There is a lot of responsibility involved in being the executor of an estate. It is a thankless task and if you are not also a beneficiary of the Will, there is very little, if any, financial reward.
Peoples’ personal affairs pre and post death, and their estates can be complex, particularly if there are familial disputes. There are any number of reasons why issues arise or delays may be caused. As an executor, there are a number of duties and responsibilities. These are summarised below.
Organising the funeral
The first responsibility of an executor is to arrange the funeral (generally in consultation with the deceased person’s family). However, while the executor is responsible for organising the funeral, the costs of the funeral are paid from the estate.
If an executor (or anyone else) pays for the funeral personally, they are entitled to be reimbursed the reasonable expenses of the funeral from the estate.
Collecting and preserving assets
The next responsibility of an executor is to ascertain and collect into the estate the assets owned by the deceased person. These assets may include cash in bank accounts, shares, property, motor vehicle/s, unpaid wages etc. and in some circumstances, superannuation and life insurance.
An executor should notify all relevant institutions of the death of the deceased person and take control of the assets. This includes transferring relevant assets to the executor in their role as personal representative of the estate and notifying institutions, including telecommunications and energy companies, banks, and superannuation funds, to name a few.
Some institutions may require a Grant of Probate of the Will to recognise the executor as a person who has the authority to deal with the estate. A Grant of Probate is the court’s official recognition that the will of a deceased person is the last, valid will of a deceased person.
Small amounts in bank accounts or shareholdings, and real property (real estate) do not usually require a Grant of Probate in Queensland. However, it may be prudent for an executor to obtain a grant to provide them with greater protection and ease when dealing with the estate assets.
It is also important to remember that if there is a property or properties in the estate, the executor should make sure that property or properties are insured.
An executor’s duty is to the estate and the beneficiaries. Their primary duty is to act in the best interest of the estate. It is important that the executor avoids any decision that conflicts with their own interests. Unless all beneficiaries provide their express, written agreement, an executor should avoid making a decision, which may conflict with their own interests or which may negatively affect the value of the estate.
If an executor does not fulfil their obligations as executor, or acts in a way which negatively affects the estate, they may be held personally liable for any loss suffered by the estate.
When all assets have been identified it is necessary to pay any debts. For example, reimbursement of reasonable funeral expenses, credit cards and loans. If property is sold, any mortgage/s should be repaid and outstanding outgoings, such as rates and water, paid.
In some cases, there will be insufficient funds in an estate to pay debts. This is known as an insolvent estate. The order of payment of debts is set out in s 57 of the Succession Act 1981 (Qld) and states that, “the funeral, testamentary and administration expenses have priority.”
An executor should ensure that records are kept of all payments made from the estate i.e. invoices and receipts.
Defending the estate during legal proceedings
Jenna Hutchinson discussed Family Provision Applications in a previous blog (which can be found here), but in short, in Queensland, an eligible person must notify the executor of their intention to apply for further provision from an estate within six months of the deceased person’s death. The person bringing the claim is then required to apply to the court within nine months of the date of death.
If after the date six months from the date of death the executor has received no notification of a potential claim against the estate, the executor may administer the estate and will be protected by the provisions of the Succession Act 1981 (Qld).
If notice has been received of a claim within six months from the date of death, but at the date nine months from the date of death, no application has been made in a court, the executor may administer the estate.
A claim can be brought outside the above time frames, but whether the claim will be allowed is at the discretion of a judge.
Attending to taxation
It is necessary for an executor to attend to personal income tax for the deceased person up to the date of their death and also income tax for the estate as a separate taxpayer. The obligation to file tax returns generally continues until finalisation of the estate administration.
Capital Gains Tax should also be kept in mind if there are Capital Gains Tax assets in the estate, for example, property or shareholdings etc.
Distributing and/or managing assets
Once all assets have been collected into the estate, debts paid, and if relevant, any legal proceedings finalised, the estate must be distributed to the beneficiaries.
A general principle applies that one year from the date of death is considered a reasonable time for the administration of an estate. However, this may be affected by litigation and/or other complexities, depending on each estate.
There may also be minor beneficiaries to a will, or beneficiaries who have not yet reached the age specified in the will for them to receive their share. If this is the case, the executor (if they are also the named trustee of the trusts created under the will) has further duties to hold the estate assets or funds until the beneficiaries attain the relevant age.
It should be noted that once a beneficiary reaches 18 years of age, if they have full legal capacity and a vested interest in a share of the estate, that beneficiary may apply for the release of their share earlier than the time specified in the will.
An executor’s obligations also continue until those beneficiaries reach the relevant age. Those obligations include maximising the beneficiaries’ entitlements, which may mean investing funds, renting property for rental returns etc. In these circumstances, an executor is able to advance funds from the estate for education, maintenance and support of those beneficiaries.
An executor is required to administer the estate without delay (with exception if there is litigation), and if there is loss suffered by the estate due to any delay by the executor, they may be held personally liable.
It should also be noted that interest will also begin to accrue on any specific monetary amount gifted under a will after the first anniversary of the deceased person’s death. This is “legacy interest” and is calculated in accordance with s 52 of the Succession Act 1981 (Qld).
Due to the onerous responsibilities and obligations of an executor, they are able to apply to the court for commission to be paid from the assets of the estate (Succession Act 1981 (Qld) s 68).
As an executor, it is important to obtain appropriate advice from relevant advisors, such as:
- solicitors in relation to the responsibilities as executor;
- accountants in relation to taxation and accounting of estate assets; and
- financial advisors, if necessary, in relation to investment and management of estate assets.
Get in touch with us
We would be happy to assist you with your duties as an executor. If you have been appointed as an executor and have questions in relation to your obligations and responsibilities, please feel free to contact Turner Freeman Lawyers’ Wills and Estates Team on 07 3025 9000. Jenna Hutchinson and Laura Hagan practise exclusively in Succession Law and would be happy to have a chat with you.