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Passing and filing estate accounts

Passing and filing estate accounts

Posted on
Wed, 04/03/2019 - 14:25
Posted by Christine Smyth

To many of us, estate administration disputes can seem Pythonesque – gravely serious, yet often comedic in their depth and nature.

 

The position of personal representative (PR)1,2 is, at times, burdensome; for beneficiaries, at times bewildering. The mix frequently results in disputes over the manner in which the estate administration is conducted, with both often left floundering for a productive resolution. 

 

Introduced in 2011, Chapter 15, Part 10 of the Uniform Civil Procedure Rules 1999 (Qld) (UCPR)3  is an overlooked yet economic way to resolve these disputes. It starts as a quasi-judicial process and, if necessary, can proceed through to a full judicial determination. 

 

This article provides a practical step-by-step guide to navigating Part 10.

 

LEGISLATION

 

The current version of Part 10 4 was introduced through 2011 amending legislation under the Uniform Civil Procedure Amendment Rule (No.1) 2011.5

 

The explanatory memorandum to this amendment summarised its objectives as follows:

 

  1. clarifying the procedure for applying for the assessment and passing of an estate accounts;

  2. prescribing the minimum standards for the procedure of the assessment;

  3. clarifying the powers and functions of an estate account assessor;

  4. clarifying and updating the procedure for applying for and awarding of a trustee’s or executor’s commission.6

 

Part 10 proscribes a formal process whereby the manner in which an estate trust is administered can be considered in a structured way through the oversight of an independent third party, an estate account assessor. The estate account assessor is both accredited and appointed by the court, and an accredited specialist in succession law. The estate account assessor has powers akin to a registrar, including the power to determine the process.7

 

Sadly, estate administration disputes often involve prolix and incendiary correspondence disputing the adequacy or otherwise of the estate accounting and administration, increasing the costs and acrimony between the parties without any real or satisfactory resolution.

 

An application to file and pass estate accounts therefore has the very real potential to save time and money by bypassing these exchanges, providing the parties with an independent assessment of the issues in contention which is proscriptive, and therefore economic and efficient. 

 

PROCESS – BY PERSONAL REPRESENTATIVE

 

As a shield, a PR concerned about potential or actual criticism of their conduct in administering the estate can simply apply to the court, ex parte,8  seeking an order for the appointment of an estate account assessor to assess and pass the estate accounts. The process provides the PR with the imprimatur of the court for its conduct in the estate administration and, if necessary, guidance  on any matters to be addressed.

 

Part 10 sets out the minimum requirements for what must be included in a set of estate accounts and the way in which they are presented – see rule 648. This proscription alone can remove a great deal of unnecessary disputation on what ought to be included in estate account reporting.

 

As with all things related to the law, language is key to understanding the process. Practitioners are directed to rule 644, which contains the definitions for Part 10. These  clarify the expectations on what must be included in the material sought and presented.

 

Once the PR has filed an application for the filing and passing of estate accounts, they must follow the process as per steps five and six below.

 

PROCESS - BY BENEFICIARY

 

A concerned beneficiary may utilise Part 10 as a sword by holding the trustee to account in a formal and relatively economic way. 

 

STEP 1: Eligibility

 

Is the beneficiary eligible to seek an assessment of the estate accounts?9 

See the definitions in rule 644.

 

Only a beneficiary entitled to an accounting may apply to the court under Part 10. Typically, the residuary beneficiary/ies are the only entitled beneficiaries. The case authority for this proposition is Re Schilling [1995] 1 Qd R 696. In that decision, the beneficiary’s right to seek an account was generally limited to those in whom a beneficial interest, as opposed to a mere right to due administration, had vested on completion of the administration. It was further held that the beneficiary should ordinarily exercise the right to inspect the accounts before bringing an action.10

 

STEP 2: Notice to the trustee of the estate – rule 646(1)

 

The beneficiary must write to the PR and request an estate account to be prepared and served within 30 days.11

 

STEP 3: No response

 

If no estate account is provided after 30 days, the beneficiary is entitled to make an application to the court under rule 645 for the filing, assessing and passing of an estate account – see rule 646(7).

 

STEP 4: Response provided – Objection

 

If the response is not satisfactory, then the beneficiary may serve a notice of objection on the PR – rule 646(2).

 

The notice of objection must be in the approved form and must set out in a particular manner the objections –  rules 646(3)-(6). The approved form is form 127 of the UCPR.

 

The notice must give the PR 21 days to address the objections – rules 646(7)(b)-(c).

 

STEP 5: Estate account assessor appointment

 

If no response is given or is unsatisfactory, the beneficiary may then apply to the court for the appointment of an estate account assessor.12   In preparation for that application, the beneficiary must write to the estate account assessor 13 seeking their written consent to act, confirmation of their fees, and to obtain clearance of conflict of interest – rule 645(3).

 

The beneficiary then files an application seeking orders that the PR file an estate account and that the estate accounts be assessed and passed – rule 645(1). The respondent to the application is the PR – rule 645. The application is supported by an affidavit.

 

The affidavit must depose to the reasons for the application – rule 645(2).

 

Exhibited to the affidavit are the following:

 

  • 1. Letter to the PR seeking account

  • 2. Response from PR

  • 3. Notice of objection

  • 4. Response to notice of objection

  • 5. Consent to act from nominated estate account assessor

  • 6. Any other relevant material.

 

If the court orders the estate account be assessed, then it must appoint an estate account assessor and may give directions to the estate account assessor as to the assessment – rule 645(6).

 

STEP 6: Process of assessment

 

The appointed estate account assessor may determine the process – rule 651(1). However, that power is tempered by the requirements of rules 651(2) and (3). The costs of the estate account assessor are ordinarily borne by the estate – rule 651(4). 

 

The powers of the estate account assessor are quasi-judicial – rule 652.

 

Once the assessment of the estate accounts has been completed by the estate account assessor, they prepare, sign and file a certificate – rule 657(1), within 14 days after the end of the assessment, providing a copy to the parties – see rule 657(4). The certificate confirms the appropriateness of the manner in which the estate has been administered – rule 657(1)(a) or otherwise see rules 657(1)(b)-(d).

 

The estate account assessor isn’t required to give reasons in the first instance, but must provide them if requested – rule 657A. The cost of preparing the reasons is borne by the person requesting – rule 657A(4).

 

Once the certificate has been filed, the matter may be relisted for the accounts to be passed – rule 657B. If a party is dissatisfied with the decision of the estate account assessor, they may seek the court’s review – rule 657B(3). From there the court determines the matter on the material filed, at which point it becomes a wholly judicial process. 

 

Conclusion

 

Grief, expectation and responsibility are a heady mix that can easily spill over into  intractable, heated disputes. Often it is a lack  of knowledge about what is expected of both the PR and the beneficiaries that results in  an expensive escalation of tensions as to the rights and responsibilities of the parties.

 

The process of applying for the passing of estate accounts, while not a panacea, can go a long way to resolving those disputes in an efficient and final way through the supervision and imprimatur of the court. 

 

Hopefully, with this step-by-step guide, practitioners can add another tool to  their reservoir of options available to clients, which you can recommend,  while demonstrating your value  proposition as a trusted legal adviser. 

 

Christine Smyth is a former President of Queensland Law Society, a QLS Accredited Specialist (succession
law) – Qld, and Consultant at Robbins Watson Solicitors. She is an Executive Committee member  of the Law Council Australia – Legal Practice Section, member of the QLS Specialist Accreditation Board, Proctor Editorial Committee and STEP and an Associate Member of the Tax Institute.

 

NOTES:
  1. It is notable that the definitions simply refer to ‘personal representative’, without mention of ‘legal’.
  2. Note that the definition of ‘trustee’ in this part includes a personal representative of a deceased individual – see rule 644.
  3. Referred to in this article as Part 10.
  4. legislation.qld.gov.au/view/html/inforce/current/sl1999-0111#ch.15-pt.10.
  5. legislation.qld.gov.au/view/html/asmade/sl-20110296#sl-2011-0296. It amended the original UCPR as effective 1 July 1999 – legislation.qld. gov.au/view/html/inforce/1999-07-01/sl-19990111#SL-1999-0111.
  6. Space doesn’t permit an analysis of the process of executor’s commission on this occasion.
  7. In accordance with rule 651. 
  8. See rule 647, although the court can direct the application be served.
  9. Note that this application is different to an application under s 52(1)(b) Succession Act 1981, which provides for a legal personal representative to provide accounts to the court, and s 8 Trusts Act 1973, which enables any person with  an interest in any trust property to apply to court to review acts and give directions.
  10. Lee’s Manual of Queensland Succession Law  (7th ed., 2013). Note that Re Schilling was decided pre-UCPR.
  11. Note the Acts Interpretation Act 1954 (Qld) s 38 excludes the day the notice issues, but includes all ordinary calendar days, not just business days.
  12. But note the court may dispense with compliance  if it is considered urgent – rule 646(8).
  13. Please note the author is a registered Estate Account Assessor. For a list of all registered estate account assessors see courts.qld.gov.au/__data/assets/pdf_file/0020/173306/register-approved-account-assessors.pdf.


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