*The contents in this blog relates to legislation in New South Wales.
An executor of an estate performs an important role. Choosing an executor/s is a decision that should be carefully considered by the will maker when preparing their Will. Every estate is different and can present the executor/s with unexpected challenges in the course of administering a deceased estate.
Factors to consider when appointing an executor include age, health, circumstances of the executor/s and the relationship between co-executors. Executor’s duties include investigating estate assets and liabilities, calling in assets, arranging for payment of estate debts and distributing the estate in accordance with the terms of the testator’s will.
Executors have a duty of care to always act in the best interests of the beneficiaries of the estate. This duty includes maximising estate assets and administering the estate without unnecessary delay.
With limited exceptions, executors must perform their duties until the estate is completely finalised. Generally, an executor is allowed approximately 12 months to administer an estate, depending on how complex the estate may be. This period of time is often called the “Executors Year”. Depending on the nature of estate assets, the contents of the Will, whether there are minor beneficiaries or a life estate is given in the Will etc, an executor may be required to undertake their role for a substantial period of time.
Executor’s circumstances can change which mean they may experience difficulties fulfilling their obligations. Poor or declining health can be an issue that may impact the executor’s capabilities. It is a necessary part of the executor’s role that they have the capacity to understand their legal obligations and be of reasonably good health to properly undertake the required steps to administer the estate.
What happens if an executor is not fit to act?
Depending on the circumstances of the estate, and where the estate may be at in terms of the administration process, there are different options available where an executor is unfit to act.
Some of the reasons an executor may be unfit to act include:
- Lack of mental capacity required to competently administer the estate;
- Conflict of interest;
- Interference with the estate;
- Inappropriate conduct; and
- Neglecting their duties (including not taking the steps required to prove the Will or failing to act with due and prompt diligence in administering the assets);
Before applying for the Grant of Probate
Pursuant to section 74 or 75 of the Probate and Administration Act 1898 NSW (PAA Act), the Court, if it thinks necessary or convenient, can appoint another suitable person to administer the estate. In cases where more than one executor has been appointed, one or more of the executors may submit an application to the Court to “pass over” an executor who they believe to be incapable.
Supporting documentation needs to be provided to evidence a claim that an executor is unfit. This may be medical reports as to the lack of capacity to act, or other documentation evidencing the executor has misappropriated funds and the estate intends on bringing a claim against the executor to recover estate funds.
If Probate has already been granted
In the event an executor becomes incapacitated or has misappropriated estate funds after probate has been granted to them, an application can be made to the Court to remove the executor, effectively bringing their appointment to an end. If there was only one appointed executor, a suitable alternative administrator will need to apply to the Court.
An interested party in the estate, such as a beneficiary, may make an application to the Court to pass over or remove an executor.
Avoiding issues for your estate
Our Wills and Estate team has extensive experience in the estate administration process. This experience allows us to provide our clients with advice to help mitigate future complications that may arise.
Our advices are based on our client’s individual circumstances. Wills are not “one size fits all”. While it may be appealing to prepare a will “on-line”, or to use a “will kit”, there is a substantial risk that inadequately prepared Wills can lead to a deceased estate incurring substantial legal costs dealing with easily avoided issues.
If you would like estate planning or administration assistance, please do not hesitate to contact our Wills and Estates lawyers on 13 43 63 or via our online enquiry form.