Acting as executor: Will I or won’t I?
For most people, acting as an executor is not an every-day experience. They may be appointed by a relative or friend, or sometimes in their professional capacity as a result of being a trusted advisor. Many people have heard of the term ‘executor’, however do not know what an executor does.
For most first time executors, they will find themselves asking ‘what does an executor do’, and ‘what are my responsibilities’?
Who is the executor and do they have to act?
An executor is the person nominated in a Will to administer the estate of the Will maker after they die. Most people nominated as an executor will act in that role. However, in some cases where someone does not want to act, they can renounce their appointment.
Are professional qualifications required?
No professional qualifications are required to act as an executor. If there are complexities with an estate, the executor is able to obtain assistance from professionals such as accountants and lawyers.
What do I do as an executor?
The duties of an executor include:
- locating the Will (a copy will normally be found with the deceased’s ‘important papers’ or with their lawyer and financial advisors)
- acting in the best interest of the beneficiaries of the Will
- protecting the assets of the estate (such as maintaining any insurance policies on any estate assets)
- determining the assets and liabilities of the estate
- applying for a grant of probate
- collecting estate assets, paying any liabilities and distributing the estate in accordance with the Will.
Obtaining a grant of probate (Grant)
The Grant provides formal acknowledgement from the Supreme Court that the Will was the last Will, and that you are appointed as executor. The Grant also provides the executor with legal title to deal with the assets of the estate.
Many institutions require a grant before they will transfer assets over a certain value (often $25,000), or where there is real estate.
It generally will take anywhere between two to three months to gather the background material and prepare the relevant documentation. Once prepared and submitted to the Supreme Court, it will take another two to three weeks to receive the Grant.
Potential issues for executors
Possible claims against the estate
Any person who believes they did not receive adequate provision for their proper maintenance and support under the Will can make a claim for further provision. Any claim must be made within six months of probate being granted. If an executor distributes all of the estate before the six month period expires, and a claim for further provision is then made, an executor can potentially be personally liable. If there is a concern about someone making a claim, it is best to wait until the six month period had ended.
The executor is also required to finalise any tax returns for the deceased, as well as for the estate (if required). The best approach is to seek advice once the assets and liabilities of the estate have been determined to ensure any tax liabilities are dealt with before the estate is distributed.
Communication with beneficiaries
All beneficiaries should be identified and advised of their entitlements under the Will from an early stage in the administration of the estate.
Issues can arise where beneficiaries’ expectations regarding the payment of entitlements are not realistic and they expect an immediate payment of their entitlements under the Will. In most cases, payments of entitlements will not occur until 6 to 12 months from death. Keeping the beneficiaries informed regarding when they can realistically expect a payment can avoid many issues.
Emma Woolley is a partner at Hall & Wilcox lawyers.