This is a guide for executors about their role, their obligations and what is involved in managing and finalising an estate.
The executor’s role is to personally carry out the wishes of the will maker as specified in the will and is a position of great trust. The executor must always act in the best interests of the estate and the beneficiaries and cannot intermingle his or her interests with the estate.
The executor is responsible for managing and protecting all of the assets of the estate until they are distributed. The executor is also responsible for paying all of the liabilities of the estate.
An executor should keep full and accurate records of how the estate has been managed and provide a summary of the estate’s transactions to the beneficiaries.
An executor cannot take sides with one of the beneficiaries if there is a dispute.
The executor must at all times act with care, and in the interests of the beneficiaries, must endeavour to administer the estate in accordance with any direction or power in the will as quickly as possible.
The executor may be liable in damages to beneficiaries for negligence in respect of any avoidable delay which results in loss to the beneficiaries either in relation to lost investment income or a lost opportunity to invest.
The executor is responsible for making funeral arrangements and should follow any directions in the will in relation to those arrangements but is not bound to do so. The executor should consult with the family about the funeral arrangements. The reasonable cost of the funeral is an expense of the estate but the executor should be careful not to incur expenses beyond the available funds in the estate.
As the executor is responsible for deciding whether the body is to be buried or cremated. Also the executor may be asked whether the organs can be donated. This is the decision of the executor usually in consultation with the next of kin. The executor should check the will for directions in regard to the body of the deceased. A direction that the body is not to be cremated is binding on the executor.
It is not usual in Australia to have a formal reading of the will. In New South Wales the Succession Act specifies who is entitled to a copy of the will. The executor should consult with an experienced legal practitioner as to who is entitled before releasing a copy of the will to anyone.
The executor is responsible for the safekeeping of the assets of the estate. The executor should:
- identify the deceased’s beneficiaries
- ascertain what are the deceased’s assets and make a list as soon as possible (consideration should also be given to digital assets e.g. photographs, social media & email accounts)
- ensure that assets are adequately insured where necessary
- ensure that items such as jewellery & paintings are adequately secured
- consider whether the locks to property need to be changed
- ascertain what are the deceased’s liabilities (including tax)
- ascertain if there is a superannuation death benefit payable
- ascertain if the deceased had life insurance
- redirect or collect the deceased’s mail
The executor must apply for (within 6 months of the date of death) and obtain a Grant of Probate, except in the case of estates with only jointly owned property or small bank accounts or personal items.
A Grant of Probate is a Supreme Court order that is issued by the Registrar of the court as a result of the executor complying with the stringent court Rules. In some situations the process is judicial and requires the making of the order by a Judge of the Supreme Court.
The Grant of Probate is necessary to give the executor the legal right to deal with certain assets in the estate such as real estate, shares and money in bank accounts. Those assets cannot be transferred, collected or sold unless a Grant is obtained.
After the Grant of Probate is obtained the executor must properly administer the estate by collecting any income, transferring and/or selling the assets, filing tax returns and paying any outstanding tax and satisfying the liabilities of the estate.
The executor is entitled to apply to the court for a commission, if the executor wishes to do so.
The executor has a final duty to distribute the estate in accordance with the terms of the will or any supervening court order.
The executor should keep the beneficiaries informed of progress with the estate, the date and amount of likely distribution, and if there is some unavoidable delay, inform them promptly explaining the reason.
The executor must realise that where a professional such as a solicitor or accountant is retained to carry out executor or real work, costs of such work are payable by the executor, although the costs of general estate administration are payable by the estate. The executor is entitled to reimbursement of any properly incurred costs paid by the executor in respect of the administration of the estate.
The administration of an estate and the role of the executor can be complex and time-consuming. In most cases it involves knowledge of the law of wills and succession and Supreme Court procedures together with access to the prescribed documents and forms.
At Best Practice Lawyers we recommend that executors instruct an appropriately qualified lawyer to provide professional advice and to ensure that the estate is administered properly. This will avoid the executor having personal liability to the beneficiaries of the estate for any aspect of the administration that is not carried out correctly or in accordance with the law.