Legal Question in Wills and Trusts in New Jersey
My husband�s grandmother passed away earlier this year. She lived and owned a home ($340k) and my mother-in-law is the joint owner (and also lives there with father-in-law). My brother-in-law is the executor of her estate. He is the joint on her bank account (probably $3-6k). She named her 3 grandchildren as equal beneficiaries to an annuity ($75k) and her 7 great-grandchildren split the remainder of her estate. We have not seen the will yet to verify the exact language, this is according to brother-in-law who is not using a lawyer. He also said that after the funeral costs, there was $10k left in the estate bank account. My husband and his siblings have already received the annuity proceeds. She also had a small life insurance policy ($15-25k) to cover her funeral expenses, don�t know who the beneficiary was.
Now father-in-law wants us to reimburse him for estate related costs that he fronted (probate fees related to the annuity and lawyer�s fee for a consultation). My understanding is that anything related to the grandmother, her death/funeral and her estate should be paid with the remaining $10k (and in my opinion her bank account funds). And that the annuity is not part of the probate estate and should not be subject to any taxes or fees (except individual income taxes). When I mentioned this to father-in-law, he replied �the annuity IS her estate.� So now I wonder if we misunderstood and that there is no money in the estate bank account, if this is true do we have to reimburse him with our proceeds? I�m pretty sure he and brother-in-law are confused, because by their logic the house he is living in is also part of her estate. And yes both are part of her gross estate for tax purposes, but they don�t need to be liquidated in order to pay the estate�s expenses, correct? Please advise what is correct IF there are sufficient funds in the estate account, IF there are no remaining funds, and IF there are some funds but the expenses will eventually exceed that amount.
Also, are executor commissions based on the gross estate or the probate estate? Thank you in advance!
2 Answers from Attorneys
Executors commissions are based on the gross estate.If your grandmother owned the home as tenants by the entirety with your father inlaw then the house passes to him by operation of law and is not part of her estate. You should consult an attorney to review the will and the deed. and to discuss the other issues raised in your question.
There are different meanings to the word "estate", and this may explain why there is confusion. In its broadest sense, one's estate is everything that has their name on it, even if others are named as well. Then there is ones probate estate, which usually consists of everything that is owned individually and is controlled by the Will. Then there is non-probate estate, which is usually anything that has the decedent's name on it, with someone else, or which passes by operation of law, without regard to the Will. A joint bank account or house with multiple owners is part of the non-probate estate, as is an insurance policy or other asset with a designated beneficiary, like an insurance policy or retirement plan. Finally, there is a taxable estate which includes all assets in which there is ownership by the decedent. I have not seen the Will, which usually has some provision on the payment of taxes, fees and costs. These traditionally are covered by the probate estate. However, possible costs and tax liability can be attributable to assets which pass outside the Will and the Will might provide that these expenses are payable by the recipients of the assets involved. This might be the reason for the claim. You should get a copy of the Will and an accounting of the estate, which should indicate how assets were registered and if they had named beneficiaries. This might answer some questions. This is a response to an Internet question and the reply is not intended to be legal advice or as creating an attorney-client relationship.
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