What is a probate?

Probate is a certificate from the Supreme Court notifying the world at large that the attached will is valid and enabling the executor to administer the estate. The document is proof of the executor’s authority to deal with assets of the deceased.

Why is probate necessary?

The deceased’s assets may be held by others, for example, a bank holding the deceased’s funds, a share registry holding the deceased’s shares and the Land Titles Office regulating the ownership and transfer of the deceased’s real estate. These asset holders may require probate before releasing the assets or transferring them in accordance with the will. The grant of probate confirms that the person seeking release of assets has authority to deal with them and this protects the asset holders against possible liability for handing assets over to the wrong person. This assists with the orderly and lawful succession of estates.

Can I deal with the deceased’s assets without Probate?

Asset holders will often release modest amounts without the need for probate to be obtained so long as they are indemnified for doing so. Banks and share registries will usually have an in house limit. Should the estate exceed that limit, then probate will be required. The Land Titles Office will always require a grant of probate or letters of administration.

The cost of a free Will

The Public Trustee is now known as NSW Trustee & Guardian and has for many years offered free wills. Many people are induced by that offer to have their wills made by the NSW Trustee & Guardian. However, the NSW Trustee & Guardian will be appointed as executor of the estate and is entitled to charge high rates of commission for administering your estate. Their website currently lists the following rate of charges:

Value of Assets % Fee Payable (inc GST)
Up to $100,000 4.4
From $100,001 to $200,000 3.3
From $200,001 to $300,000 2.2
From $300,001 and above 1.1

On a modest estate including a house worth $750,000 and $100,000 in the bank they will charge $15,950 + expenses.

What would a solicitor charge?

Solicitors charge for obtaining a grant of probate according to a prescribed maximum fee set by an independent body. The fee for getting a grant of probate for this example would be $4799 + GST. Thereafter, to administer the estate a solicitor would typically charge $1,500 + GST.

Inclusive of GST the total costs for a solicitor to carry out the work would be $6,928.90. This is a saving of over $9,000 from the amount charged by the NSW Trustee & Guardian. This is the real cost to you of that free will for which a solicitor may charge you about $400 depending on complexity.

An added advantage from avoiding the NSW Trustee & Guardian is that you will not have outsiders involved in managing your family’s private business.
You have all heard the expression “there is no such thing as a free lunch”. Well now you know there is no such thing as a free will.

Mediation

There are two ways that parties can resolve their disputes:

  1. by agreement
  2. by Court ruling

Mediation is all about helping the parties reach their own agreement. Mediation involves an independent third party called the Mediator. It is the Mediator’s role to assist the parties in reaching a voluntary agreement. The Mediator does not decide how the dispute should be resolved.

Mediation has a number of advantages over litigation:

  • mediation is less expensive and less time consuming
  • mediation is confidential whereas litigation is public
  • mediation leaves control of the outcome in the hands of the disputing parties rather than in the hands of a Judge
  • mediation may allow solutions that a Court cannot offer
  • mediation can extend beyond restrictive legal issues and may allow parties to repair or preserve ongoing relationships.

Best Practice Lawyers can offer qualified mediators as well as trained and experienced lawyers to represent parties at mediation.

Update on contractor reporting requirements due 21 July

If your business is in the Building and Construction Industry, reporting contractor payments via your annual report to the ATO will be due for the first time on 21 July 2013. Are you ready?

By 21 July 2013 you will need to submit your Contractor Payment Report to the ATO if you hold an Australian business number (ABN), your primary business is in the Building and Construction Industry and you make payments to contractors for their building and construction services.

Ensure you have met your compliance obligations and understand who is and who is not deemed to be a contractor to your business. Should you require advice or clarification of any aspect of your obligations, contact a lawyer to seek assistance.