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Understanding probate is key to saving money

New Jersey residents might benefit from understanding probate procedures before spending money in an attempt to avoid it. The probate process in New Jersey is simpler than it is in other states, and it usually requires filing an easy application in order to designate an executor with the surrogate of the county where the person who died resided. The procedure is neither as expensive nor time-consuming as it is in some other states.

The application must include the original will and the death certificate, plus a minor charge. The surrogate then issues certified Letters Testamentary in order to appoint the executor, after which the decedent's next of kin and beneficiaries must be notified via a Notice of Probate. Once the notice is mailed to the proper parties, the executor need not continue to oversee any other probate court activity or file any other formal documents.

Even if probate is avoided, administration activities, which include paying expenses and debts as well as filing tax returns, will continue. It is necessary to realize that there's a difference between circumventing or reducing estate taxes and avoiding probate. People's taxable estates include all their assets, including the ones not involved in probate; therefore, they must file all inheritance or estate tax returns, even if a revocable living trust owned the property at the time of their death. However, choosing the trust route makes its administration private.

The process of estate administration can be confusing, especially as far as probate is concerned. However, a knowledgeable attorney might be able to explain the laws as they relate to probate, trusts and taxes. The attorney may be able to help those trying to navigate the process as well as advise executors regarding the best way to proceed.

Source: NJ.com, "Biz Brain: Estate tax savings strategies", Karin Price Mueller/, August 18, 2013

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