As long ago as 1641, Judge Dodderidge noted that there is almost no-one who has not been an executor, who will not ever be an executor, who will never need an executor or who will not have a legacy paid to them by an executor. 

If it is almost inevitable that someone will be, need or receive something from an executor, you think we’d know a lot more about what an executor does.  Unfortunately, for many people, the first time they have to consider the duties of an executor is at the same time they are grappling with the emotional turmoil following the death of a loved one. 

The first steps

While it is an executor’s duty to organise the funeral, this is generally done by, or in conjunction with, the immediate family of the deceased.  The necessary funeral expenses are allowed to be paid prior to any other debts or charges the deceased may have had.  An executor does need to be aware that the funeral must be in keeping with the size of the estate – it would be a breach of the executor’s duties to arrange an extravagant funeral that exhausted the deceased’s estate, leaving no funds to meet debts or legacies due to be paid to beneficiaries under the will. 

Once the funeral has been conducted, the executor needs to start the process of winding up the estate.  The first step in most cases is to apply for a grant of probate.  This is the process whereby it is proved that the Will is the last and valid Will of the deceased.  As a part of this application, the executor will need to state all of the movable and immovable assets held by the deceased in his or her own name as well as the deceased’s own liabilities, together with respective values.  The kinds of immovable assets to be considered include real estate and land, while other assets such as personal possessions, motor vehicles, shares and bank accounts are considered movable. If you are unsure about the value of any asset, getting an expert valuation may be very useful.  For liabilities, consider mortgages, loans, credit cards and small debts such as telephone and utility bills. 

Example

Jim and Betty have been married for 35 years.  Jim recently passed away.  He and Betty owned a house as joint tenants and had a joint bank account. They also jointly owned all the furniture and household effects.  Jim owned $500,000 worth of Wesfarmers shares and a car which was registered in his name.  It is only the shares and car that need to be included in the grant of probate application as these are held solely in Jim’s name.  

To obtain a grant of probate, the executor, also called the applicant and the deponent in this part of the process, makes an application to the Supreme Court.  Because, in Jim’s and Betty’s case, Jim’s Wesfarmers shares cannot be administered until a probate is granted, it may be worth considering legal assistance with this step because the Supreme Court does have fees for making an application that may not be refundable if a serious mistake is made. 

 To accompany the application, you will need:

• The original Will and, if there are any, any original codicils;
• The original death certificate and a copy if you want the original returned; and
• An affidavit stating whether or not the deceased married or divorced after the Will was executed.

You will also need to provide the full names and current residential addresses for the witnesses to the Will and any codicils.  If you cannot locate the witnesses, you will need to state what you have done to locate the witnesses.  This is another area where legal assistance can prove useful. 

Administering the estate

The executor should start keeping detailed records of all steps taken in the administration of the estate.  Expenses incurred in administering the estate such as the costs of selling assets can be met by the estate.  As the executor will need to account to the beneficiaries for all of the estate’s funds, a prudent executor will keep track of all expenditure and income so that any questions the beneficiaries have can be easily answered.  An executor is in a similar position as a trustee and as such has a duty to perform the executor’s duties as an ordinary, prudent business person would. 

An important consideration at this stage is protection of the assets.  An executor takes responsibility for the deceased’s assets so it is very important to ensure that those assets are insured – an executor could end up personally liable to the beneficiaries if those assets are destroyed and insurance has not been renewed! 

While there is no death duty payable in Australia, there may be outstanding taxation owed by the deceased.  A taxation return will need to be filed with the Australian Taxation Office.  If money is owed, it is to be paid out of the estate, and any refund belongs to the estate. 

After the funeral and expenses relating to obtaining the grant of probate are met, the executor will need to pay all debts and other liabilities of the deceased.  Not all of the deceased’s assets will be available to the estate to satisfy the estate’s debts.  For example, if the deceased owned real estate as a joint tenant, then the surviving joint tenant will own the whole of the real estate under the survivorship provisions.  Life insurance and superannuation benefits may also be in a protected position.  If they are subject to a binding nomination (other than to the estate of the policy or fund holder), they will not available to the estate to satisfy the debts. 

Unless an executor is certain about the deceased’s debts, it would be prudent to advertise in a suitable newspaper for any of the deceased’s creditors to come forward to advise the executor of any debts.  If an executor does advertise and pays only those debts of which there is notice, the executor can distribute the estate knowing that he or she will not be personally liable for any other estate debts that are subsequently revealed. 

In order to meet the estate’s debts, it may be necessary to sell some of the estate’s assets or for the estate to borrow funds.  If assets are to be sold, it is important that the executor acts responsibly to ensure that the assets are sold at their market value.  Any sale of assets will need to comply with the appropriate processes so expert assistance may be useful at this stage. 

Once the debts are paid and there are no known challenges to the Will, the assets can be distributed to the beneficiaries.  Gifts under a Will may be specific or general.  A specific gift is one that is described in the Will and can clearly be identified as separate from the rest of the estate such as “my piano”, “the grandfather clock in the hallway” or “my 500 preference shares in XYZ Ltd”. By contrast, a general gift is something which can be provided from the estate such as “$10,000 to Mary”. After all other legacies are set aside or provided for, and the liabilities of the estate are met, the remainder of the estate, or residue, can be distributed to the residuary beneficiaries. 

When legal advice should be sought

• If an executor considers that the task of administering the estate may prove overwhelming, the cost of using a solicitor to administer the estate instead would be a worthwhile expense and reasonable legal costs can be paid from the estate funds.
• If an executor feels under pressure from one or more of the beneficiaries to deal with the estate in a particular way, engaging a “neutral” solicitor may ensure that each beneficiary feels they are being dealt with fairly.
• If the estate is particularly complex, such as an estate that involves the deceased’s business, or a family trust.
• If it seems that the estate might be insolvent, then the executor should get legal advice as there may be special provisions under federal bankruptcy legislation that applies to the estate.
• If the executor is aware that the deceased has left someone out of the Will who might be expected to be a beneficiary, such as the deceased’s child or de facto spouse, then it is possible that the excluded person might make a claim against the estate under the Inheritance (Family and Dependants Provision) Act.  It may be prudent to seek legal advice to ensure that the estate is able to defend such an action.