Handling an Insolvent Estate in New Jersey

By Fredrick P. Niemann, Esq. of Hanlon Niemann & Wright, a Freehold, NJ Estate Probate Administration Attorney

A decedent died without a Will in 2013, leaving an estate buried in debt. The Decedent, however, owned one-half (50%) interest as tenants in common in a residence shared with his mother. An Intestate Estate (meaning an estate without a will) Administration proceeding was filed in 2016 so that the residence could be sold and mom could receive her share of the sale proceeds as a one-half (1/2) owner of the property. The Estate obtained a Surety Bond as required by the county Surrogate. The property was pleased under a contract of sale, but the buyer’s title insurance company insists that insolvency proceedings be filed on behalf of the Estate.

So far only two of the creditors have filed formal claims against the Estate pursuant to NJSA 3B:224. In the Estate petition for insolvency and permission to sell the property, the question raised is whether all potential creditors be named as parties, or just those who actually filed formal claims against the Estate?

I think the answer is fairly simple. The title company will want all creditors named in the court action. It’s the safe thing to do. And I don’t just mean those creditors who have filed formal claims. I mean all creditors who are known to the Estate Administrator having debts owed to them by the decedent. Failure to list them will result in a defective title or future claim of an omitted creditor. The administrator will then be liable for the unpaid debt.

To discuss your NJ Estate Probate Administration matter, please contact Fredrick P. Niemann, Esq. toll-free at (855) 376-5291 or email him at fniemann@hnlawfirm.com.  Please ask us about our video conferencing consultations if you are unable to come to our office.