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Merlo, Accountant
Category: Tax
Satisfied Customers: 9783
Experience:  25+ years tax consulting. Specializing in returns for US citizens living abroad
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Which assets can be used to pay administration ...

Resolved Question:

In what order can specific assets be used to pay administration expenses (attorney, funeral and executors commissions) for New Jersey estates when there is not enough in the residual estate to pay them?
Submitted: 9 years ago.
Category: Tax
Expert:  Merlo replied 9 years ago.


How many beneficiaries are there to the estate? What types of assets remain in the estate if there is no readily available cash? Does the estate have an executor? Is the estate being handled through probate?

Expert:  Merlo replied 9 years ago.
Hello again lilla,

There is no particular order in which the assets of an estate can or cannot be sold, unless such terms are specifically outlined in the will of the decedent. Generally it is up to the executor or personal representative of the decedent to make these types of decisions, keeping in mind the best interests of the beneficiaries.

Typically, where decisions need to be made on the sale of assets in order to pay expenses of the estate, although the executor has the ultimate responsibility for this decision, he would normally consult with the heirs on their preferences of which assets were sold first, particularly if only one or two heirs are named as beneficaries. If the beneficiaries cannot agree amongst themselves on the assets to be sold, then ultimately the executor or personal representative would be responsible for making the decision.

If the estate is going through probate, then the probate court may also have to approve any proposed plan for sale of assets if real estate is involved.

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Thank you.

Customer: replied 9 years ago.
Reply to Merlo's Post: The beneficaries are the wife and two daughters by the deceased's previous marriage. The probate assets consist of a small amt of personal property (maybe 4K)and car (14K) left to the wife and a Merrill Lynch account with 300,000 left to the wife and two daughters. The residual probate estate is property in Pa which if sold would maybe be worth 8 or 9K and that was left to the wife. She is the executor and she wants to take executors commissions, pay the attorney and accountants and funeral bills from the assets of the estate. The daughters think the the wife is responsible for all the expenses from her personal money including the funeral and professional fees and don't think she is entitled to executors commissions especially if it comes from Merrill Lynch account.
Non probate there is a condo was in joint name with the wife, a joint CD for 15K and the wife was also the beneficiary of a very small ins policy.I'm looking for guidance with the goal being that its appropriate that the balance of the expenses can come from the Merrill Lynch account after selling off and using the money from the sale of Pa property.
20K in expenses of the estate exceed the residual and there is no probate cash except the Merrill Lynch account. Thanks
Expert:  Merlo replied 9 years ago.

Hello again lilla,

Many times, if a spouse or family member is the one acting as executor of an estate, they will waive their right to an executor's fee, simply because it is their personal choice not to charge for their services. However, legally the wife is entitled to charge an executor's fee if she chooses to do so. All other expenses for the funeral and attorney fees and any other expenses in connection with settling the estate should be paid using the estate assets. They are not the personal responsibility of the wife, just as they are not the personal responsibility of any of the other beneficiaries.

If there is a Merrill Lynch account with $300,000 that was to be divided equally between the wife and the two daughters, then it would be most practical to use the proceeds from that account to pay off the debts owed by the estate. Whatever remains in that account after expenses can then still be divided equally among the 3 beneficiaries, and each beneficiary will have equally paid their share of the estate expenses. You indicated in your original post that there were attorney fees to be paid. If you also have an attorney involved in the settlement of this estate, you should also seek his guidance on this issue, particularly if you are already paying him a fee to assist with the estate settlement.

If this has been helpful please press the Accept button. Positive feedback is also appreciated.

Thank you.

Merlo and other Tax Specialists are ready to help you
Customer: replied 9 years ago.
Reply to Merlo's Post: Actually I asked the attorney and he said there was a NJ document much like the EPTL in NY which gave the order that assets could be utilized to pay expenses. I couldn't locate such a document and he was unhelpful as he said that was a tax matter.
Thanks for your help!