Advice for Executors of a Will
Probate is the process where the Supreme Court of Victoria is required to determine whether the Will is valid, and that the person applying is the appropriate person to be appointed as executor.
The following guide may be of assistance for executors appointed by a Will in considering their obligations and the actions that they need to take.
1. Probate
A preliminary issue is whether it is necessary to apply for a Grant of Probate (where there is a Will) or, if there is no Will, whether it is necessary to apply for “Letters of Administration”. Not all estates require a Grant. In some cases, there may be very limited financial assets (such as a small bank account) where it may not be necessary to obtain a Grant.
In cases where the estate is larger in terms of value of assets and particularly where there is real estate then it will be necessary to obtain a Grant.
Without a Grant banks and other organisations, such as the Titles Office will not recognise the executor as authorised to act until the Grant is obtained.
In many cases assets might be jointly held (for example between a husband and a wife) and where one dies if some assets are jointly held then the assets can be transferred to the surviving partner by operation of law. It may still necessitate the assistance of a Lawyer to transfer jointly owned real estate to the survivor.
2. Immediate Issues
First, the executor is responsible for arranging and paying the funeral.
Commonly, however such arrangements are made in conjunction with close family.
The deceased’s Will needs to be located. Generally, the deceased person has either advised the family where the Will is located and may have left a copy with their personal papers. In most cases the Lawyer who made the Will, will hold the original Will in safe keeping.
Once aware of the provisions of the Will the executor is required to contact the beneficiaries named in the Will and advise them of the steps that the executor is intending to take in order to deal with the deceased’s assets, and provide them with a copy of the Will.
The executor has a duty to act promptly in the administration of the estate but of course there are often good reasons why the process may take some time. It is always wise to keep the beneficiaries well informed as your work as an executor is undertaken.
Importantly the executor will need to gather information as to the assets and liabilities of the deceased as that information then finds its way into an Inventory of assets and liabilities that is lodged with the Application for a Grant.
The executor is also responsible for ensuring that the deceased’s assets are kept safe. This may include securing the home, motor vehicles etc. and importantly the executor should ensure that the insurable assets such as a home, motor vehicle etc. are all fully insured.
In arranging the funeral either as executor or with the cooperation of family the funeral director will be provided with all relevant information that will ultimately populate the death certificate which will then issue to the person organising the funeral. The executor will then need to receive that death certificate as it is required to be lodged with the Application for a Grant.
3. Who Applies
Often more than one person is named as executor.
Where multiple executors are named at least one executor must apply although all named executors can apply if they wish. Usually, discussion is had between named executors to see which executors intend applying or those who may not immediately apply but with leave reserved for them to do so at a later date.
4. Applying for the Grant
Having undertaken the preliminary work, the executor (usually assisted by a Lawyer) will determine whether the Will is validly made or if there are any deficiencies in it.
For a Will to be valid it must be in writing, signed by the Will maker, and witnessed by two witnesses all at the same time.
The executors Lawyer will advise if there are any difficulties with the Will that might prevent it being validated by the Court.
Prior to the Application being prepared and lodged the executor would need to consider whether there is any issue likely to arise as to whether the deceased person had “testamentary capacity” at the time they made their Will.
This issue can often arise where the deceased has some form of mental incapacity such as dementia etc. and which is often referred to in the death certificate. If the diagnosis of a mental illness which might impact the deceased’s ability to make a Will arises then it may be necessary to gain evidence from a treating doctor before proceeding with the Application.
For example, the death certificate might recite the deceased person suffered with dementia for a period of 10 years. If the Will was made before that diagnosis, then no problem is likely to arise but if made after diagnosis then the Supreme Court will certainly seek evidence as to the likely testamentary capacity at the time the Will was made.
Once issues surrounding the Will’s validity has been determined and information as to the assets and liabilities ascertained the formal Application will be prepared and which will include an Affidavit to be sworn by the executor(s) setting out a number of formal matters and to which is exhibited a copy of the death certificate, the original Will and the Inventory of Assets and Liabilities.
Prior to the Application being lodged with the Court a formal publication is required to be made on the Supreme Court Website advising the public of the intention to apply for probate in case someone has some interest in the matter.
5. Claims upon the Estate
Once a Grant is obtained the executor will be in position to redeem the various assets from banks and other institutions and deal with real estate to have the Title(s) registered in the name of the executor pending sale or transfer to beneficiaries.
Prior to any distribution of the estate there may be parties who make claims upon the estate. This may be parties that believe that there are debts due by the deceased to them. Importantly there are also opportunities for parties who are described in legislation as “eligible” parties may wish to challenge the Will if they have not received any or insufficient benefit under the estate.
Parties entitled to challenge are limited to spouses, domestic partners, children and in some extreme circumstances other family members such as persons residing with the deceased for example. If there is notice given of a potential challenge, then the executor will be advised not to distribute the estate for a period of 6 months from when Probate is granted, that period being the time within which a person wishing to challenge the Will can do so.
6. Executors Commission
Acting as executor in many estates is not unduly difficult or time consuming. In other cases, it may be difficult and might extend over a period of time.
As executor you may be entitled to “commission” for your “pains and trouble in administering the estate”. This is often a small percentage of the value of the estate.
If it is contemplated that the executors wish to make a claim for commission, then they ought be careful to record all of the time and the work they have undertaken.
In most cases where commission is claimed the beneficiaries will agree to the claim and the percentage or the amount to be paid to the executors.
Absent beneficiaries’ agreement then the executor would need to apply to the Court and the Court will hear evidence about the executors claim and determine their entitlement to commission.
7. Finalising Matters
After ensuring that there are no further upon the estate and assets have been collected then the executor will be in a position to distribute the estate to the beneficiaries in accordance with the terms of the Will. This may involve distribution of money to the beneficiaries or may involve the sale of assets (shares, house etc. motor vehicles).
Prior to distribution it will also be necessary to consider whether a tax return is required.
Often this will involve ensuring that a tax return is prepared for the period 1 July to the date of death and then, depending upon income being earned on the deceased’s asset, there may be a need for a tax return for the estate to be lodged covering income earned from date of death to the date when the estate is distributed.
Usually, the executor will be working with the deceased’s accountant in this regard.
There may also arise questions of Capital Gains Tax which is a significant part of the tax regime and again the executor will need to work with the estate Lawyer and the deceased’s Accountant to take advice in respect of the potential impact of CGT.
8. Costs
Prior to distribution if a Lawyer as been engaged the executor will receive information as to the fees to be charged to the estate.
When first given instructions to a Lawyer the Lawyer is obliged to provide information to the executor as to the expected fees and out of pocket expenses.
Costs are paid entirely by the estate prior to distribution of funds to the beneficiary.
Author: Peter Wilson & Euphemie Barr
Published: 24 July 2024