Legal Question in Wills and Trusts in New Jersey
My father died in May 2010. He left a will in which he left his estate to his 4 daughters. My older sister is the executor. She also had power of attorney.We sold the house for $200,000.The buyers are paying in cash. My father also had a bank account which was $56,000 now has $48,0000. My sister says we cannot get any of the money. She has to keep it in trust in case he had outstanding bills. I know he does not. My question is: couldn't the sisters each get $50,000 the day of the closing and keep the $48,000 for any buys that COULd arise? When can we get our share? Something doesn't seem right? The $48,000 should be more than enough to cover any expenses, taxes. He owned the house. He owed no money. Was 79 years old with a great medical plan in addition to medicare. My father would be absolutely devastated if he knew we weren't getting any money for years. My sister, the executor, also wants us to sign papers stating that we will all pay equally for any unforeseen debts. Can't his $48,000 cover that as well?
3 Answers from Attorneys
Your sister seems to be acting prudently under the circumstances.
Nevertheless, if all known debts have been paid, she could probably distribute the net proceeds of the house sale [perhaps retaining a few thousand dollars to cover incidental expenses]. All beneficiaries should sign a Refunding Bond and Release upon receiving their distribution from the estate. She should be able to transfer the $48,000 into an estate account without a NJ tax waiver if the only beneficiaries are the children and the estate is under $675,000. That money could then be used to cover debts and expenses.
An executrix of the estate of your father has the duty to collect all assets, pay all obligations and taxes, and then make distributions. This is normal. Prior to any distributions being made, each beneficiary should sign a Refunding Bond and Release. As referred to in your question, that documents your obligation to repay any distributions if there are later debts of the estate.
Normally, I would have my clients make a preliminary distribution once the known taxes and bills have been paid. After all of the beneficiaries have signed and agreed to an informal accounting, and it does not appear that there any audits of the estate, the balance should be distributed. That is typically done within the year after the date of death.
I hope this helps!
Ron Cappuccio
www.SaveYourEstate.com
I agree with the answers provided by Ron and Jon. If your father kept good records and the POA acted properly, most, if not all, debts should be known. A reserve for up to 6 months seems responsible. The RB&B can be utilized if something unusual arises after all funds are distributed. A preliminary distribution of assets seems to be appropriate at this time.
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