Posted by Nicola Elkington in Resources on October 3rd, 2024
If the deceased had a Will, it will state who the executor or executors are to look after the deceased’s estate.
It is quite a responsibility to be chosen by a family member or friend to ensure their last wishes are taken care of. The role of executor is one of trust and needs to be carried out with care and honesty. First and foremost, you must act in the best interests of the estate and all the beneficiaries; your own interests must be put aside (which can be difficult if you are also a beneficiary).
The executor is responsible for identifying, locating, managing, and protecting all of the assets of the estate until they are distributed to the beneficiaries. The executor is also responsible for ensuring all of the valid liabilities of the estate are paid from estate funds.
Where there is more than one executor, they should consult with each other and agree on a course of action.
Executors should keep full and accurate records of how the estate has been managed and distributed and should provide a summary of the financial transactions for the estate to the beneficiaries. The executor/s is/are responsible for any tax returns to be lodged on behalf of the deceased and the estate.
If a conflict arises, the executor cannot take sides with one or more beneficiaries and should try to mediate a resolution to the conflict.
Navigating legal and tax laws – There are a number of technical aspects in the role of executor, such as arranging filing tax returns for the deceased. Rarely does an executor carry out all duties without drawing on the expertise of a solicitor and/or accountant. First Australians – If the deceased was an Aboriginal or Torres Strait Islander, the executor needs to carefully consider funeral and place of burial sensitivities.
STEPS TO MANAGE AN ESTATE
Once the executor has contacted the funeral home, the funeral director will guide
much of the planning. You will need to consider:
– Obituary announcement – what details do the family want announced?
– The service – religious or memorial service, eulogies, readings, what music to include, flowers, burial or cremation, where will the remains be interred?
– Once the death certificate or funeral invoice has been received, the executor may be able to arrange for the funeral expenses to be paid from the deceased’s bank account.
When someone dies without a will
If someone dies without a Will, it’s known as dying “intestate” and a court may appoint someone to administer the estate, depending on its size. The person entitled to the greatest benefit from the estate can apply to the court to be appointed as the estate’s administrator and they undertake the same duties as an executor. A solicitor is needed to assist with this process.
Change locks on buildings if necessary, move vehicles to secure location if no garage, and store valuable household items securely.
If the property is unoccupied, as executor you are responsible for any damage that
could happen until the property is sold/transferred. This makes it vital for the
executor to arrange or confirm adequate insurance cover.
If the deceased was living in a rented property, notify the property manager and
arrange for the bond to be returned.
As an executor, you are responsible for applying for probate, with the assistance of a solicitor. This should be obtained in a timely manner ie within about 6 months from the date of death.
A grant of probate is a court order as to who is authorised to administer the estate, and which document is the last Will of the deceased. Once obtained, the grant of probate allows organisations, such as banks, to accept instructions as to what to do with the relevant asset.
An application for probate requires the preparation and filing of various documents with the Supreme Court of NSW.
Probate is necessary to confirm the executor has the authority to deal with assets such as real estate and money in bank accounts. Real estate held in the sole name of the deceased cannot be transferred unless probate is obtained.
Most banks will not allow the executor to deal with money in the deceased’s bank account(s) where the balance is above a certain amount unless probate has been granted.
Banks often allow access to funds in a bank account for the payment of the funeral and the filing fee for the Supreme Court.
There are some small estates that do not contain real estate (for example, because it is transferred to a surviving joint proprietor) and in these cases, probate may not be required.
Make a list of all the assets
Making an inventory of the estate’s significant assets is one task you will undertake as executor.
The market value of each asset (including real estate, shareholdings, jewellery, artwork, vehicles), needs to be determined as at the date of death. You may also need the asset cost to calculate capital gains/loss to be reported on the relevant tax return.
In the case of real estate, ask for a market appraisal from a licensed local real estate agent.
As probate can take some months to obtain, it’s important for the executor to be in contact with the beneficiaries. Beneficiaries are likely to be family members, so maintaining family harmony where possible is important.
An executor is not usually entitled to be paid, other than out of pocket expenses.
The executor may only receive some payment for their work in the following circumstances:
The payment to the executor is called a ‘commission’. When a court considers whether an executor should be paid a commission it takes into account the work done by the executor as well as the responsibility and time involved.
Executors wishing to receive a commission should keep extensive records, such as a diary, of all they have done in their executorial role to justify the commission.
The court retains the right to call an executor in to account for their administration of a deceased estate at any time. This means the executor providing the court detailed information about payments and receipts and the sale of assets, with the assistance of a solicitor.
In some instances, the executor will need to wait for probate to be granted before being able to action some of these items.
Identify and locate the beneficiaries
Identifying and locating beneficiaries can be simple if the will-maker was part of a close knit family. Today it can mean blended families, locating anywhere with varied contact.Notify Department of Human Services of death and cancel any payments
The executor completes the ‘advice of death’ form from the Department of Human Services website, which will notify Medicare, Centrelink and Child Support agencies of the death. It is advisable to have the deceased’s Medicare card number, Centrelink Customer Reference Number and/or Child Support Reference Number on hand to complete this form. In some circumstances, there may be a bereavement allowance/payment available, so it’s important to check eligibility.
Review insurance/s (Health, Car, Property, life) and claim any refunds
Some insurance will need to be cancelled immediately whereas other will need to remain or be recorded in the name of the executor until the asset is no longer part of the estate.
If a property owned by the deceased is unoccupied, as executor you are responsible for preventing any damage that could happen before the property is sold/transferred. Adequate insurance cover for properties must be in place and retained until the asset is disposed.
In the case of any life insurance, the executor can begin the insurance claim or discuss with a solicitor.
Cancel/transfer utilities and essential services
If there are dependants or others living in the deceased’s home, the electricity/gas/water/internet/landline accounts will need to be transferred to whoever is taking over those accounts. Mobile phone accounts should be cancelled by the executor by providing to the telephone company ID and proof of death documentation.
Cancel memberships/subscriptions
Many memberships will cancel when direct debits are no longer paid as bank accounts are frozen or shut down. However, if care is not taken, there could be months of unnecessary payments made before accounts are closed.
Cancel social media and other online accounts
Social media networks usually have procedures in place to deal with the accounts of deceased members. These vary between networks. Facebook accounts can be switched to memorials and Google offers an ‘inactive account manager’.
Finances
If any bank accounts or other asserts were held jointly, the surviving joint owner can contact the relevant institution to advise the death and the assets will transfer automatically to the joint owner after proof of death is provided.
Contact the financial institutions and advise of Will makers death
There is no single registry of bank accounts, so this will involve reviewing the deceased’s paperwork or emails if possible.
When a financial institution is notified of a customer’s death, the account will be frozen, meaning no withdrawals can be made.
Any credit cards will need to be cancelled. The issuer can also block the cards from further use. (Note if there is a secondary card holder, they will need to be notified the account is no longer active).
Set up an estate bank account
Usually a bank will only allow an estate account to be opened after probate is granted.
A bank account often will need to be set up for any funds (such as proceeds from the sale of property) to be deposited into and expenses paid from. This account can be at the bank of the executor’s choosing.
Apply for an estate tax file number
There is useful information on the Australian Tax Office website, see
Checklist: what to do when someone dies | Australian Taxation Office (ato.gov.au).
There is an online form to complete on the Australia Tax Office website, if need be:
https://www.ato.gov.au/forms-and-instructions/tfn-application-for-a-deceased-estate
Investigate if the will maker had other interests in family trust, SMSF, private company etc.
You should check with the deceased’s accountant as to any interest in a private company or trust.
Locate and contact the Will maker’s accountant to confirm taxation details, including when
last tax return was lodged
Apart from tax return information, an accountant often has useful information about assets and income that will assist the executor in administering the estate.’
Overseas assets
If the deceased held overseas assets you may need to lodge tax returns in the country where the assets are located and the estate may be charged inheritance tax.
You will probably need to engage a lawyer in that country to assist with the tax, to arrange for the closing of any bank accounts and sale or transfer of assets.
Depending on the country, you will need to obtain a reseal of the Australian grant of probate, or, if the country does not have a reciprocal arrangement with Australia a lawyer will be required to arrange a fresh grant of probate in the relevant country.
Write to superannuation fund/s to notify death and for funds to distribute death benefits to beneficiaries
Check if life insurance cover was held by the deceased as a member of a superannuation fund. Life insurance cover often is held in addition to the deceased member’s superannuation balance.
In many cases the trustee of the superannuation fund will decide who is to receive the death benefit, unless a valid binding death benefit nomination was signed by the deceased member.
Self-managed super funds have their own rules and require the assistance of a solicitor and accountant to deal with correctly.
Pay debts and liabilities
Debts are liabilities must be paid before any distributions to beneficiaries. Even if the willmaker left a particular asset to a beneficiary, if the estate has insufficient cash to cover all debts, estate assets will need to be sold or redeemed to the extend required to pay all liabilities.
If there are more liabilities in the estate than assets, then the estate is insolvent. In this situation, the executor must seek professional advice before going ahead, as legislation dictates how an insolvent estate is to be administered.
The executor can reimburse any estate expenses that have already been paid by a family member or the executor.
Prepare Estate accounts
An executor must keep detailed records and receipts of any monies or assets collected and paid on behalf of the estate.
Collate information to lodge any outstanding tax returns of the deceased
Distribute estate to beneficiaries in accordance with the terms of the Will
If assets were held jointly, they automatically transfer to the surviving joint owner. Some assets may have been specified in the Will to pass to a particular beneficiary. In the case of property, it may be possible to transfer the land to a beneficiary, or to sell and distribute the proceeds via the estate – the beneficiary/s need to be consulted especially where there are tax consequences.
It is advisable to obtain a receipt from the beneficiary confirming they have received the asset. In some cases, beneficiaries may need financial advice about what to do with their inheritance.
Close the estate bank account once all monies are distributed After all debts have been paid, taxation matters have been finalised, and estate funds distributed to beneficiaries, the executor can close the estate bank account.
Ongoing duties
If a trust is established by the Will, unless otherwise specified, the Executor will automatically become the trustee of the ongoing trust.
An example of this is when a minor is a beneficiary under the Will, however given their age, cannot receive the distribution. It’s then the executor’s responsibility to conduct the trust until the age of entitlement specified in the Will. This role is often one that executors are unaware of and can lead to additional work beyond the administration of the estate.
BENEFICIARY – A beneficiary is any person or entity (e.g. a charity) that receives a gift or benefit from a person’s estate pursuant to their Will.
ESTATE – An estate is all of the assets and liabilities of a person after her or his death. There are some assets that do not form part of the will-maker’s estate after his or her death. The most common examples are:
EXECUTOR – An executor is a person who has been appointed in a Will to administer the will-maker’s estate and carry out the will-maker’s wishes set out in the Will after she or he has died. They are described as the deceased person’s “legal personal representative”.
PROBATE – the legal process whereby a Will is confirmed by the Supreme Court of NSW as the last Will of the deceased and the executor is confirmed as the deceased person’s legal personal representative.
FOR FURTHER INFORMATION call Linda Alexander Law on 02 8076 6076 or email linda@lalaw.com.au
Visit our website at www.lalaw.com.au
