Handling Debts and Expenses in NJ

Handling Debts and Expenses in NJ
It is the fiduciary's duty to determine when bills unpaid at death should be paid, and then pay them or notify creditors of temporary delay. In some cases, such as property or casualty insurance bills or real estate taxes, the estate may be harmed if the bills are not paid promptly. Most states require a written notice to any known or reasonably ascertainable creditors. While most bills will present no problem, it is wise to consult an attorney in unusual circumstances, as the fiduciary can be held personally liable for improperly spending estate or trust assets.
The fiduciary is responsible for a number of tax returns. First are the personal returns of the decedent: the final income tax return for the year of the decedents death; a gift or generation-skipping tax return for the current year, if needed; and prior years returns that may be on extension all may need to be filed. In addition, if the value of the estate (whether under a will or trust) before deductions exceeds the amount sheltered by the "applicable exclusion amount," which is $1,000,000 in 2003 and due to increase to $1,500,000 for 2004 and 2005.
Since the estate or trust is also a taxpayer in its own right, a new tax identification number must be obtained and a fiduciary income tax return must be filed for the estate or trust as well. It is important to note for planning that the estate or trust and the beneficiaries may not be in the same tax brackets. Thus, timing of certain distributions can save money for all concerned. Some tax preparers and accountants specialize in preparing such fiduciary income tax returns and can be very helpful. They are familiar with the filing deadlines and will be able to determine whether the estate or trust must pay estimated taxes quarterly.
Most expenses that a fiduciary incurs in the administration of the estate or trust are properly payable from the decedents assets. These include funeral expenses, appraisal fees, attorneys and accountants fees, insurance premiums, etc. Careful records should be kept and receipts should always be obtained.