New Jersey Probate court proceedings can be long, costly, and definitely confusing. The good news is that you can take steps before death that can make the process go more smoothly. These steps are state dependent so here are your options in New Jersey.
Living trust refers to a trust that may be revocable by the trust creator or settler (known by the IRS as the Grantor). Living trusts are often used because they may allow assets to be passed to heirs without going through the process of probate. Avoiding probate will normally save substantial costs (the probate courts, in some states, charge a fee based on a percentage net worth of the deceased), time, and maintain privacy (the probate records are available to the public, while distribution through a trust is private). Both living trusts and wills can also be utilized to plan for unforeseen circumstances such as incapacity or disability, by giving discretionary powers to the trustee or executor of the will.
In New Jersey, you can make a living trust to avoid probate for virtually any asset you own — real estate, bank accounts, vehicles, and so on. You need to create a trust document (it’s similar to a will), naming a successor trustee which is someone to take over as trustee after your death. Then you must transfer ownership of your property to yourself as the trustee of the trust. Once all that’s done, the property will be controlled by the terms of the trust. At your death, your successor trustee will be able to transfer it to the trust beneficiaries without probate court proceedings.
If you own property jointly with someone else, and this ownership includes the “right of survivorship,” then the surviving owner automatically owns the property when the other owner dies. No probate will be necessary to transfer the property, although of course it will take some paperwork to show that title to the property is held solely by the surviving owner.
In New Jersey, there are two types of ownership, joint tenancy and tenancy by the entirety. Joint tenancy is property owned in joint tenancy automatically passes to the surviving owners when one owner dies. No probate is necessary. Joint tenancy often works well when couples (married or not) acquire real estate, vehicles, bank accounts or other valuable property together. In New Jersey, each owner, called a joint tenant, must own an equal share. Tenancy by the entirety is like joint tenancy, but is allowed only for married couples and registered domestic partners in New Jersey.
Payable-on-death designations for bank accounts
Payable-on-death bank accounts offer one of the easiest ways to keep money — even large sums of it — out of probate. All you need to do is fill out a simple form, provided by the bank, naming the person you want to inherit the money in the account at your death.
As long as you are alive, the person you named to inherit the money in a payable-on-death (POD) account has no rights to it. You can spend the money, name a different beneficiary, or close the account. At your death, the beneficiary just goes to the bank, shows proof of the death and of his or her identity, and collects whatever funds are in the account. The probate court is never involved. If you and your spouse have a joint account, when the first spouse dies, the funds in the account will probably become the property of the survivor, without probate. If you add a POD designation, it will take effect only when the second spouse dies.
Transfer-on-death registration for securities
Almost every state has adopted a law (the Uniform Transfer-on-Death Securities Registration Act) that lets you name someone to inherit your stocks, bonds or brokerage accounts without probate. It works very much like a payable-on-death bank account. When you register your ownership, either with the stockbroker or the company itself, you make a request to take ownership in what’s called “beneficiary form.” When the papers that show your ownership are issued, they will also show the name of your beneficiary. After you have registered ownership this way, the beneficiary has no rights to the stock as long as you are alive. But after your death, the beneficiary can claim the securities without probate, simply by providing proof of death and some identification to the broker or transfer agent. (A transfer agent is a business that is authorized by a corporation to transfer ownership of its stock from one person to another.)
Options that do not apply to New Jersey
Transfer-on-death deeds for real estate and Transfer-on-death registration for vehicles is not allowed in New Jersey.
Simplified New Jersey Probate procedures
New Jersey has a simplified probate process for small estates. To use it, an executor files a written request with the local probate court asking to use the simplified procedure. The court may authorize the executor to distribute the assets without having to jump through the hoops of regular New Jersey Probate probate.
You can use the simplified small estate process in New Jersey if:
1. There is no valid will and the value of all property doesn’t exceed $10,000. The surviving spouse or domestic partner is entitled to all of it without probate. N.J. Stat. Ann. § 3B:10-3.
2. There is no valid will, the value of all property doesn’t exceed $5,000, and there is no surviving spouse or domestic partner. One heir, with the written consent of the others, can file an affidavit with the court and receive all the assets. N.J. Stat. Ann. § 3B:10-4.
Isn’t It Illegal To Sell Property That Is Being Probated?
It’s commonly assumed that sales of real estate in probate are extremely difficult, if not impossible. The truth is that, in most cases, the Executor has the power to make a decision to sell – as long as he has the agreement of all the heirs to the estate. In some cases, he or she may also need the permission of the court, but even if that happens, the agreement of all the heirs will usually be all the judge needs to approve a sale of real estate. Research the laws in your state for any requirements – for instance, some require that the property be listed through a licensed realtor.
If you are in Probate and need to sell your house fast in order to settle debt in the estate you have options. Scott or one of his associates at Scotty Buys Houses will be happy to make you a fair offer and get you the cash that you need quickly. Even if the house is in terrible condition!