Dealing with the estate administration process can be a difficult time, especially after the recent loss of a loved one. Robertson Hyetts can guide you through the process and procedures if you have been nominated to administer the estate of a Will maker, or if a person dies without a Will.
We have prepared a short guide to estate administration and acting as an executor.
1. What is an executor or estate administrator?
An executor is the person nominated in a Will to administer the estate of the Will maker after they pass away. Most people nominated as an executor will act in that role. However, in some cases where someone does not want to act, they can renounce their appointment, leaving the remaining executors to act.
If a person dies without a Will, the person who administers the estate is called an administrator.
2. What are the obligations of an executor?
The duties of an executor include:
- locating the original Will (usually located with the Will maker’s lawyer, or potentially the Will maker’s accountant or financial advisors)
- protecting the assets of the estate (such as maintaining insurance policies on estate assets)
- protecting and defending the estate from any legal challenges
- determining the assets and liabilities of the estate
- applying for a grant of probate or letters of administration if there is no Will
- collecting estate assets and paying any liabilities
- attending to tax obligations, including any outstanding tax returns, as well as tax returns for the estate
- distributing the estate and/or establishing and maintaining trusts as directed in the Will.
3. What is a grant of probate and letters of administration?
A grant of probate is a formal acknowledgement from the Supreme Court that the Will was the last valid Will and that you are the executor. Importantly, it provides the executor with the legal right to deal with the assets of the estate. Many institutions require a grant of probate before they will relinquish control of the assets of the Will maker above a certain value. A grant of probate is always required where there is real estate in Victoria in the name of the Will maker.
If a person dies without a Will, in most circumstances the next of kin applies for letters of administration to become the administrator.
4. What assets are in an estate?
Once the last Will is located, the next step in the probate application process is to gather information from institutions that hold assets solely owned by the deceased and confirm the value as at the date of death. This is usually achieved by writing to the asset holders and providing certified copies of the Will and death certificate.
This information is collated into an Inventory of Assets and Liabilities which is submitted to the Supreme Court.
It is not uncommon to see a Will where a Will maker gifts assets that actually cannot be dealt with through the Will. It is important to note that estate assets do not include:
- Assets owned jointly with another person (which pass to the surviving joint owner)
- Assets held in trusts, such as a family trust (the trust continues on after death)
It also does not include superannuation death benefits or life insurance benefits unless they were left to the estate or the ‘legal personal representative’.
5. What documents are submitted to the Court?
Once the values of assets and liabilities as at the date of death have been determined, the next step is to advertise on the Supreme Court website that you intend to apply for a grant. This must be done at least 14 days before the application is made to the Supreme Court.
Robertson Hyetts can assist you in preparing documentation for the Court.
After 14 days from the date of the advertisement, a number of documents are submitted to the Supreme Court as part of the application for a grant, including:
- an Affidavit of the Executors/Administrators
- an Inventory of Assets and Liabilities
- an Originating Motion
- Other supporting material as required
In most cases it takes two to three weeks to receive the grant of probate after lodging the application with the Supreme Court.
6. What if there is a claim on the estate?
Certain categories of people listed in the legislation, who believe they did not receive adequate provision for their proper maintenance and support under the Will, can make a claim for further provision. Any claim must be made no later than six months after the date of the grant of probate. It is the executor’s duty to defend the challenge, which may involve negotiating with a claimant to minimise Court costs.
7. When can the executor or administrator distribute assets?
No distributions can be made from the estate until after the grant has been obtained.
Robertson Hyetts can assist you to deal with all the various institutions once the grant has been received.
Once the grant has been obtained, you may distribute assets of the estate if:
- six months has elapsed since the date of the grant of probate/letters of administration
- you have published the notice of intended distribution of the estate after the grant has been issued
- the time specified in the notice is not less than 30 days after the date it is published
- the time specified in the notice has expired
- at the time of distribution, you did not have notice of any application or intended application by any person(s) for provision to be made to them from the estate.
Our lawyers are able to walk you through the process of the distribution of assets to ensure that you comply with all of the above actions.
8. What are my taxation obligations?
The executor or administrator is required to finalise any tax returns for the deceased, as well as for the estate (if required). This is an important step – the executor (or administrator) can be liable for the deceased’s tax obligations if care is not taken. Our lawyers can provide advice on the tax obligations of the executor before the estate is distributed.
9. Do I need to communicate with the beneficiaries?
All beneficiaries should be identified and advised of their entitlements under the Will from an early stage in the administration of the estate.
Issues can arise where beneficiaries’ expectations regarding the payment of entitlements are not realistic and they expect an immediate payment of their entitlements under the Will.
In most cases, payments of entitlements will not occur until 6 to 12 months from the passing of the Will maker. Keeping the beneficiaries informed regarding when they can realistically expect a payment can avoid many issues.
For legal advice on your duties as the executor or administrator of a Will, phone now for an appointment: Bendigo 03 5434 6666; Castlemaine 03 5472 1588.