Release & Refunding Bond in Probate matters
Under New Jersey law it is the duty of
the fiduciary [Executor or Administrator] to make arrangements to pay bills and
other estate expenses and carry out instructions under the Will. NJSA 3B:23-24
provides the fiduciary shall take a Release and Refunding Bond from each
beneficiary.
The attorney for the estate prepares
the Release and Refunding Bond. The approximate amount that beneficiary will
release is typed on the release form. It is mailed the beneficiaries with the
following language:
“Please read the enclosed draft Release and
Refunding Bonds and estate accounting. If you have any questions regarding the
accounting, please call the executor directly since they have the bank records.
The law office does not have bank records. Every beneficiary will need to sign
their Release and Refunding Bond. If any beneficiary does not sign their
release and refunding bond, then the estate funds cannot be distributed to
anyone until approved by the Superior Court. An Accounting and Court approval
under Rule 4:87-1 would take many months. We are requesting all beneficiaries
to immediately make arrangements to sign the Release and Refunding Bond in
front of a notary, and return it to my office. Please also note under New
Jersey law each beneficiary must certify they do not owe child support. Please
fill out the child support section by hand.
The Release & Refunding Bond must
be filed with the County Surrogate and a fee paid. “
By statute (N.J.S.A. 3B:23-24) an Executor
or Administrator is required on paying a beneficiary his/her share of
the estate, to take a Refunding Bond and Release from the beneficiary and to
file the bond in the Surrogate’s Court. The statute requires that the
Refunding Bond and Release be in the amount or value of the beneficiary’s share
of the estate. The beneficiary must sign the Refunding Bond and Release before
a Notary Public or attorney. If the beneficiary is a minor or
incapacitated person, the Refunding Bond and Release must be signed by the
guardian of the property.
The
Refunding Bond and Release has a dual
purpose:
Refunding
– To refund to the Executor or Administrator out of his/her share of the estate
his ratable part of any unpaid debts, owed by the testator or intestate, if
there are no other assets to pay them.
Release - To discharge the Executor or Administrator of an estate of his/her
duties upon distribution to the beneficiary of his/her share of the
estate.
In an Administration without a Will that required a Surety Bond, the
Administrator must request a Certificate
of Release from the Surrogate at the time he/she files the Refunding Bond
and Release. A Surety Bond will not be cancelled by the insurance agent
unless the Certificate of Release is presented to the agent.
It is necessary to file the completed
Refunding Bond and Release from each beneficiary of the estate with the
Surrogate’s Court. The statutory fee for filing is $ 10.00 per bond
and $ 5.00 for the Certificate of Release.
If all the beneficiaries do not sign
their Release and Refunding Bond, then a Superior Court lawsuit must be
filed called Actions For The Settlement Of Accounts under RULE 4:87. The Court Rule on
Accounting is below.
NJSA 3B:23-24. Refunding bond of devisee or
distributee A personal representative shall, on paying a devise or distributive
share or on delivering an instrument of distribution to the person entitled,
take a refunding bond therefor, to be filed in the office of the surrogate of
the county wherein he received his letters or in the office of the clerk of the
Superior Court, if he received his letters from the Superior Court.
RULE 4:87. Actions For The Settlement Of
Accounts
4:87-1.
Procedure
(a) Actions to settle
the accounts of executors, administrators, testamentary trustees,
non-testamentary trustees, guardians and assignees for the benefit of creditors
shall be brought in the county where such fiduciaries received their
appointment. The action shall be commenced by the filing of a complaint in the
Superior Court, Chancery Division, and upon issuance of an order to show cause
pursuant to R. 4:83. A non-testamentary trustee shall annex to the complaint a
copy of the written instrument creating the trust and stating its terms. The
order to show cause shall state the amount of commissions and attorney's fee,
if any, which are applied for.
(b) An action may be
commenced by an interested person to compel a fiduciary referred to in
paragraph (a) of this rule to settle his or her account, and, in appropriate
circumstances, to file an inventory and appraisement.
4:87-2.
Complaint
The
complaint in an action for the settlement of an account
(a) shall contain the
names and addresses of all persons interested in the account, including any
surety on the bond of the fiduciary, specifying which of them, if any, are
minors or mentally incapacitated persons, the names and addresses of their
guardians, or if there is no guardian then the names and addresses of the
parents or persons standing in loco parentis to the minors;
(b) shall specify the
period of time covered by the account and contain a summary of the account. The
summary shall state, all as shown by the account: (1) in the case of a first
accounting, the amount for which the accountant was chargeable as of the date the
trust or obligation devolved upon him or her, or where an inventory is on file,
the amount of the inventory; or in the case of a second or later accounting,
the balance remaining in the hands of the accountant as shown in the last
previous account; (2) the amount for which the accountant became chargeable in
addition thereto; (3) the total of the first two items; (4) the amount of the
allowances claimed in the account; and (5) the balance in the accountant's
hands. Charges and allowances sought on account of corpus and income shall be
stated separately both in the summary and in the account;
(c) shall have
annexed thereto the account which shall be dated;
(d) shall ask for the
allowance of the account, and also for the allowance of commissions and a fee
for the accountant's attorney, if accountant intends to apply therefor; and
(e) shall be filed at
least 20 days prior to the day on which the account is to be settled.
4:87-3.
Form of Account; Statement of Assets to Be Annexed to Account
(a) Form of
Account. The charges and allowances as to principal and income and the statements
required to be annexed to the account may be typed or in the form of computer
or machine printouts; and, where appropriate, the accountant may use a single
schedule for the presentation of portions of the account, but charges and
allowances as to corpus and income shall be stated separately.
(b) Statement to
Be Annexed to Account. To all accounts shall be annexed:
(1) a full statement
or list of the investments and assets composing the balance of the estate in
the accountant's hands, setting forth the inventory value or the value when the
accountant acquired them and the value as of the day the account is drawn, and also
stating with particularity where the investments and assets are deposited or
kept and in what name;
(2) a statement of
all changes made in the investments and assets since they were acquired or
since the day of the last account, together with the date the changes were
made;
(3) a statement as to
items apportioned between principal and income, showing the apportionments
made;
(4) a statement as to
apportionments made with respect to transfer inheritance or estate taxes;
(5) a statement of
allocation if counsel fees, commissions and other administration expenses have
been paid out of corpus, but the benefits of the deductions from corpus have
been allocated in part or in whole to income beneficiaries for tax purposes;
and
(6) a statement
showing how the commissions requested, with respect to corpus, are computed,
and in summary form the assets or property, if any, not appearing in the
account on which said commissions are in part based.
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