Executor: Duties and Liabilities
An executor is a person who is appointed by a will to administer the estate of the deceased, that is, to ensure that the assets are distributed to the beneficiaries in accordance with the will after all debts have been paid. It is a very important position to hold as it carries duties and responsibilities and failure to meet them may result in the executor being held liable for any of their acts or omissions.
- The term ‘estate’ refers to all assets and liabilities of the deceased person, this includes property owned and any monies owed to creditors. However, there are instances where certain assets are not included in the estate, such as property that is ‘jointly owned’ as the deceased’s share of the property will pass to the other owner automatically upon their death.
- A ‘beneficiary’ is any person or entity that receives a gift or benefit from a deceased’s estate.
There can be numerous executors and they can almost anyone but is important that the person appointed is honest and reliable as they will be making important decisions regarding a deceased’s estate. Furthermore, if more than one executor is appointed, it should not be family members, such as siblings, in order to avoid a situation where there is conflict on how the estate should be distributed to each other.
- Solicitors may be executors as they have extensive knowledge in the area of estates but may charge a fee due to their expertise.
Duties and Responsibilities of an Executor
First and foremost, the executor carries an obligation to act in the best interests of the estate and all of the beneficiaries, thus, cannot act in their own interest if it conflicts with those of the estate or beneficiaries. Where there is more than one executor, a discussion should be held between each other to decide on a course of action for every decision regarding the estate. It is also vital that executors maintain proper and accurate records on how the estate has been managed and distributed – this includes keeping all financial statements and notes on how a decision was reached.
When the maker of a will passes, the executor is responsible for:
- Creating an ‘inventory of property’, essentially a list of the assets and liabilities of the deceased, including any entitlements, and any physical property should receive a valuation.
- Publishing an intention to apply for probate in the Supreme Court.
- Applying for probate in the Supreme Court fourteen days after publishing an intention to apply for probate. This process is for the Court to confirm that the will is valid, and that the executor has authority to administer the estate. A probate application will require lodgement of:
- Proof of death, such as a death certificate;
- Inventory of property;
- Executor’s affidavit; and
- Original will.
A fee may be payable when making a probate application, the only exception being that the estate is worth less than $100,000. Banks may allow access to the deceased’s funds in order to make payment of the probate lodgement if it is a small estate.
- Paying the deceased’s expenses and debts one the Supreme Court grants probate before distributing the assets to any beneficiary. This involves depositing all of the deceased’s money and proceeds from sale of assets into the bank account under the name of the estate. The debt repaid is made in the following order:
- Funeral expenses;
- Administration expenses, such as legal costs in obtaining probate;
- Outstanding tax; and
- Other debts.
- Preparing a distribution report which details exactly:
- Assets owned by the deceased;
- Money received for any asset sold; and
- Debts paid.
- Preparing a distribution report which details exactly:
- Distributing the remaining assets, both money and physical property, to the beneficiaries in as set out in the will, as well as providing each beneficiary with a copy of the distribution report – note that there is a time requirement that six months have passed since the deceased has passed before distributing assets.
- During this time, it may be appropriate to publish a notice which instructs anyone who has a claim against the estate to notify you and provide you with details regarding their claim.
If the executor must deviate away from the will for whatever reason, they must obtain consent from all of the beneficiaries in writing.
During this whole process, from the moment the person has passed till the moment the assets are distributed, the executor is responsible for managing and protecting the assets of the estate.
Liabilities of an Executor
An executor is a position of trust carrying a heavy burden with potential for personal liability for breach or failure to act in a responsible or appropriate manner.
Some common examples of where an executor may be liable include:
- An executor may be personally liable for any contract that they enter into after the death of the deceased. This is especially important where the business is part of the deceased’s estate and the actions of the executor may bind them personally to the contract of the business;
- Executor must be wary of their tax liability in their role as an executor as this is distinct from their own personal tax liability;
- Executor must not distribute any asset until probate is granted, and debts and taxes are finalised as distribution prior to these events may hold the executor personally liable;
- An executor is personally liable if they pursue activities which result in the estate becoming insolvent; and
- If the executor is provided with a notice containing an undisputed debt, they must not proceed with distribution of assets as they will become personally liable for the debt owed to the creditor. Protection is provided to the executor where they have published a notice with intention to distribute and the time has expired, or the claim of debt is without notice and detail.
Commission for being an Executor
If a will does not explicitly provide for any commission, then the executor may make an application to the Supreme Court of New South Wales to receive one. In these circumstances, the general rule is that the court will not award an executor with payment if they are a beneficiary under the will.
If the will does provide for a commission to the executor, then they may receive payment as set out in the will for time spent as an executor administering the estate.
Delegating/Declining the Responsibilities of an Executor
An executor can delegate some of their responsibilities to professionals, such as lawyers or accountants, who are better equipped with the knowledge and resources to properly administer the estate. The executor must be careful when considering who they delegate their responsibilities to as they will be ultimately responsible for their actions.
Refusing to be an executor is an option that is available, and if this is what the appointed executor intends to do, then they must do so as soon as possible so that the estate can be administered in a timely manner. If the executor wishes to renounce their position after probate has been granted, they must obtain consent from the Supreme Court of New South Wales.
An executor with personal interests that conflicts with the role of the executor or wishes set out in the will should decline the position – for instance, where they intend to make a claim for a larger portion of the assets.
JB Solicitors – How We Can Help You
JB Solicitors is a firm of highly skilled and experience lawyers who can guide you through every step as an executor. We will ensure that you, as an executor, fulfil your role by:
- Informing you of your rights and responsibilities;
- Assist with an application for probate;
- Identifying and collecting all of the deceased’s assets and prepare an inventory of property;
- Help you prepare a distribution report;
- Advise you on the order of debt payments and asset distribution, as well as tax implications; and
- Resolve any claims made against the estate.
Ready To Get Started, Or Have Further Enquiries ?
Our estate planning services are fixed in pricing as we believe in giving our clients certainty and value transparency.
Or use the Settify link below to get in touch with one of our experienced estate planning professionals.
