Being asked to settle a deceased person's estate can sometimes feel like taking on a second job. In addition to the time-consuming process of wrapping up the individual's financial affairs, you may be required to make court appearances and could be placed in the middle of a highly contentious family situation regarding inheritance rights. For this reason, New Jersey law gives executors the right to take a percentage of the estate as payment for their services.
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New Jersey Probate
When a person passes away in New Jersey, his property usually must go through a court-supervised process called probate. Probate facilitates the transfer of these assets to people or organizations, as provided either through the deceased person's will or according to the state's intestacy laws. Intestacy laws dictate where property goes in the absence of a will, with priority to close relatives. A simplified or formal probate procedure is required unless all of the assets left behind are considered non-probate, meaning they transfer automatically at death, such as life insurance proceeds, POD accounts and trusts.
Personal Representative Overview
In New Jersey, the probate process is handled by a personal representative. If this person is named in the will, he is referred to as an "executor." Otherwise, he is appointed by the probate court and is known as an "administrator." The probate process is started by filing an application with the Surrogate's Court at any time; however, probate will not officially open until at least 10 days after the death. As part of initiating probate, the executor must submit the will and have it "proved." This simply means that a clerk will review the document to make sure that it was executed according to all of the formalities in state law. Once this is complete, the court will provide the personal representative with greater authority through what are called "Letters Testamentary."
The letters testamentary provide the personal representative with the authority to complete several tasks. First, he must notify all of the beneficiaries listed in the will within 60 days after the will is admitted. He must then collect and safeguard all estate property and value it, obtaining appraisals where necessary. Next comes calculating all outstanding debts and taxes and opening a bank account for the estate. Once all debts are paid -- which might require sale of estate property -- the remaining assets can then be transferred to the beneficiaries.
Under New Jersey law, an executor or administrator need not volunteer his time. Instead, he is entitled to 6 percent of the income earned by the estate. This is typically in the form of interest from money held in the estate bank account. For instance, assume the deceased person's home was sold for $100,000 and this represented all of the money in the estate bank account. If the estate took one year to settle and $10,000 in interest was generated, the representative would be entitled to $600 (.06 X 10,000).
The representative is also entitled to a fee equal to a percentage of the total value of the estate or "corpus." The percentage is graduated, allowing the representative to claim 5 percent for the first $200,000 of the gross estate's value, 3.5 percent for the value between $200,000 and $1 million, and 2 percent on amounts over $1 million.