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Estate Executor’s Guide – [Part 1] Getting Started
Estate Executor’s Guide four part series – Part 1: Getting Started
Estate administration 101: Administering an estate and dealing with beneficiaries demands attention to detail and a high level of communication. Use this guide to work through the steps you should take. If at any time you need legal involvement in your administration, please call us on 1300 580 413.
What is comprised by the estate?
The deceased’s estate covers all of a deceased person’s property and debts but does not include:-
Property co-owned with another person as “joint tenants”
Joint bank accounts
Superannuation and life insurance proceeds (unless specified as being payable to the member’s/policy holder’s estate)
Company assets, the estate’s interest being the shares the deceased holds in the company
Undistributed assets of a trust
What is the duration of an estate administration?
Receipt of information from banks and companies; advertising requirements as regards Probate or Letters of Administration; the sale of assets; and finalising tax issues are all time consuming requirements.
Claims against estate assets are allowed six months to be notified. Thus executors in many cases should not make distributions before that period has expired.
Some assets may be required to be held on trust until a certain event happens or if a gift is left with for a person’s benefit, such as by way if a Protective Trust, the executor’s role continues for an extended period.
All of the above issues are determinative of the period over which any particular estate requires administration.
What if the estate liabilities exceed the estate assets?
In the circumstance where there are more liabilities than assets, the estate will be deemed insolvent and should be declared bankrupt. The remaining assets should then be used by the trustee to pay out the liabilities. The executor and beneficiaries have no responsibility for the estate’s insolvency so long as they have not taken any assets from the estate.
What is required to administer an estate correctly?
The steps involved in administration of an estate and the time it takes to administer depend largely on the nature of the estate. The following guide will assist you through each step.
Most wills afford wide discretion to executors in relation to many things you must decide in the course of estate administration. You must act in the best interests of the estate and you are entitled to consult with beneficiaries. You are not bound to observe beneficiaries’ requests. You should balance the wishes of the beneficiaries with any immediate and long-term financial needs of the estate.
You must ensure your interests do not conflict with the interests of the beneficiaries. Before making major financial decisions you must consider potential taxation and stamp duty implications.
You must ensure that the estate’s investments, if any, are reviewed periodically (at least once a year), to ensure they continue to be appropriate for the circumstances.
Generally, when investing, you must use the care, diligence and skill that a prudent person in your position would use. You must consider the relevant legislative and general law obligations. You may decide it is in the estate’s best interests to retain current investments.
You may wish to consult a financial advisor. An accountant or solicitor can only give advice on investing funds if they hold an AFS licence or are an authorised representative of a licence holder.
You can be liable for financial loss if you conceal or misrepresent or carry out your responsibilities negligently or illegally. To protect yourself, you should always follow any advice given by an accountant, solicitor or financial advisor.
Always ask to see a copy of the financial advisor’s licence and if relevant, letter of authority. A licence is not a guarantee of good advice. Ensure the adviser has professional indemnity insurance. Such insurance does not cover losses due to poor advice as opposed to negligent advice.
Generally, advisers who charge a set fee to research and prepare a financial plan (and monitor investments, if required) and who do not receive any commission from the entity with whom the investment has been placed are considered the most transparent.
Immediate steps to take
If you have been appointed as an executor, the following are the immediate items that should be addressed.
Obtain a copy of the will and satisfy yourself that the original is held securely and safely, for example, in a solicitor’s safe custody facility. You will also need to see any letter of direction or explanation deposited with the will.
Familiarise yourself with the provisions of the will relating to burial or cremation and any specification in the will about where and what funeral or memorial service should be conducted. Liaise with family members to arrange the event at an agreed time.
In consultation with family, appoint a funeral director to perform the desired arrangements. Most banks will allow the release of sufficient funds from a deceased’s account to cover funeral expenses. If this is not available, most funeral directors will await payment of their costs from the estate if required.
Consider whether there are any potential issues of legal capacity and if so, seek evidence from the testator’s medical practitioner that he or she had capacity to make the will on the date it was made.
Consider the signing of the will to ensure that on the face of it there were two independent persons present who signed as witnesses in the testator’s presence. Examine the will to see if any of the witnesses been granted a benefit under the will.
Consider whether Probate of the will is likely to be required. Part IV of this guide explains this process and similar court procedures.
Consider whether any family members – for example, children or step-children – have been omitted from benefits under the will.
Make an inventory of all estate assets to consider what steps need to be taken to collect and preserve them. This will also assist in determining whether a grant of probate will be needed.
Copy of will
Ensure copies of the will are provided to all persons named in the will as a beneficiary. The following are also entitled to a copy on request: a beneficiary under a former will, the deceased’s spouse, children, stepchildren and parents. In some cases a former spouse and some relatives are also entitled to a copy.
Satisfy yourself that all assets such as homes, boats and cars have current and adequate insurance.
Ensure that items of monetary or sentimental value such as jewellery, photographs, paintings etc. are adequately stored and secured.
An executor does not have to accept the role however if they propose to decline, this should be done at the earliest available opportunity and certainly before a grant of probate is issued.
Obtain Death Certificate
Often this is sourced for the deceased’s family by the funeral director. The certified death certificate can in most cases be obtained online with payment of the appropriate fee to the registrar for births, deaths and marriages in the state where the deceased died.
Appoint a Solicitor
In most cases, a solicitor should be appointed. If probate or letters of administration are required, you will definitely need a solicitor. This also applies if the estate consists of multiple assets including real estate or investments. The solicitor can do as much or as little of the administration as you prefer.
There are a variety of “housekeeping” duties that should be attended to as soon as convenient: redirect mail; cancel drivers licence; cancel Centrelink payments; claim medical expenses from Medicare and private health fund; and cancel health insurance and claim refund.
You have completed Part 1 of the Estate Executor’s Guide four part series
If at any time you need legal involvement in your administration, please call us on 1300 580 413.
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Last updated: 28 May 2020
Disclaimer: This information is designed for general information. It does not constitute legal advice. We strongly recommend you seek legal advice in regards to your specific situation. For expert advice call 1300 580 413 or contact us to arrange free initial advice.