Acting as an Executor, while an honour, can at times be an onerous task. Often it is not until a beloved family member or friend passes away and the estate administration work begins, that the enormity of the task is recognised.
At McColm Matsinger Lawyers we assist Executors at every stage of the administration process to make the task as simple as possible, while ensuring that Executors fulfill their obligations and their exposure to personal liability is minimized as far as possible.
A general overview of the role and duties of an Executor is set out below.
The Role of an Executor
An Executor is required to administer the Estate of a deceased person in accordance with their Will. In fulfilling this role, the Executor is required to:
- Ascertain the assets and liabilities of the Estate. The Executor is required to make proper enquiries regarding the assets and liabilities of the Estate to confirm the value of the Estate and keep proper records documenting the assets and liabilities of the Estate.
- When required by the nature of the assets, apply to the Supreme Court for a Grant of Probate.
- Transmit or transfer any real property assets.
- Call in the assets of the Estate.
- Pay any liabilities of the Estate including any tax liabilities. It is imperative that an Executor obtains taxation advice so as to determine whether any tax liability is to be paid by the deceased person or their Estate, and whether a return to date of death and or an Estate return is required to be filed with the ATO.
- Liaise with the beneficiaries, notifying them of their entitlements under the Will, obtain their bank account details and where the beneficiary is not known to the Executor, confirm their identity.
- Arrange for any personal property specifically bequeathed to a beneficiary to be transferred.
- Pay any pecuniary legacies provided for in the Will.
- Attend to a distribution of the Estate to the beneficiaries in accordance with the terms of the Will.
Duties of an Executor
The Executor is in a position of trust, personally chosen by the will maker to fulfill their wishes, maximise the estate and act in the best interests of the beneficiaries. Due to the nature of the role, the Executor has strict duties that must be adhered to.
The duties of any Executor include:
- A duty to administer the deceased’s Estate in accordance with their wishes as set out in their Will. An Executor has a duty to follow the deceased’s Will and must distribute the Estate in accordance with the deceased’s person’s Will. A deceased person’s Will cannot be altered by an Executor and any distribution of Estate funds must strictly follow the deceased’s persons Will. A deceased person’s Will can only be altered with the intervention of the Court or with the express consent of all adult beneficiaries (where there are no minor beneficiaries).
- A duty to act in the best interest of the beneficiaries. The Executor must act in the beneficiaries best interests. The Executor cannot favour their own interests over the interests of the beneficiaries or put themselves in a position of conflict. The Executor also cannot favour the interests of one beneficiary over another.
- A duty to Maximise the Estate. The Executor has an obligation to ensure that the value of the Estate is preserved and the assets are maximized. In some circumstances an Executor will be required to obtain valuations for assets to ensure that they are sold for market value. An Executor may also be required to invest Estate funds pending a distribution. An Executor may also be liable for waste, meaning that Executor may be personally liable for any funds lost or misappropriated.
- A duty to keep Estate Funds Separate. When calling in the assets of the Estate, the Executor is required to keep all funds received on behalf of the Estate separate from their own. This requires an Executor to open an Estate bank account. Where McColm Matsinger Lawyers are engaged to assist with the administration of the Estate, our trust account can be used to bank any cash proceeds of the estate.
- A duty to Protect the assets of the Estate. This duty requires the Executor to ensure that the assets of a deceased person are well maintained and properly insured. For example, if the deceased person owned a home, this duty requires the Executor to take out or maintain a comprehensive policy of insurance over the property.
- A duty to ensure all liabilities are paid. Where an Estate is solvent, the Executor must ensure that all liabilities of the Estate are paid by the Estate. This includes funeral expenses, any tax liability, loans, lines of credit and any outstanding debts the deceased accumulated during their lifetime that remain unpaid at the time of death, for example utilities bills, telephone accounts and any outstanding tax invoices for goods and services.
- A duty to keep proper records and accounts. The Executor must keep a full record of all assets called in and all liabilities paid. This includes keeping copies of all tax invoices paid by the Estate and records of any distributions made to the beneficiaries.
It is important that Executors understand their role and are mindful of their duties. The duties of an Executor must be strictly adhered to and if the duties are breached, then this could result in the Executor becoming personally liable to the Estate. It is therefore recommended that Executors seek the assistance of a qualified legal practitioner with experience in Estate Administration to reduce their risk of exposure to liability. It is also important to note that where the Executor acts properly and administers the Estate according to law, they are entitled to have the costs associated with the administration of the Estate paid by the Estate.
If we can assist you to navigate the Estate Administration process, then please contact us.
The information in this document represents general information and should not be relied on for your specific circumstances. If you require legal advice and assistance on the matters contained or associated in this document you should contact MMLaw. Please contact Christine Matsinger or Tamsyn Harris.