According to Caring.com, more than 50% of Americans believe estate planning is important, but only 33% have a will. NJ Estate planning is more than making sure your assets find their way to the right person. If done correctly, it can preserve family harmony, and avoid unnecessary time and expenses.
As a NJ title agency, we handle many NJ estate transactions where title is being conveyed from heirs of an estate. As one would presume, these types of transactions come with a special set of underwriting requirements and calls for careful title examination in order to close with clear title.
Below are 10 of the most commonly asked questions we receive.
What does probate mean?
Probate is the judicial process required by the State of NJ to authenticate the Will so the assets of the deceased can be passed on to the intended beneficiaries. The authentication process includes, among other things, the examination of assets of the deceased and acknowledges who the assets will be passed onto. The probate process can take several months.
What if the executor/administrator passes away or doesn’t want the responsibility?
The court would appoint a substitute administrator to replace the named executor/administrator if further successors weren’t named to fulfill their role. Waiting for a substitute to be named may prolong the distribution of assets.
Can the Executor/Administrator sign a Power Of Attorney to let someone else sign the Deed and other Conveyance Documents?
Typically, this is not allowed unless there is court intervention. Most likely, if a successor wasn’t named, the court will appoint a substitute.
The seller passed away in another state. Do I need to probate their estate here in New Jersey?
Yes, you will need to open an ancillary probate proceeding in the state(s) where any/all property sits. This is necessary because the probate court in the decedent’s home state lacks legal jurisdiction over the property that is situated elsewhere.
What is an Inheritance Tax Waiver?
New Jersey’s Inheritance Tax Waiver relates to both the NJ Inheritance Tax and Estate Tax. Inheritance Tax is assessed based on who is inheriting assets and the Estate Tax is assessed based on the value of the Estate as a whole. The waiver represents a written consent from the Director of the Division of Taxation releasing the property from the lien of the State.
Why do you need an Estate Questionnaire?
The passing of a loved one is an intimate affair. In order to confirm that the property is sold without any debts or liens, Title Insurance Underwriters need someone familiar with the Estate to provide certain representations in the questionnaire.
Why do you require ALL the heirs to sign off on the Deed? Isn’t the Executor/Administrator’s signature enough?
Our end goal is to ensure that any parties with an interest in the property conveys their interest so the buyer has the peace of mind that no one else has any lingering interest. We work with our underwriters and all parties involved to make this process as smooth as possible.
If there is a dispute within the heirs/devisees, can the property still be sold?
The Executor/Administrator has the flexibility to manage/sell the property within the confines of the Will. If precise instruction isn’t provided, then the Executor/Administrator has the freedom to rent or sell the property so long as there is no monetary loss. However, Title Insurance Underwriters will sometimes determine that they cannot insure clear title while the dispute is ongoing.
What debts do I have to pay? Are they all lienable?
The Executor/Administrator is responsible for the distribution of any assets with debts being paid prior to inheritance payments. Creditors can, indeed, file a claim against the estate, and have 9 months to do so after the date of death. The process starts with funeral expenses paid first, followed by costs of administration, taxes, then medical bills.
What taxes are associated with an Estate? When are they applicable?
There are 2 types of estate taxes in NJ: NJ Inheritance and Federal Estate Tax.
NJ Inheritance Tax is taxed (11-16%) when the beneficiary of the Estate is not Class A (children, parents, grandparents) or Class E (charitable donations). NJ’s Estate Tax is no longer imposed for those who passed on or after January 1, 2018.
Federal Estate Tax is taxed if the estate is valued above a certain threshold. The current threshold is $12.06 million per person (or $23.12 million for a married couple). The threshold will drop to approximately $5 million in 2026.
Though we answered our Top 10 Questions Asked, we didn’t cover everything. Let us know if there is a question you need answered. We would be happy to help!
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