Losing someone you love can be devastating enough. Not only are you grieving the loss of this person, but you may also be tasked with the role of finalising their affairs as the executor of their Will, often the last thing on your mind in your grief-stricken state.
Just the thought of it can be daunting because it is unfamiliar territory and it’s certainly not a situation any one wishes to be placed in. Unfortunately, it’s a situation you are likely to find yourself in throughout your lifetime.
During the process, it is common to hear foreign terms such as “Probate” or “Letters of Administration”. Generally, the majority of people have never heard of either of these terms and those who have tend to have misconceptions about what they actually mean. We often hear statements such as, “there’s a Will so why do we need Probate?” or “we don’t need Probate because our family gets along”.
99% of the time we are simply asked, “What is Probate?” and “Why do we need Probate?”. It is important to understand what Probate (or Letters of Administration) is in order to appreciate why it is required to administer a deceased estate.
What is Probate?
A grant of Probate is essentially confirmation by the Supreme Court of the authenticity of the last Will of the deceased. The process involves advertising with the prescribed legal publications to ensure that there are no later Wills in existence and a subsequent application to the Supreme Court to effectively “prove” the last Will. An affidavit sworn by the executor is filed with the Court, and the document itself is inspected by the Probate Registrar with a fine tooth comb to confirm its validity.
What are Letters of Administration?
A grant of Letters of Administration is the equivalent to a grant of Probate in the circumstances where a person has died intestate, ie without a Will or without a valid Will. This grant is also required if the executor of the will has died, has lost capacity or has renounced. The administrator (akin to an executor) is appointed by the Supreme Court. This grant is more difficult to obtain and priority to apply is determined by the rules of intestacy in the relevant States.
Why is Probate required?
You may often hear from someone you know, whose mother/father/brother/sister died, that they didn’t need Probate compelling you to question why it is required at all. After all, there is a Will so why does it become so complicated after the fact? Yes, there are circumstances in which the executor will not be required to obtain Probate. This is may be the case where the assets are jointly held or it is considered a “small estate”, where the assets of the estate are of low value. However, it is important to understand that every estate is different. There is no stock-standard estate plan because the personal and financial circumstances of each person are varied.
There are many issues to consider when it comes to the duty of an executor and the administration of the estate, however, the most common reasons for obtaining Probate are outlined below:-
Authority to deal with assets
Most asset holders will not release or transfer assets held by a deceased person until a grant of Probate has been provided to them. For example, in New South Wales the sale or transfer of all real property held solely in the name of the deceased cannot be carried out without a grant of Probate or Letters of Administration. Generally, most banks and financial institutions will not release the contents of a person’s bank accounts if the value is over a certain threshold. There is no set or standard value, and each financial institution determines its own value at their discretion. It can also depend upon the family dynamics and who the beneficiaries are (and how many). For example, if a male dies and has several de facto partners with children from different marriages, it is unlikely a bank will release funds without a grant and, even if they do, they require indemnities to be given.
Production of the grant effectively ensures that the executor is legally authorised to deal with the assets. There are certain procedures set out by the Supreme Court to flush out any prior Wills and if a grant is not issued it is almost impossible to determine that the last Will is in fact the last testament of the deceased. Essentially, the asset holder is guaranteed that they are in fact dealing with the correct legal personal representative and if a later Will is found the liability rests with the executor for intermeddling with the estate.
Protection from claims
There are certain statutory time limits imposed by the respective Succession Acts in each State and Territory for an executor to safely distribute the assets of an estate. These time limits are in place to allow any person whom is eligible to make a claim for provision from the estate sufficient time to provide their notice (“eligible applicant”).
For example, in New South Wales, the executor must wait 12 months from the date of death before he/she may safely distribute the assets of the estate to the beneficiaries. The reason for this is that an eligible applicant has 12 months from the date of death to file their claim. There is the option to distribute after 6 months from date of death by publishing a ‘Notice of Intended Distribution’ with the Supreme Court of New South Wales. It should also be served upon any known eligible applicants. If no one comes forward within 30 calendar days from the date of publication then the executor may safely proceed with distribution.
In Queensland, there is a 6 month notice period from the date of death for people to give notice of a claim against the estate and legal proceedings must be filed no later than 9 months from the date of death if that notice has been given. It is therefore prudent to wait at least 9 months from the date of death before distributing but this can be shortened with written confirmation from any potential claimants they will not bring a claim.
Statutory protection is only afforded to the executor or administrator when Probate or Letters of Administration are obtained. If a grant is not obtained, they leave themselves open to liability for any claims brought against the estate by creditors or beneficiaries. Take for an example, the instance where an executor distributes the assets in accordance with the Will without obtaining Probate. An illegitimate child or a former spouse may come out of the woodwork (as is often the case) after hearing of the death some time after the fact with the intent to seek provision from the estate (i.e. bring a claim against the estate). If the assets have been distributed prior to the requisite statutory time period, and no notice has been given to the public of the distribution the executor becomes personally liable. This is despite the fact the executor has acted in good faith and distributed the assets in accordance with the contents of the last will of the deceased.
There is also the possibility a later will could be in existence without the knowledge of the executor. There are many good reasons to obtain a grant of probate if you are an executor! Don’t listen to back yard legal advice or get advice from lawyers who don’t specialise in this area.
In most cases, the reason an executor chooses not to obtain Probate is because they do not want to incur the cost of doing so. They are often misinformed or have not been provided with the correct advice in relation to the liability that goes hand in hand with their duty as an executor.
We strongly advise any executors or administrators to carefully consider their position and obtain accurate legal advice from experienced legal practitioners in this complex area. It may save you a lot of grief and money!
For enquiries please contact Wills & Estates Department Manager, Donna Tolley on direct line 07 5506 8241, email firstname.lastname@example.org or freecall 1800 621 071.