Completing an Accounting and Removing an Executor of an Estate By Kenneth Vercammen Esq. of Edison, NJ 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 executorâ€™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 Part 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) That the executor be removed as the executor/administrator of the estate and that the plaintiff 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 4) make the executor reimburse the estate for the neglect or waste of assets. Removal for cause of Executor NJSA 3B:14-21
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." Wolosoff, supra, 205 N.J. Super. at 360. 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. Ibid. Estate litigation is often acrimonious, but the removal of an executor appointed by the decedent is generally to be avoided. Connelly, supra, 142 N.J. Eq. at 411. "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." Wolosoff, supra, 205 N.J. Super. at 360-61. There also must be proof that the friction or hostility arose out of the trustee's behavior. Ibid.; Starr v. Wiley, 89 N.J. Eq. 79, 90 (Ch. 1918) CONCLUSION 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. Kenneth A.
Vercammen is a Middlesex County trial attorney who has
published 125 articles in national and New Jersey publications on litigation topics. He has been selected to lecture to trial lawyers by the American Bar Association, New Jersey State Bar Association and Middlesex County Bar Association. Call our office to schedule a confidential appointment 732-572-0500 KENNETH VERCAMMEN & ASSOCIATES, PC ATTORNEY AT LAW 2053 Woodbridge Ave. Edison, NJ 08817 4
(Phone) 732-572-0500 (Fax) 732-572-0030 website: www.njlaws.com