SouthJersey.CPA

So you are the executor of a New Jersey estate. It can be daunting, especially if you have not done it before and do not have support. Here’s a checklist of what actually needs to happen:

Step 1 – Establish Legal Authority

1. Probate the will with the county Surrogate’s Court or initiate intestacy proceedings
   This is the non-negotiable first step. Bring the original will, death certificate, and filing fee to the Surrogate’s Court in the county where the decedent resided. The court issues Letters Testamentary (if there’s a will) or Letters of Administration (if there isn’t). Without these, you have no legal authority to do anything else on this list. If the estate is likely to be contested, involve an estate attorney before filing.
2. Send required notice to heirs and beneficiaries
   NJ law requires formal notice to all beneficiaries named in the will and all statutory heirs. This starts the clock on certain objection periods.

Step 2 – Establish the Estate’s Financial Infrastructure

3. Obtain an EIN from the IRS for the estate; file Form 56
   The estate is a separate taxpayer the moment of death. Get the EIN online via IRS.gov (takes minutes). File Form 56 (Notice Concerning Fiduciary Relationship) to formally notify the IRS of your role and to ensure correspondence routes to you, not to the decedent’s address.
4. Open an estate bank account
   All estate receipts flow in and all disbursements flow out of this account. You’ll need the EIN and your Letters Testamentary to open it. Never commingle estate funds with your personal accounts.

Step 3 – Inventory, Notify Creditors, and Protect Assets

5. Prepare a complete inventory of assets
   Identify and value everything: real property, financial accounts, retirement accounts, life insurance, business interests, vehicles, personal property. Keep records of everything. Note that some assets (life insurance with named beneficiaries, jointly held property with right of survivorship, IRAs with beneficiary designations) pass outside probate – but they may still factor into the taxable estate.
6. Notify creditors and allow the claims period to run
   NJ requires formal notice to creditors. There is a nine-month period from date of death during which creditors can present claims. Do not distribute assets to heirs before this period expires and all valid claims are resolved – you can be personally liable if you do.
7. Identify and resolve any Medicaid/estate recovery claims
   If the decedent received NJ Medicaid benefits (particularly long-term care), the NJ Division of Medical Assistance and Health Services has a right of recovery against the estate. This must be addressed before distribution.

Phase 4 – Tax Filings

8. File any delinquent prior-year income tax returns
   If the decedent was behind on federal (1040) or state (NJ-1040) returns, get those filed. You sign as executor. These are the decedent’s personal obligations and must be resolved before the estate can close cleanly.
9. File the final Form 1040 and NJ-1040 for the decedent
   This covers the period from January 1 of the year of death through the date of death. Due date is the normal April 15 of the following year (extensions available). A surviving spouse may be able to file jointly for the year of death; evaluate this.
10. Address the NJ Transfer Inheritance Tax
    NJ is one of the few remaining states with an inheritance tax, and the rules hinge on the beneficiary’s relationship to the decedent:

Class A beneficiaries (spouse, civil union partner, domestic partner, children, grandchildren, parents, stepchildren): exempt from NJ inheritance tax. Use Form L-8 (affidavit for financial institutions) or Form L-9 (real property affidavit) to release assets without a formal tax clearance proceeding.
Class C beneficiaries (siblings, sons/daughters-in-law): taxable above $25,000; rates 11–16%.
Class D beneficiaries (all others): taxable above $500; rates 15–16%.
Class E (qualified charities): exempt.

When there are taxable transfers, file Form IT-R (NJ Inheritance Tax Return for Resident Decedents) and obtain Form 0-1 (the transfer inheritance tax waiver) before transferring or selling encumbered assets. Tax is due within eight months of death; there is a 10% penalty for late payment. Escrow arrangements may be possible for real estate closings pending final tax determination.

11. Determine whether a federal estate tax return (Form 706) is required
    The federal estate tax applies only to gross estates exceeding the current exemption (approximately $13.99M per individual in 2026 — though the TCJA sunset could reduce this substantially after 2025 if Congress does not act). If applicable, Form 706 is due nine months after death (six-month extension available). Note: New Jersey repealed its estate tax effective January 1, 2018 — there is no longer a separate NJ estate tax return.
12. File Form 1041 (and NJ-1041) for estate income
    The estate is a separate income tax entity from the moment of death. Any income earned after death — interest, dividends, rental income, gains on asset sales — is reported on Form 1041 and NJ-1041. The estate may elect a fiscal year (ending in any month), giving some flexibility in timing distributions and deductions. This may span multiple tax years if the estate administration is prolonged.
13. File Form 1042/1042-S only if applicable
    This is relevant only if the estate has foreign (nonresident alien) beneficiaries or certain types of U.S.-source income payable to foreign persons. It is not a standard NJ estate filing. If you have foreign beneficiaries, get specialized advice here — the withholding and treaty analysis is complex.

Step 5 – Collect, Liquidate, and Close

14. Collect assets and manage the estate
    Transfer titled assets into the estate’s name, collect receivables, manage investment accounts, maintain real property, and arrange for appraisals as needed. Pay ongoing expenses (property taxes, insurance, utilities) from the estate account.
15. Handle retirement accounts and beneficiary-designated assets
    IRAs, 401(k)s, and similar accounts with named beneficiaries pass outside probate — but the executor needs to ensure the beneficiary designations are honored and that the beneficiaries understand the distribution rules (SECURE 2.0 10-year rule implications, required minimum distributions, etc.).
16. Document stepped-up basis for inherited assets
    Assets in the probate estate (and certain assets included in the taxable estate) receive a stepped-up cost basis to fair market value at date of death. Proper documentation now prevents capital gains problems for heirs later.
17. Close real estate transactions
    If real property is being sold, coordinate with the inheritance tax waiver process (Step 10). Title companies in NJ will require either an 0-1 waiver or a self-executing L-9 affidavit before closing. Factor in real estate commissions, transfer taxes, and any attorney fees in the closing math.

Phase 6 – Final Accounting and Distribution

18. Prepare and present the formal estate accounting
    Prepare a complete accounting of all receipts, disbursements, gains, losses, taxes paid, and fees charged. Depending on circumstances, this may need court approval (formal accounting) or can be done by informal consent of all beneficiaries. This is your protection as executor.
19. Pay all remaining obligations
    Taxes, liens, attorney fees, executor commissions (NJ law allows statutory commissions), and any other valid claims must be satisfied before distribution.
20. Distribute net proceeds to heirs and close the estate
    Only after all tax clearances are in hand, all creditor claims are resolved, and the accounting is approved do you make final distributions. Get signed receipts and releases from each heir. File a final Form 56 closing out your fiduciary relationship.

Note that the sequence above is presented in logical order but estates rarely move linearly. Tax filings, creditor resolution, asset collection, and the inheritance tax process typically run in parallel. Most executors, especially in estates with real property, business interests, or non-Class A beneficiaries, benefit from retaining both an estate attorney and a CPA experienced in fiduciary returns from the outset.

If there is a business involved, this can complicate the process. Relatively few professionals will offer to run the business temporarily to either wind down or sell the enterprise. But this is where I have been able to offer the most value.

Finally, consider that waiting until after a death in the family is the worst way to approach an estate settlement. The more discussion, documentation, and planning done in advance, the easier the process will be.