Commonly Used Terms

There can be many parts that can be confusing in estate administration, which is the last thing, you and your family needs when a loved one dies. We are here to make this process easier for you. If you are require further information regarding estate administration, please call us on 1300 580 413

Ademption: If an asset given by will to a beneficiary is disposed of by the deceased before death, the gift is considered “adeemed”. This presumption can be negatived in the will.

Alteration: An addition or change – handwritten or otherwise – to a will or codicil.

Bequest: A gift or benefit provided in a will.

Beneficiary: A beneficiary is any person or organisation (e.g. a charity) that receives a gift or benefit from a person’s estate.

Capacity: The mental ‘wherewithal’ required for the making by a person of a valid will. Someone may apply on behalf of persons lacking capacity to the Supreme Court for a will to be make for them.

Capital Gains Tax: Tax payable on the sale an asset, if it was acquired after September 1985.

Caveat: An instrument lodged in the Supreme Court to prevent the grant of probate or letters of administration or requiring same to be referred to a judge. The caveat may alternatively require the will to be “proved in solemn form”. The caveat must be supported by a notice of grounds. It stays in place for six months unless removed by order of the court. Further caveats each for six month periods may be lodged after the expiry of an earlier caveat.

Child: In addition to natural children – in Queensland and some other Australian jurisdictions – this term includes any stepchild or adopted child including a child born after the date of the deceased’s death who survives the deceased by at least 30 days.

Codicil: A document required to be executed in the same formal manner as a will, that amends a prior will Dependent.

Conflict of interest: Executors must manage conflicts of interest for example if they are also a creditor or co-beneficiary by always acting transparently and not appearing to favour their personal interest. In cases of actual conflicts, the express written consent of beneficiaries should be obtained as to the course of conduct the executor proposes.

Debts: Most personal debts survive the deceased’s death and can be recovered from the estate by the person to whom the debt is owed. Together with estate and funeral expenses, they are customarily paid before the estate is fully administered. Creditors should notify the estate administrator of the debt due to them before 6 months following the deceased’s death.

De facto: The partner of a deceased person living together with him or her on a “genuine domestic basis” – established by circumstances including residence, interdependence, joint property ownership, shared children and shared household tasks – has standing under Family Provision and Intestacy rules. The pair must have lived together as a couple for a continuous period of at least 2 years up to the deceased’s death. A shared residence does not of itself prove a de facto relationship.

Delay: The executor must administer the estate expeditiously and should report progress to beneficiaries regularly, for example on a quarterly basis. Failure to do so can be a ground for removal of the executor from the position.

Dependant: A spouse and child of the deceased and anyone else wholly or substantially supported by the deceased at the time of their death including a parent, a parent of a surviving child.

Divorce: Gifts to former spouses in wills made prior to a divorce are void but the will remains valid. There is no automatic voiding of gifts following a separation or upon the break up de facto couples.

Distribution: The transfer of ownership of estate property or the payment of money to beneficiaries.

DIY: Will kits from a newsagency or elsewhere are often incorrectly completed or incorrectly executed. They are often the subject of estate disputes.

Estate: An estate is comprised by all of the property and liabilities of a person after their death except for jointly owned property.

Entitled person: A person to whom the executor or solicitor in possession of a will must provide a copy. Such persons include a person named in the will (or a former will) as a beneficiary and the deceased’s spouse, child, stepchild, parent and in some cases, a former spouse and some relatives.

Examination: The process taken by the court’s Registrar prior to the grant of Probate.

Execution: The formal signing of a written will – by the testator or someone else, in the presence of and at the direction of the testator – which is required to be in the presence of two independent witnesses, both present at the same place at the same time.

Executor: The person or persons appointed to efficiently manage estate assets, make payments on behalf of infant beneficiaries pending distribution, sell the assets and make distributions to beneficiaries. An Administrator is a person who performs the same role other than by appointment under a will.

Executrix: The term that applies to a female Executor.

Executor’s commission: A sum allowed by the court or approved by beneficiaries for payment to an executor for the “pains and troubles” to which he or she has been put. It can be as high as 6% on income derived and 5% on capital realised. Such payment requires an order of the court or unanimous agreement of beneficiaries.

Executor’s Year: The period of 12 months allowed to an executor of a deceased estate to pay, free of interest, any legacy left by the will.

Family Provision application: An application to the court by spouse, former spouse, child, stepchild or a person financially dependent upon the deceased, to receive a greater benefit under the will than has been provided for them by the testator.

Fiduciary duty: In addition to their statutory duties, an executor also holds a fiduciary duty in relation to the estate and the beneficiaries arising out of his or her duty to act in the best interests of the estate at all times.

Guardianship: The taking of day-to-day care of infant children orphaned by a deceased’s death. An expression of the desire that a person takes guardianship only comes into effect after the death of both parents.

Hotchpot: The quaint legal term that refers to the taking into account of a pre-death gift to a beneficiary by setting off its value against that beneficiary’s entitlement under a will.

In specie: The distribution of an estate asset directly to a beneficiary or beneficiaries, rather than by paying a share of the cash realised from its sale.

Issue: A legal term for “child”.

Inter vivos: A Latin term referring to “during the lifetime of” a person as opposed to “upon or after the death of” a person to which the description, “testamentary”, applies.

Intestacy: If a deceased dies without a will, the administrator must distribute assets to a spouse, children and in their absence, to other relatives according to specific proportions under the rules of “intestacy”. Where there are no surviving relatives or “kin”, all funds go to the state. The absence of a valid disposition of an asset is also referred to as an “intestacy” in relation to that asset.

Interested person: A witness to the signature of the testator on a will, a gift to whom is void unless there are at least two other persons who are “not interested witnesses” or the court is satisfied that the testator made it freely and voluntarily.

Jointly Owned: Property “in joint names” including bank accounts and a family home of which the co-owners are registered as “joint tenants”, pass automatically to the surviving joint owner rather than becoming part of the deceased’s estate.

Kin: Relatives amongst whom an “intestate” estate is distributed – if there is no surviving spouse or child- are referred to as “kin”. They include siblings, nieces & nephews in the first-tier; grandparents in the second tier; and uncles, aunts & cousins in the third tier.

Letters of Administration: A “grant” from the court authorising a relative or creditor of the deceased who has died without a will, to administer their estate. A person with a  close relationship to the deceased has a superior right to such “grant” than those with a more distant relationship.

Life Interest: The right to use an asset, e.g. a home, or to receive income from the asset during a beneficiary’s lifetime after which, it reverts to the estate for distribution to the residuary beneficiaries or is passed as a further life interest to another person, for example to a descendant.

Life Insurance: The proceeds of life insurance are – in the absence of a specific beneficiary under the policy – paid to the estate for distribution to the residuary beneficiaries.

Location: Wills can be expressed to relate to property only within one place (eg. Australia), which relieves the executor from taking steps in relation to assets located elsewhere and the will drafter from exploring the laws of succession that apply in other countries.

Maintenance: Refers to the financial support for education etc of infant beneficiaries. Wills usually confer a general power on executors to make payments from bequests due for payment upon the child turning 18 or older, to make payments for the infants “maintenance” during their childhood in  the executor’s discretion.

Minor: A minor or person under 18 years may not make a legal will except if in “contemplation of marriage”.

Marriage: A will is automatically revoked by a legal marriage, unless the will was made expressly “in contemplation” of that marriage.

Mutual wills: Wills made under an agreement, eg between a couple, to provide corresponding benefits in each of their wills are referred to as “mutual wills”. Disputes sometimes occur in blended families if one of the pair changes their will after the death of their partner.

Nomination: In relation to superannuation, a procedure to appoint a person as the recipient of benefits due to be paid on the death of a member.

Outgoings: The expenses of preserving an asset after the deceased’s death but before it is transferred to a beneficiary are sometimes the source of dispute if the will makes no provision as to whether they should be borne by the estate or the particular beneficiary and for what period.

Pass over: A beneficiary may attempt to bar an executor from seeking a grant of probate by seeking an order that the person be “passed over”. The order must be obtained before the grant of probate is made. A court will only be persuaded that a named executor be passed over, if genuine cogent reasons for the executor’s disqualification are placed before the court.

Per Stirpes: A quaint legal term that describes how property should be devolve if a beneficiary (who has children) dies before the testator. It provides for the deceased beneficiary’s share to be paid to his or her children.

Perpetuity: The “rule against perpetuities” prevents a will providing for a state of affairs continuing indefinitely. Thus all assets must eventually be distributed. The perpetuity period can be a “lifetime” plus a number of years – or a specified duration – that usually doesn’t exceed eighty years in total.

Probate: The official recognition by the Supreme Court of a will and the executor’s authority to deal with the assets of a deceased person’s estate. Except in the case of estates involving only small bank balances, Probate must be obtained before an executor can require others, eg a bank, to deliver up control and possession of the deceased’s assets.

Provisioned: In accounts provided to beneficiaries, an amount specified in relation to an estimated liability such as income tax or accountant’s fees is called a provisioned sum.

Renunciation: The act of a person declining or “renouncing” their appointment as executor under a will.

Removal: The court ordered removal of an executor or a testamentary trustee from their position due for example to their ill-health, misconduct or delay

Residuary beneficiary: A beneficiary who is entitled to a share in the residue of the estate after all specific legacies have been paid and bequests have been actioned.

Revocation: The formal cancellation of an earlier will. The making of a new will usually has that effect automatically. The term also applies to the cancellation by the court of a grant of probate in respect of a will.

Safe Custody: A facility for the safe keeping of important documents and valuables by a bank or solicitor.

Solemn form: As opposed to a grant in “common form” of probate or letters of administration. A person challenging the legitimacy of a will – for example due to the alleged lack of legal capacity of a testator – in respect of which a “common form” grant has already been made – may require the executor or administrator to bring the grant before the court. The court then determines – on evidence – whether the will represents the deceased’s last testamentary intentions. The pronouncement of a will in solemn form means its provisions cannot be subject to later contest except for fraud or the discovery of a later will.

Spouse: includes husband, wife, de facto partner and a former husband or wife, if they are receiving, or entitled to receive, maintenance from the deceased and have not remarried. The term also includes same sex life partners.

Supreme Court: The court of each Australian State that exercises jurisdiction over wills, trusts, estates and children.

Survival: If a beneficiary does not survive the testator for at least 30 days the disposition is treated as if that person had died before the testator.

Survivor: Where two or more persons die in the same calamity and it is unknown which of them died first, the deaths are “presumed to have occurred in order of seniority” with the younger surviving the elder “for a period of 1 day”.

Survivorship: The law relating to jointly owned property that allows it to pass automatically to the surviving joint owner rather than becoming part of the deceased’s estate.

Superannuation: Most policies contain death benefits. If the subject of a “binding nomination” the benefits are (subject to discretion of the fund’s trustee) paid in accordance with the directions contained in the nomination.

Testator: A person who makes a will.

Testamentary disposition: The provision in a will or codicil disposing of an asset of the testator to a beneficiary.

Testamentary trust: As opposed to an inter vivos trust, as testamentary trust is created by will. Upon the death of the deceased, the trust comes into existence. The will must specify the identity of (or provisions for appointment of) a trustee, the purpose of the trust, powers of the trustee, which property of the deceased becomes a trust asset, who (or what class of persons) are the beneficiaries and what benefits they will receive and when. Such devices can be used to preserve assets across generations who benefit from the income derived.

Testamentary trustee: The person appointed by will to be the trustee of a testamentary trust. In many cases the trustee is also the executor.

Time limits: If any person seeks to dispute a provision in a will or claim a benefit from estate assets, notice to that effect must therefore be given within the six month period to the executor. A dependant or family member who proposes a Family Provision application must also file the application in court within 9 months of the date of the deceased’s death.

Undue Influence: Coercion, manipulation or similar conduct exercised upon a testator to provide benefits to a person under a will. Such conduct – if proven – can invalidate the entire will.

Vesting: The arrival of an interest from a deceased estate into the hands of a beneficiary such that the beneficiary rather than the executor then has legal control and ownership of the interest. The “vesting date” of a gift is often described in wills in terms of the occurrence of one or more events such as the death of another person.

Witness:  A person who is present when someone signs a document who confirms that the signature is genuine by adding their own signature.

 

 

 

 

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