Searching for Missing Heirs – Part 3
The last 2 weeks I have written about the increasing number of estate administration matters in our office in which there was no will and it is not clear who the heirs are. These are cases where the decedent had no spouse or children. We may know of the heirs on one side of the family, for example, on the paternal side but nothing about the maternal side. In other cases we don’t know any of the heirs on either side. We must determine all the rightful heirs - and not just some of those heirs - to be sure that the estate assets are distributed correctly. Hiring a company such as a genealogy search firm or a detective, may be necessary. This is part of the “due diligence” that the administrator must exercise in locating missing heirs. What specific steps need to be taken is determined in part by the size of the estate. Since there is no central data base that can be consulted, public records, newspaper archives and personal interviews typically form parts of the search. Once heirs are identified they must be located and if they are deceased the search then continues to the next level down on the family tree. Once an administrator is
Searching for Missing Heirs – Part 2
In last week’s blog post I talked about how many people are alone without apparent family and that dying alone - from an estate administration perspective - raises issues such as identifying the rightful heirs. For people that don’t have close relationships, they probably have less reason to think about executing a will. As I explained last week, state intestacy laws step in when there is no will. Often, although not always, some people who had some contact with the decedent step forward or are easily identified. This does not, however, tell us about any other heirs we may not know about. When we work on an estate administration matter, the heirs typically get impatient about the process. “Why does it take so long”, they ask. There are actually a number of reasons why. Let’s start with the fact that any administrator must be appointed, either by the County Surrogate, the elected official charged with overseeing the estate administration process, or a judge in cases where there is no spouse or child with first right to serve as administrator under the law. When a judge is needed, the process takes a bit longer - 6 week or longer depending on the court’s scheduling. Once an administrator is appointed, he or
Searching for Missing Heirs (Part 1)
There have been a number of stories in the media about an epidemic of loneliness among the elderly. This is in part because families are smaller and more spread out. From an estate administration perspective, this means that many of these same people are dying alone and without apparent or at least known heirs. When someone dies without a will, state intestacy laws establish the line of heirs who are entitled to receive estate assets and in what order. Spouses, children and other direct descendants take first. When there are no such heirs, more remote family members such as siblings, nieces and nephews and cousins are next in line. The more remote the family, however, the more difficult it becomes to identify these heirs. Some of them may have lost touch with the decedent (person who died) and are not even aware of the death. In some cases, family members may step forward, claiming to be heirs. But, how can we be sure and even if true, how can we be sure that there aren’t other heirs we don’t know about who haven’t reached out? Aren’t they entitled to a share the estate? What happens if it turns out that there are no heirs? Next week I’ll
Considerations When Leaving Estates to Non-U.S. Citizen Beneficiaries – Part 3
In my last 2 weeks’ blog posts I have been discussing the issues related to leaving your assets to beneficiaries who are not U.S. citizens. This week I want to cover a couple of recent scenarios in our office. One involved a decedent who was a U.S. citizen, died without a will and left a husband and minor son in Africa and a daughter in the U.S. To further complicate the matter, the husband also had children not of his relationship with his wife. Under New Jersey intestacy laws, because the husband had other children, he is to receive only a part of the estate, not all of it. The balance goes to the decedent’s children. Adding to this complication is the fact that the son is a minor so cannot legally receive his share. The share of a minor typically is held in trust or possibly deposited with the Surrogate until he reaches age 18. Being a foreign national further complicates and delays the process. In another case, the decedent had a will which left part of her estate to her sibling, a resident of Hungary. The sibling survived the decedent but then died before receiving his distribution. The sibling had no will. Not knowing how the estate administration process there
Considerations When Leaving Estates to Non-U.S. Citizen Beneficiaries – Part 2
In my post last week, I answered the question whether leaving assets to a non-U.S. citizen triggers any additional tax when compared to a U.S. beneficiary. With the exception of a spouse, it generally makes no difference from an estate or inheritance tax standpoint. There are, however, other practical considerations to take into account. For example, before an executor or administrator distributes the estate to the heirs, he or she should prepare an accounting showing what was taken into the estate, what was paid in estate debts and taxes and what each heir’s share of the remaining estate is. It is a good practice - for the fiduciary’s protection - that each heir sign a release and refunding bond which releases the fiduciary from any liability before funds are distributed. While it is recommended that these documents be signed before a notary, that can sometimes be problematic logistically if the heir lives in a remote area not near the U.S. embassy or consulate or where a notary can easily be found. While this certainly isn’t a reason to change one’s chosen heirs, it can lead to some delays or necessitate work arounds to insure that all documents are properly signed and acknowledged. Additionally, there may be tax
Considerations When Leaving an Estate to Non-U.S. Beneficiaries – Part 1
In some respects, naming a non-U.S. citizen as a beneficiary of your estate is no different than naming a U.S. citizen (with the exception of a spouse). For example, while the amount that can be passed free of federal estate tax (there currently is no New Jersey estate tax) is currently $13.61 million, this applies only to the estates of U.S. citizens. The amount that can be passed tax free by a non-U.S. citizen is $60,000. It is the citizenship of the decedent and not that the beneficiary that matters. The spouse is the exception because there is no marital deduction available to the non-U.S. citizen spouse. The marital deduction provides that spouses can pass unlimited amounts to each other - even if they exceed the exemption amount ($13.61 million in 2024). This unlimited exemption is not, however, available for transfers by a U.S. citizen spouse to a non-U.S. citizen spouse. Estate tax on transfers can only be avoided by setting up a specific type of a trust known as a qualified domestic trust (QDOT). Additionally, lifetime transfers to a non-U.S. citizen spouse are limited to an annual exclusion of $185,000 (for 2024) before being subject to gift tax. While New Jersey phased out its estate tax in