PROBATE & ADMINISTRATION

ESTATE/TRUST MANAGEMENT

Administering a Deceased Estate

When someone passes away, their assets and liabilities comprise their estate. The process of dealing with the estate is called estate administration or estate management. The person who has the responsibility of managing the estate is called either the "executor," "administrator" or "personal representative" of the deceased person. For simplicity, we will here refer to that person as the executor.

The executor's job is to collect the assets of the deceased, pay debts, and distribute the estate. The executor must distribute the estate to the beneficiaries named in the will, subject to the laws of succession. If there is no will, the executor must distribute the estate to the beneficiaries specified in the "intestacy rules."

Probate and Letters of Administration

Probate is a document issued by the Supreme Court. It contains the court's official seal, so that it is accepted as your authority to deal with the estate.

To obtain Probate, you must prove to the court that:

·        The person named in the will is deceased;

·        The will is in fact the last and valid will of the deceased person; and

·        You are in fact the executor named in the will.

This is proven by affidavits (sworn statements) verifying these details. If there are any conditions attached to your appointment as executor, the fulfilment of those conditions must also be proven to the court.

It is not always necessary to obtain Probate. However, if you administer an estate in accordance with a will, and that will is later found to be not valid or not the last will of the deceased, then you will be personally liable to the true beneficiaries for the value wrongly distributed. You will not be liable in this way if you have obtained Probate of the will.

You will need to get Probate if an asset-holder (such as a bank) insists on it. They will usually do this if the estate asset they hold is very substantial (e.g. a bank account over the Probate threshold set by the particular bank - usually about $50,000).

It usually takes about 3 months to get Probate. This includes preparing the necessary documents and filing them in the Supreme Court, and then waiting for the court to assess the documents and issue the Probate document.

In some circumstances (for example, if there is no will), the court will issue "Letters of Administration" instead of Probate. The effect of Letters of Administration is the same as Probate.

Managing a Trust

You will likely be involved in a trust at some time in your life. Perhaps through a family trust, either as trustee or beneficiary. Or perhaps as executor or beneficiary of a will, as deceased estates involve particular duties of trusteeship. And increasing numbers of people are setting up self-managed superannuation funds, which are also a special type of trust.

The implementation of a trust requires important decisions to be made. One important decision is to determine who will manage the trust, either as trustee of a trust or as executor of your will. These are not decisions to be taken lightly.

The duties of a trustee are many and complex, such as: Avoiding conflicts of interest and conflicts of duties, the duty to provide information and accounts to beneficiaries, the duty to invest properly, the duty to distribute the trust funds in accordance with the trust deed or the will and according to law. Failure to act appropriately as trustee can result in costly litigation with the beneficiaries. Trustees who fail in their duties can be sued by the beneficiaries, or can be removed by the Supreme Court.

In some situations the beneficiaries can require the trustee to terminate the trust and transfer to the beneficiaries the funds or property that was held by the trust. A trustee who does not make the correct decision will be exposed to personal liability for any losses suffered by the entitled beneficiaries.

Winlaw Associates can assist by providing prompt and effective advice in relation to these matters.