in the inheritance tax laws also might warrant changes in the will.

Intestate succession of beneficiaries

When there is no will, the laws of the State of New Jersey provide for the distribution of property to the heirs by intestate succession.

I. If you die leaving a spouse and children, who are also the children of the spouse, the spouse receives the first $SO,50,000 plus one-half of the balance. The children receive the other one-half of the balance divided equally among them. If there are grandchildren, they take their deceased parent's share unless all children are deceased. Then all the grandchildren share equally.

II. If you die leaving a spouse and children who are not also the children of that spouse, the spouse receives one-half, the child or children receive one-half divided equally and then the grandchildren take their deceased parents share unless all the children are deceased. Then all the grandchildren share equally.

III. If you die leaving children but no spouse the children receive all divided equally among them. If there are grandchildren, they take their deceased parent share, unless all the children are deceased, then all the grandchildren share equally.

IV. If you die leaving a spouse but no children and their decedents and if your mother or father survives, the spouse receives the first $50,000 plus one-half of the balance and the mother and father or the survivor receives the remainder. If no parent survives, the spouse receives all.

V. If you die leaving no spouse and no children or their decedents and your parents survive, the parents take all. If no parent survives, brothers and sisters receive all divided equally.

What is a trust?

A trust is often established for minor children when they receive a bequest. It is also done when there's a question of the ability of the beneficiary to handle the responsibility of the money or property.

A trust is created through an agreement or through your will and allows for a third person, known as the trustee, to administer the bequest for your beneficiary. It can be for property or money in a bank account or other investment.

The person who administers the account is called a trustee.

What are the tax laws in New Jersey?

For up-to-date information about New Jersey's Transfer Inheritance Tax Laws, call (609) 292-5033, the New Jersey tax Office or visit www.state.nj.us/treasury/taxation

In essence, the revised New Jersey Transfer Inheritance Tax Act of 1985 provides for four classifications of beneficiaries.

BENEFICIARY CLASSES AND TAX RATES

Inheritance tax recognizes five beneficiary classes ranging from "A" to "E", as follows:

- Class "A" - Father, mother, grandparents, wife, husband, child or children of descendent, adopted child or children of descendent, issue of any child or legally adopted child of descendent, mutually acknowledge child and stepchild (includes a grandchild and great-grandchild but not a step-grandchild or great step-grandchild).

RATE: Exempt from tax in estates of decedents' dying on or after 7/1/88.

- Class "B" - Deleted by amendment 7/1/63.

- Class "C" - Brother or sister of descendent, wife or widow of a son of descendent, or husband or widower of a daughter of descendent.

RATE: for Each Beneficiary
First $25,000 No tax
Next $1,075,000 @11%
Next $300,000 @13%
Next $300,000 @14%
Over $1,700,000 @16%

- Class "D" - Every other transferee, distribute or beneficiary not herein classified.

RATE: First $700,000 @15% - Over $700,000 @16%

- Class "E" - Transfers to the State of New Jersey or any of its political subdivisions for public or charitable purposes, an educational institution, church, hospital, orphan asylum, public library, and certain other nonprofit agencies, etc.

RATE: Totally exempt

For rates applicable to estates of decedents' who died prior to 7/1/88, contact the individual tax Audit Branch, inheritance and Estate tax in Trenton.

Does New Jersey allow living wills?

Yes. A living will allows you to instruct your family and physicians about life sustaining efforts and equipment that you want or don't want to sustain your life. A copy of your living will should be kept in a safe place that is accessible in case of an emergency. Family members or those close to you should be told of your wishes and the living will, and know where it is kept.

For more information on living wills, you may want to contact the Monmouth County Office on Aging in the Hall of Records Annex, Freehold or call 732-431-7450.

Power of attorney

A power of attorney is a written document in which you authorize another person, an adult, to act on your behalf, regarding your legal property, bank accounts and other legal matters.

A power of attorney is generally used when someone is unable for some physical or mental reason to carry out his or her affairs. With a power of attorney, a spouse, friend or family member can act on behalf of you, the principal. Often the need for a power of attorney is not considered until some incapacity overcomes a person. Then expenses and court proceedings are involved.

There's a way to avoid these problems. You can provide for an agent, someone, such as a spouse, friend or family member, to act on your behalf should you be unable to.

There are two kinds of power of attorney: limited and general. The limited power of attorney gives a person authority to act for a specific purpose. An example is the sale of a house when the owner cannot be present. The agent with power of attorney can sign the legal papers in the principal's absence.

With a general power of attorney the agent has authority to act on anything and everything for the principal if he becomes disabled or mentally incompetent.

A power of attorney automatically ends at the death or disability of the person who gave it. A durable power of attorney survives disability, but it too is revoked and ends at the death of the principal.

A will is necessary to transfer property after death.

What is joint ownership?

When a husband and wife own a piece of property equally together, they have joint ownership. Upon the death of one the other automatically becomes the owner.

When two or more persons, other than spouses, own real estate together, they are "tenants in common". They own an undivided share of the property, unless their deed specifically states that they are "joint tenants with the right of survivorship and not as tenants in common".

Usually property held in joint ownership goes to the surviving owner upon the death of the other. However, under tenants in common, the share passes to the heirs of the deceased.

Personal property may be jointly owned with the right of survivorship. Checking accounts, saving accounts or stocks and bonds may be held jointly or as tenants in common.

Transferring ownership of stocks and bonds can be complex. Contact the "registered agent" or "transfer agent" for the proper procedure and necessary paperwork.

The title of a motor vehicle can be changed more easily with a Surrogate's Certificate. If the title is held jointly with your spouse, the survivor need not change the title at the Division of Motor Vehicles.

When the title is held with someone other than a spouse or by the decedent alone, the executor/administrator must present a Certificate of Executorship/Administration, Affidavit of Next of Kin with the original title, registration and insurance identification card.

Fees

The diversified duties of the Surrogate's office are set by acts of the State Legislature, as are the fees to be charged for various services provided. A list of those fees can be provided by the Surrogate upon request, or visit our website at http://www.essexsurrogate.com

Glossary

Administration: A person appointed by the courts to take charge of the estate of a decedent who dies without a will.
Beneficiary: A person designated to receive money, property or benefits in a will.
Bequest: A gift of personal property by a will.
Bequeath: To dispose of personal property through a will.
Caveat: A formal notice given by someone to prevent the proving of a will or the grant of administration of an estate.
Codicil: An addition or supplement to an original will that adds to or deletes only a part of the will.
Decedent: A deceased person.
Devise: A gift of real estate through a will.
Estate: Property and possessions, everything a person owns.
Executor/Executrix: A person named in a will to carry out the wishes and intentions of the will, also known as a personal representative.
Guardian: A person entrusted by the law with the fiduciary care of a person, as a minor or mental incompetent, or of their property.
Heir: A person who inherits property from a deceased person.
Intestate: When a person dies without a will.
Legatee: A person who receives a gift under a will.
Personal property: Intangible property, such as stocks, bonds or bank accounts, and tangible property such as jewelry, furniture, an automobile.
Probate: Official proof of authenticity or validity of a will.
Real property: Land and/or buildings.
Surrogate: The elected county official who oversees probate in the State of New Jersey.
Tenants in common: Two or more persons owning individual interests in a single piece of property.
Testator/Testatrix: The person who makes a will.
Trust: Property owned or managed by a person for another.
Trustee: Person holding property in trust for another.
Will: A legal declaration of the manner in which a person wishes his or her estate to be divided after his death.
Witness: Person who observes the signing of a document and attests to the signatures.

Check list

This is a recommended list of documents and necessary papers that could be essential for settling your estate if you die. Keep them in a safe place. If not kept all together, then list for the executor of the estate where they can all be found. This can save time later on.

  • Will
  • Checking/savings account numbers, names of banks and books
  • Safe deposit box key, location, number, how registered
  • Stocks and bonds
  • Pension and annuity records
  • Insurance policies
  • Union and/or company life and health benefits/insurance
  • Real estate deeds
  • Motor vehicle title
  • Installment loans
  • Birth certificate
  • Social Security card or number
  • Marriage/divorce records
  • Veterans records, including discharge papers
  • Recent federal and state income tax returns
  • Church or religious affiliation records