Legal Question in Wills and Trusts in New Jersey

Out of approx 17 beneficiaries 5 are refusing to sign the refunding bond and release. informal accounting is complete , and money is ready to be distributed.what happens next? question #2 the will has no mention of the estate paying inheritance taxes for all beneficiaries yet it did but it would have been more beneficial for most of us to pay on our own doesn't seem fair we are paying tax on a $4oo,000 house left to 2 people.


Asked on 12/05/13, 10:25 pm

3 Answers from Attorneys

Jonathan Chester The Law Office of Jonathan S. Chester, Esq., LLC

To answer your question, I will need more information, including a copy of the Will to determine the who is liable for the taxes.

On the accounting question, it seems like there is a stalemate....When that happens, in general, if the beneficiaries will not sign-off on the refunding bonds or approve an informal accounting, the executor will have to file an estate accounting in court and have a Judge approve it. If approved by the court, the executor is free to make the distributions without the direct approval of the beneficiaries. However, if the accounting is filed in court, the beneficiaries will have the opportunity to raise any objections at that time, and the Judge may agree that the executor has acted improperly and surcharge the executor or make other adjustments to the proposed distribution.

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Answered on 12/06/13, 6:36 am
Robert Davies The Davies Law Firm, P.A.

I do not understand why your attorney is not answering these questions for you.

The executor needs a good smart attorney to answer these questions and handle the matter.

If the attorney can not answer the questions, get another attorney. Hire me.

If you do not have an attorney, please get one right away.

Robert Davies, Esq.

201 820 3460

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Answered on 12/06/13, 7:06 am
Robert J. Lenahan, Jr. Robert J. Lenahan, Jr.

In NJ, the individual beneficiaries are liable to pay their own inheritance taxes, unless the will specifically says that all inheritance taxes are to be paid by the estate. The executor can be held personally liable if he distributes money to the beneficiaries and they do not pay the taxes. Therefore common practice is that the executor withholds the proper amount of inheritance tax from each beneficiary's distribution and pays it to the state. So if a beneficiary gets $10,000 and the will does not say inheritance taxes are payable out of the estate, the executor sends out $8500 to the beneficiary and holds back $1500 to be paid to the state. Remember these are NJ "inheritance taxes" you are talking about, not "estate taxes." The tax is on the inheritance, not on the estate.

Since you still have money to distribute, you should have the ability to withhold the proper amount of inheritance taxes from the final distribution and so reimburse the estate. Then those monies can be redistributed to those beneficiaries that would have gotten more money had the estate not paid the taxes for other people.

As for the 5 people refusing to sign the releases, find out if it is because they object to the idea of having to refund monies or whether they disagree with the accounting. It is common for beneficiaries to object to this, but they have no choice. It's a law. If they object to the accounting (meaning they think they are entitled to more money) you will have to do a formal accounting in the Superior Court. This entails much more than simply filing the informal accounting with the court.

Never do a final distribution to some beneficiaries but not to people who refuse to sign off. If those 5 force you into court, the estate will incur counsel fees which will not be assessed against their shares only. They will be assessed against the estate as a whole. If you pay the others, you will not have enough money to cover all of the counsel fees and you will have to pay legal fees that could have been deducted from the shares you paid out.

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Answered on 12/06/13, 10:27 am


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