At the time of her death, May Smith* had outlived her husband and her two adult sons. Her Will, which she had not updated in about 25 years, still named her husband as the primary executor, with her sons identified as the back-up executors.
When a Will does not name any living executors, someone (whether a relative, friend or other third-party) must petition the court to appoint what is called an Administrator C.T.A. (an abbreviation of cum testamento annexo, which is Latin for “with the will annexed”). The Administrator CTA will then have the responsibility of handling all matters involved with probating the Will and administering the estate pursuant to the terms of the Will. The court will first look to the deceased’s closest next of kin to appoint as Administrator C.T.A before considering someone else.
Unfortunately, if your family has to take this route, they will be met with additional delays and costs associated with administering your estate.
In the example of May Smith, one of her three granddaughters was appointed Administrator C.T.A. In New Jersey, a person cannot be appointed as administrator of an estate without posting a surety bond. When executors are named in a Will, the language in the Will often waives the surety bond requirement. When an administrator is appointed by the court, the administrator cannot begin the process of administering the estate without posting the bond. The bond serves as a form of insurance of sorts to protect estate assets and ensure that the Administrator C.T.A will properly distribute the estate’s assets and address any of the estate’s outstanding debts.
The amount of the bond is based on the value of the estate and set by the Surrogate Court. Because May Smith’s estate contained high-value stock holdings and was worth millions of dollars, her granddaughter had to come up with a substantial amount of funds for the surety bond. Normally, the process of posting a surety bond will delay administration of the estate by several weeks — but the timeline can be dragged out if the administrator must procure loans.
Meanwhile, the clock is ticking on the deadline to settle the estate. Also, because the estate’s assets can’t be accessed without an administrator, the estate’s bills cannot be paid during this time. This can cause problems with creditors and build up interest payments, all to the financial detriment of the estate’s beneficiaries. For estates like May Smith’s that are not exempt from filing federal tax returns, the delay in administering the estate’s funds can also create problems with state tax boards and the IRS.
There are many reasons why a Will should be regularly updated, but May Smith’s story serves as a cautionary tale as to the importance of updating your Will every few years and be sure that named executor appointments are current. Doing so will save family members from an unnecessarily stressful and expensive burden in settling an estate.
*Names have been changed to protect the client’s privacy.
Not sure if your Will is up to date? Can’t remember who you named your executor? Don’t follow May’s path, contact our office at 856.782.8450 today to discuss your options.
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