Estate Administration Outline

The passing of a loved one can be a very distressing and confusing time for family and friends. The difficulties faced seem to be compounded for those charged with the responsibility of dealing with an estate and for those left without adequate provision from an estate.

DEALING WITH AN ESTATE - EXECUTORS - WHERE TO BEGIN

Your first priority should be to attend to the funeral arrangements with the capable assistance of your funeral director. If you are not aware of your loved one's wishes about their funeral, it is a good idea to check their Will to see if their wishes are expressed. Don't be too concerned about legal matters - all that can be taken care of after the funeral. Funeral expenses can be paid from the deceased's bank account immediately upon presentation of the funeral account. You do not need to wait for probate, or the other steps in administering a Will, to pay the funeral costs.

THE WILL

Most people leave a Will. One of the first steps to be taken when you are ready to deal with legal matters is to locate the Will. The Will is usually deposited with a solicitor, the Public Trustee, or a bank for safe keeping. However, it is possible that it will be amongst the personal papers of the deceased.

A person (or persons) is usually nominated in the Will as the executor or executrix.

THE ROLE OF EXECUTOR

The executor's role begins with making the funeral arrangements and ends when the deceased's debts and taxes are paid and the assets of the estate are distributed to the beneficiaries named in the Will.

An executor should "take charge" of the deceased's assets at an early stage. In most cases this will simply involve identifying the assets and anything to which the deceased was entitled (such as the proceeds of insurance policies and superannuation). It is a good idea to make a list of everything owned by the deceased and to record an estimate of the value of each item. A list of the deceased's debts should also be prepared.

It is also very important at this stage to make sure that any properties owned by the deceased are secured and insurance is in place. Most insurance companies require written notice if a property is to be left vacant for more than a month and arrangements should be made to notify the insurance company. A failure to give notice can lead to a claim being refused.

After compiling the list of assets and debts, the executor should assess whether a grant of Probate is needed. "Probate" is a formal order of the Supreme Court declaring that the Will is valid and confirming the right of the executor to deal with the assets and liabilities (that is, administer the estate).

WHEN IS A GRANT OF PROBATE NEEDED ?

Generally speaking, a grant of Probate will be required where the deceased owned assets such as real estate or shares and those assets were not owned as "joint tenants" with another person. Where assets are owned with another as joint tenants the assets will automatically pass to the surviving joint owner upon the death of the deceased. Probate is not required for this to occur, although the survivor still needs to arrange for the title documents to be updated.

If the estate is solely made up of funds in financial institutions (banks or building societies), a grant of Probate may not be needed. Each of the financial institutions has a policy about the maximum amount they will release without a grant of Probate.

ADMINISTRATION OF THE ESTATE

The administration can be broken into three parts, namely:

• gathering in the assets,
• payment of the debts and taxes, and
• distribution of the surplus to the beneficiaries.

The first part involves gathering in funds sufficient to cover the debts and taxes of the deceased and to ensure that the estate can be distributed appropriately. During this stage, all accounts with financial institutions will be closed and some other assets may be sold.

During the second part, the executor arranges the payment of the debts and taxes of the deceased. A tax return for the deceased and for the estate may be required as part of this stage.

The third part involves distributing the surplus assets to the beneficiaries under the will. The distribution can take the form of a transfer of a physical asset (such as a house or a motor vehicle) or payment of money or both. The distribution can give rise to taxation issues (primarily Capital Gains Tax) to the beneficiaries.

WHAT IF THERE IS NO WILL?

There will be no executor. It will be necessary for a person (usually the next of kin) to approach the Supreme Court for a grant of Letters of Administration (which has the same function as Probate). The estate is then distributed to the relatives, according to an order of entitlements set out in the Law - the estate does not usually pass to the Government if no will exists.

WHAT IF THE EXECUTOR IS NOT ALIVE OR IS UNABLE OF UNWILLING TO ACT?

The Will is still valid and the estate will still be distributed in accordance with its terms. It will be necessary for a person (usually one of the major beneficiaries) to approach the Supreme Court for a grant of Letters of Administration.

DO I NEED TO USE A LAWYER?

No, but it is recommended. The process of applying for Probate can be complicated and the Supreme Court is very strict about the formal requirements for a grant. There are numerous Court documents that need to be prepared and then witnessed by a Lawyer or Justice of the Peace.

Even if probate is not necessary, it can be complex and confusing administering all but the most simple estate, particularly when you are not familiar with the rules and procedures.

MUST I USE THE LAWYER NAMED ON THE WILL?

No. You have complete freedom of choice as to which Lawyer you use to help you obtain Probate and administer the estate.

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