What happens to a person’s property after death? The decedent’s assets comprise his or her estate, and become subject to a legal process called probate. Titles 3A and 3B of the New Jersey Revised Statutes govern probate in the state.
Probate is the court-supervised process of settling a decedent’s estate and transferring the remaining assets to devisees or heirs according to the provisions of the decedent’s will, if any. The Surrogate Court of the county in which the decedent resided at the time of death has jurisdiction in New Jersey probate proceedings.
Testacy refers to the status of a decedent’s will. When a decedent dies with a will, the estate is said to be testate. The decedent can specify the disposition of separately transferrable interests, such as real property titled in the decedent’s name individually or as a tenant in common, in his or her will; these assets are subject to probate. Property not devised by will (i.e., intestate property) passes according to New Jersey laws of intestate succession, as established at N.J.S.A. 3B:5-3 through N.J.S.A. 3B:5-14.
Certain assets transfer outside of probate, regardless of the testacy status of the decedent. These include property held in a survivorship interest. In the example of two spouses holding title to realty as tenants by the entirety, upon the death of the first spouse, the title devolves to the surviving spouse by process of law. In a joint tenancy, title passes to the remaining joint tenants. Assets held with a beneficiary designation or in a trust are also exempt from the probate process. Note that an inheritance tax waiver or supplemental documentation, such an affidavit of surviving spouse, may be required to evidence the passing of title. In some cases, recording a new deed to reflect the retitled property may be preferable.
In New Jersey, a decedent’s property devolves to devisees (beneficiaries of a testate estate) or heirs (beneficiaries of an intestate estate) upon death, subject to the rights of creditors and to administration (N.J.S.A. 3B:1-3). To prove a transfer of property and appoint an executor of the estate, however, wills must be admitted to probate (3B:3-18).
The court grants letters authorizing a personal representative (PR) to “settle and distribute the estate of the decedent in accordance with the terms of any probated and effective will and applicable law, and as expeditiously and efficiently as is consistent with the best interests of the estate” (3B:10-23). For intestate estates, an heir or any other person desiring letters can apply for administration in the court (3B:10-13). A renunciation may be required if application is made by someone who does not have priority administer the estate (see N.J. Ct. R. 4:80-3).
Letters testamentary evidence the appointment of an executor named in a will; letters of administration authorize an administrator when the decedent dies intestate, or when a named executor cannot serve. N.J.S.A. 3B:10-2 establishes the priority for persons to be appointed administrator of an intestate estate. Once appointed, the PR has the same power over the title to the decedent’s property that an absolute owner would have, and may exercise such power “without notice, hearing, or order of court” (N.J.S.A. 3B:10-30). The PR must send notice of a probated will, however, to all beneficiaries under the will, and any surviving spouse, heirs, and next of kin, pursuant to N.J. Ct. R. 4:80-6.
Among the PR’s initial duties is marshalling the assets and taking inventory of the estate. Before an estate can be distributed, the PR must pay creditors’ claims on the estate. Depending on the size of the estate, New Jersey estate tax may also apply. The estate tax is based on the total value of the decedent’s estate.
In addition to the estate tax, New Jersey has a transfer inheritance tax for transfers valued at $500 or more [1]. Also called a “beneficiary tax” because it is based upon who specifically receives the decedent’s property, all residents are subject to the New Jersey inheritance tax unless the estate is wholly distributable to Class A beneficiaries. This class includes the surviving spouse or domestic partner and lineal ancestors or descendants of the decedent [2]. To transfer a clear title, an inheritance tax waiver must be recorded with the county clerk where the subject property is located. The waiver constitutes written consent of the Director of the Division of Taxation to transfer or release certain property in the name of a decedent [1]. New Jersey law stipulates that the estate pays only the higher of two imposed taxes (estate or inheritance) [3].
The PR can only distribute assets after payment of creditors’ claims, if any, and applicable taxes. To convey real property from a decedent’s estate, the PR must execute and record a deed. A personal representative’s deed (executor’s deed or administrator’s deed) is a type of fiduciary instrument, named for the capacity of the granting party rather than the type of warranty the grantor is making with the transfer.
A PR deed grants and conveys title to the decedent’s realty, typically with a covenant as to grantor’s acts under N.J.S.A. 46:4-6, to a devisee, heir, or purchaser. In this type of transfer, the grantor (here, the personal representative) promises that the grantor has done no act to encumber the property and that the grantor has not allowed anyone else to obtain any legal rights which affect the property (such as by making a mortgage or allowing a judgment to be entered against the grantor). If the PR is distributing (i.e., retitling) realty, a quitclaim deed may also be appropriate as evidence that title has devolved to a distributee; contact lawyer with questions.
A properly executed PR deed states the name and address of the acting PR and identifies whether the PR is an administrator or executor. In addition, the deed states the decedent’s name, date of death, and county of residence at the time of death, as well as information identifying the decedent’s estate, including the Surrogate Court where the estate is probated, the case number, and the date of issue of letters. In order to properly convey title, the grantee’s full name, address, marital status, and vesting information must appear on the deed.
When the PR is conveying title to a purchaser, the deed should recite the total consideration made for the transfer. Deeds made by a PR to a devisee or an heir to carry out distribution of the estate are exempt from New Jersey’s realty transfer fee under N.J.S.A. 46:15-10(6)(o). The deed must note the exemption, and an affidavit of consideration recorded alongside the deed.
As with all conveyances of real property in New Jersey, the PR deed requires a complete legal description of the subject parcel, including tax map reference pursuant to N.J.S.A. 46:15-1.1. An effective deed also recites the grantor’s source of title, including the office, book and page where the prior deed is recorded, and the date of recordation. The PR deed should also note any restrictions associated with the subject property.
The personal representative must sign the deed in the presence of a notary public before recording in the appropriate Register of Deeds office. A seller’s residency form is required for all transfers of real property in New Jersey. The PR deed should meet all other requirements of form and content for documents pertaining to an interest in realty, including any county-level requirements (such as a recorder’s cover sheet).
New Jersey Personal Representative Deed Forms
The information provided above is not a substitute for legal advice. Consult an attorney licensed in the State of New Jersey with questions regarding personal representative’s deeds and probate procedures, as each estate is unique.
[1] http://www.state.nj.us/treasury/taxation/inheritance-estate/inheritance_over.shtml#ScheduleB
[2] http://www.state.nj.us/treasury/taxation/inheritance-estate/tax-rates.shtml
[3] http://www.state.nj.us/treasury/taxation/pdf/other_forms/inheritance/o10c.pdf