New
Jersey is considered a “probate friendly” state since the executors are not
required to obtain court approvals for most actions. However, if the executor
is not complying with state law, in NJ the only recourse a beneficiary has is
to file a complaint and Order to Show Cause.
Trust
& Estates
Compel an
Accounting And Removal of an Estate Executor
Under New Jersey Law, the person selected as an executor of a will has
numerous legal responsibilities following the death of the person who signed
the will. Primarily, they have a duty to probate the will, liquidate assets,
pay bills and taxes, file all necessary court and tax returns, and then
distribute the assets to beneficiaries. If there is no will, state law
determines which relatives can petition the surrogate to be appointed as
"administrator" of the estate.
In New Jersey, the court and surrogate do not supervise how an executor
or administrator handles the estate. An executor occasionally fails to timely
carry out their duties. They may fail to file tax returns, fail to keep
records, misappropriate funds or ignore instructions under the will. If a
beneficiary is not satisfied with the handling of the estate, they can have an
attorney file a complaint in the superior Court to compel accounting, remove
the executor, compel filing of tax returns and seek other relief.
The new
probate statute of NJ made a number of substantial changes to the provisions
governing the administration of estates and trusts in New Jersey.
Under the
United States Supreme Court Case, Tulsa
Professional Collection Services, Inc., v. Joanne Pope, Executrix of the Estate
of H. Everett Pope, Jr., Deceased, 108 S.CT. 1340 (1988), the personal
representative in every estate is personally responsible to provide actual
notice to all known or "readily ascertainable" creditors of the
decedent. This means that is the executor’s responsibility to diligently search
for any "readily ascertainable" creditors.
In lieu
of a formal accounting the beneficiaries will usually be requested to sign a
release and refunding bond. If a beneficiary has evidence of misappropriation,
they should ask the executor for an informal accounting prior to signing the
release and refunding bond.
Complaint
for Accounting
A Complaint for Accounting is filed in the superior court probate court
to request on accounting, removal of the current executor and selection of a
new person to administer and wrap up the estate. See Rule 4:87-1.
A signed certification of one or more beneficiaries is needed. In addition,
an Order to Show Cause is prepared by the attorney. The Order to Show Cause is
submitted to be signed by the judge directing the executor to file a written
answer to the complaint, as well as appear before the court at a specific date
and time. The NJ Judiciary website has a model form Order to Show Cause.
As with a
litigated court matter, trials can become expensive. Competent elder
law/probate attorney may charge an hourly rate of $275-$400 per hour, with a
minimum retainer of $3,000 needed. Most attorneys require the retainer to be
paid in full up front.
The plaintiff can request the following:
(1) That the named executor be ordered to provide an accounting of the
estate to plaintiff.
(2) Defendant executor be ordered to provide an accounting for all
assets of decedent dated five years prior to death that defendant may have
administrated through a power of attorney.
(3) Payment of plaintiff's attorney's fees and costs of suit for the
action.
(4) Declaring a constructive trust of the assets of the decedent for
the benefit of the plaintiff and the estate.
(5) The executor may be removed as the executor/administrator of the
estate and that the plaintiff may be named as Administrator C.T.A. or
administrator of the estate.
(6) That the executor be barred from spending any estate funds, be
barred from paying any bills, be barred from taking a commission, be barred
from writing checks, be barred from acting on behalf of the estate, except as
specifically authorized by superior court order or written consent by the
plaintiff. The statue on removing the executor for cause is NJSA 3B:14-21.
Object to
Executor’s Commissions
Under NJSA 3B:18-1 et seq.,
executors, administrators and other fiduciaries are entitled to receive a
commission on both the principal of the estate, and the income earned by
assets.
However, if you have evidence that the executor has breached their
fiduciary duties or violated a law, the superior court accounting complaint can
request that the commissions be reduced or eliminated.
Compel
The Sale of Real Estate and Other Property
Occasionally, a family member is living in a home owned by the
decedent. To keep family harmony, often this family member is permitted to
remain in the home temporarily. However, it may later become clear that the
resident has no desire on moving, and the executor has neither an intention to
make them move nor to sell the house. The remedy a beneficiary has can be to have
the attorney include in the Superior Court Complaint a count to: (1) remove the executor; (2)
remove the tenant and make them pay rent to the estate for the time they used
the real property since death without paying rent; (3) compel the appraisal of the home and, thereafter,
the sale of the property
and (4) make the executor reimburse the estate for the neglect or waste of
assets.
Removal
for cause
of Executor
The court may remove a fiduciary
from office when:
a. After due
notice of an order or judgment of the court so directing, he neglects or
refuses, within the time fixed by the court, to file an inventory, render an
account or give security or additional security;
b. After due
notice of any other order or judgment of the court made under its proper
authority, he neglects or refuses to perform or obey the order or judgment
within the time fixed by the court; or
c. He has embezzled,
wasted or misapplied any part of the estate committed to his custody, or
has abused the trust and confidence reposed in him; or
d. He
has removed from the state or does not reside therein and neglects
or refuses to proceed with the administration of the estate and perform
the duties and trust devolving upon him; or
e. He
is of unsound mind or mentally incapacitated for the transaction of
business; or
f. One of two or
more fiduciaries has neglected or refused to perform his duties or to join with
the other fiduciary or fiduciaries in the administration of the estate
committed to their care whereby the proper administration and settlement
of the estate is or may be hindered or prevented.
In addition, "a court may invoke its equity powers to remove [an
executor]." In re Duke, 305 N.J.
Super. 408, 438 (Ch. Div. 1995) (citing In
re Koretzky, 8 N.J. 506, 530 (1951)). However, a judge should be
particularly reluctant to remove a fiduciary chosen by the decedent, Connelly v. Weisfeld, 142 N.J. Eq. 406,
411 (E. & A. 1948), and the foremost concern when such an act is
contemplated should be whether the executor's continued service would be
detrimental to the estate. Wolosoff v.
CSI Liquidating Trust, 205 N.J. Super. 349, 360 (App. Div. 1985)
The critical question is "whether the circumstances are such that
the continuance . . . in office would be detrimental to the [estate] and
require the court to grant relief." Thus, mere friction between an
executor and beneficiaries is not a ground for removal unless the relationship
is likely to "interfere materially with the administration" of the
estate. Estate litigation is often acrimonious, but the removal of an executor
appointed by the decedent is generally to be avoided.
"Generally, in order for friction or hostility between the
beneficiary and trustee to form the basis for removal, there must be a
demonstration that the relationship will interfere materially with the
administration of the trust or is likely to do so.” There also must be proof
that the friction or hostility arose out of the trustee's behavior. Starr v. Wiley, 89 N.J. Eq. 79, 90 (Ch.
1918)
New Jersey is
considered a “probate friendly” state since the executors are not required to
obtain court approvals for most actions. However, if the executor is not
complying with state law, in NJ the only recourse a beneficiary has is to file
a complaint and Order to Show Cause.
Planning
can only be done while someone is competent and alive. Make sure your assets
can be passed directly to your loved ones.
Vercammen is a trial attorney in Edison. He often lectures for the New
Jersey State Bar Association, New Jersey Institute for Continuing Legal Education
and Middlesex County College on personal injury, criminal/municipal court law,
drunk driving and contested probate estate administration.
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