One of the more challenging problems faced by an executor of an estate, or, by any fiduciary, is the security barriers set in place by banks and other financial institutions to obtain information and accounts. Many executors rightly complain that every bank, every financial firm, and every life insurance company has its own security rules. These rules frustrate the ability of the executor to get information and to even close accounts and obtain money for an estate. Here are my recommendations for handling this situation:
Ask, “What Do You Need From Me So We Can Talk?”
Financial companies are understandably nervous about giving out information or account access, to anyone but the account holder. Many times, depending on the bank, even an account holder will have problems obtaining information on their own accounts. For an executor, I have found the best way to get information is to call the company, identify yourself, and state why you are calling. Immediately follow this by asking, “What do you need from me so we can talk?” This usually puts them at ease. Then, send them what they ask. Usually, you are asked for a death certificate and your executor certificate from the County Surrogate. These can be sent by fax or email.
Again, depending on the bank, and what you need, you may be able to call again in a few days or a few weeks and have the conversation you want. Some might surprise you with immediate cooperation, but this is, unfortunately, not the usual response.
Know the New Jersey Inheritance Tax Rules Before You Begin
New Jersey has an Inheritance Tax. There is a tax on inheritances to everyone except a spouse, children, stepchildren, and grandchildren. Also, if the estate’s money will go into a trust, or money is left to a charity, Inheritance Tax Return must be filed. After the return is filed, it will be reviewed by the State and, if satisfactory, the State will issue a “tax waiver” sometimes called, “Form 01”. The financial institution will want the tax waiver. However, note the following:
If all beneficiaries in the last will are either a spouse, child, stepchild, or grandchild, no Inheritance Tax Return is required. Additionally, if a joint account or beneficiary is a spouse, child, stepchild, or grandchild, no Inheritance Tax Return is required. The bank should surrender the account upon submission of the executor’s documents.
If one or more beneficiaries is not a spouse, child, stepchild, or grandchild, an Inheritance Tax Return must be filed, and a Tax Waiver will be needed before the account can be closed. However, under the law (N.J.A.C. 18:26-11.16), even though a Tax Waiver may be required, the bank must release half of the account to the estate, so that bills can be paid.
Armed with the proper documents and knowledge of what is obtainable under the Inheritance Tax rules, you might be immediately successful.
The Big, National Banks Are A Problem
If you are dealing with one of the large, national banks, be prepared for a frustrating experience. These banks follow their own rules. The local branch people are not trained and have little if any, the authority to help you other than to send your documents to the bank law or estate department. It could take a couple of hours to a few months to get what you want, depending on the bank. Some will send you a seemingly unending number of forms to complete, others will not release funds and demand a tax waiver when it is not required, and one loves to freeze accounts, even if the surviving spouse is the joint owner. Be firm. Keep them on a “short leash” by calling for status reports on your requests. Demand to talk to branch managers and supervisors. If you are still having problems, see an attorney. Sometimes filing a lawsuit will gain quick action. I have been successful in recovering attorney fees in these cases. Obviously, do not open an estate account with these banks. Find a local bank to open an account.
Being an executor or other fiduciary is sometimes challenging. If you are armed with a little knowledge about the things you don’t know, your duties will be much easier. If you become an executor or other fiduciary, see an attorney at the start. A one-hour consult will set you on an easier path and is well worth the money. Our New Jersey Attorneys at Shanahan & Voigt is only a call away, and you won’t need an Act of Congress to talk with us.
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