How the Remaining Estate Funds Are Distributed to Children in New Jersey

Detailed Answer

This article explains, in plain language, the common process for distributing the remaining funds of an estate to a decedent’s children in New Jersey once taxes, valid creditor claims, and administration expenses are paid. This is a general overview of typical steps under New Jersey probate practice and state law. It is not legal advice. For case-specific guidance, consult a licensed New Jersey probate or estate attorney.

1. Who has authority to distribute funds?

Only the person appointed by the Surrogate’s Court (usually called the executor under a will or the administrator if there is no will) may legally collect estate assets, pay debts and taxes, and distribute what remains to beneficiaries. The court issues Letters Testamentary or Letters of Administration that prove that authority. For general information on Surrogates and the probate process in New Jersey, see the New Jersey Courts Surrogate information: https://www.njcourts.gov/courts/surrogate.html.

2. Inventory and value the estate

The personal representative (executor/administrator) must identify, gather, and value all estate assets (bank accounts, investments, real estate, personal property, retirement assets, etc.). This step determines the estate’s gross value and what remains to distribute after obligations are met.

3. Pay funeral costs, administration expenses, and creditor claims

Before distributions, the estate must pay valid claims and reasonable administration costs (funeral, appraisal, attorney and executor fees, court costs). The personal representative must follow applicable notice procedures so known and unknown creditors have the opportunity to present claims. Check the Surrogate’s office in the county handling the estate for the required notices and timelines.

4. File necessary tax returns and pay taxes

File any required final income tax returns for the decedent and any required estate-level returns. Important points for New Jersey:

• New Jersey no longer imposes a state estate tax for deaths after 2017; however, inheritance tax rules and filing obligations remain. See New Jersey Treasury guidance on estate/inheritance issues: https://www.state.nj.us/treasury/taxation/.
• Under New Jersey law, transfers to children generally fall into Class A and are exempt from New Jersey inheritance tax. For details and forms, consult the New Jersey Treasury’s inheritance tax guidance: https://www.state.nj.us/treasury/taxation/inheritance.shtml.
• Large estates may trigger federal estate tax obligations; check current IRS rules and filing thresholds. See the IRS resource on estate tax: https://www.irs.gov/businesses/small-businesses-self-employed/estate-tax.

5. Prepare accounting and request authorization to distribute

Once debts and taxes are paid, the personal representative usually prepares an accounting showing receipts, payments, fees, and the remaining balance (the residue). Two common paths follow, depending on whether the probate is supervised or unsupervised and the Surrogate’s local rules:

• If the estate administration is unsupervised (more common for straightforward estates), the executor can often distribute the residue to beneficiaries after providing required notices and retaining documentation; a formal court order may not be required but keeping a complete accounting and obtaining signed receipts from beneficiaries is essential.
• If the estate is supervised or a beneficiary objects, the personal representative will file a formal accounting with the Surrogate’s Court and request a court order approving the final accounting and authorizing distribution. The court then issues an order for distribution.

6. Make distributions to the children

How the funds are divided depends on the decedent’s will (if any) or the intestacy rules if there is no valid will. If the will directs distribution to the decedent’s children, follow the will’s terms. If there is no will, New Jersey’s intestacy statutes govern how property passes (for an overview of the probate/statute framework, see the New Jersey Legislature statutes page: https://www.njleg.state.nj.us/legislation/statutes.asp).

Typical scenarios:

• If the will leaves the residue to the decedent’s children equally, divide proceeds per the will language (equal shares unless the will says otherwise).
• If there is no will, the Surrogate’s Court follows New Jersey intestacy rules to allocate shares among surviving spouse, children, or other relatives.
• If a child is a minor, the personal representative cannot usually deliver cash directly to the minor. The funds are held or transferred to a court-approved guardian, placed in a custodial account under New Jersey’s Uniform Transfers to Minors Act (UTMA), or held in a trust for the child until they reach majority or another age specified by law or the will.

7. Obtain releases and close the estate

After distributing the funds, the executor should obtain written receipts and releases from beneficiaries (forms vary by county) and file any necessary closing documents with the Surrogate’s Court. Retain records of all transactions in case questions arise later.

Example (hypothetical)

Imagine an executor collects all assets and finds $120,000 in the residuary estate after paying funeral costs, attorney fees, and creditor claims. The decedent had three adult children and no surviving spouse. The executor confirms no New Jersey inheritance tax applies to transfers to the children, prepares a final accounting, obtains signed receipts from each child, and distributes $40,000 to each child. The executor files closing papers with the Surrogate and keeps copies of the accounting and receipts in estate records.

When you need court approval or help

Get court approval if: the estate is supervised, beneficiaries dispute the accounting, assets are complex (business interests, foreign assets), or tax or creditor questions remain. If you are unsure about required filings, taxes, or creditor notices, contact the county Surrogate’s office or speak with a probate attorney.

Useful official resources

• New Jersey Courts — Surrogate information: https://www.njcourts.gov/courts/surrogate.html
• New Jersey Treasury — Inheritance Tax information: https://www.state.nj.us/treasury/taxation/inheritance.shtml
• New Jersey Legislature — Statutes (Title 3B Probate & Title 54 Taxation): https://www.njleg.state.nj.us/legislation/statutes.asp
• IRS — Federal estate tax overview: https://www.irs.gov/businesses/small-businesses-self-employed/estate-tax
• Find a lawyer or referral: New Jersey Courts legal resources: https://www.njcourts.gov/selfhelp/findlawyer.html

Helpful Hints

• Gather documents early: will, death certificate, bank statements, deeds, beneficiary designations, bills.
• Keep a detailed ledger of all estate transactions and retain receipts for payments and distributions.
• Get signed receipts (discharge/release documents) from children when you distribute funds.
• Check beneficiary designations (retirement accounts, life insurance) — they can pass outside probate to named beneficiaries.
• If a child is under 18, plan how to hold or manage their share (UTMA custodial account or court-ordered trust).
• Ask the county Surrogate’s office for its checklist and local rules — processes can vary by county.
• If beneficiaries disagree, consider mediation before costly litigation.
• When in doubt about tax or procedural questions, consult a New Jersey probate attorney to avoid personal liability for improper distributions.

Disclaimer: This article is educational only and does not constitute legal advice. It summarizes common New Jersey practices and points to public resources. Laws change and every estate is different. Consult a licensed New Jersey attorney for advice tailored to your situation.