7 Key Tips for Executors

1. Communicate with the Beneficiaries

You should be clear with beneficiaries about what they should expect to receive from the estate and when they should receive it. For example, if you are intending to delay distribution of the estate for 12 months from the date of death, let the beneficiaries know this as well as your reasons for the delay.

A beneficiary can cause problems if he or she feels that you are withholding information or failing to administer the estate in a timely manner.

2. Be Sure to identify all the assets and liabilities of the Estate

In your application for a grant of probate, you are required to disclose all assets and liabilities of the deceased at the date of death.

If you have already submitted your application or have already received your grant of probate and then become aware of another asset or liability of the estate, you are required to disclose this new information to the court.

This will delay distribution of the estate and may result in additional fees from the court.

3. Don’t wait too long to make your application for Probate

In NSW you should lodge your application for a grant of probate within 6 months from the date of death. This allows the executor plenty of time to ascertain the assets and liabilities of the estate and prepare the Probate application forms.

If you do not apply within 6 months, you will be required to provide the Supreme Court with an affidavit setting out the reasons for the delay.

4. Protect your own interests

You may feel pressured by beneficiaries to rush through the application process and distribute the estate to the beneficiaries as soon as possible. However, this can land you in hot water if a creditor comes out of the woodwork or someone makes a family provision claim against the estate.

If there are no funds in the estate for payment of a debt or family provision order, you may be personally liable.

You are well within your rights to:

a) advertise your intention to distribute the estate, giving 30 days notice in which creditors can bring forth their claims.

b) Carry out a bankruptcy search to ensure that no beneficiary has been declared bankrupt at the time of receiving their bequest.

c) Refrain from distributing any and all of the estate for 12 months from the date of death, to allow any eligible persons to make a family provision claim.

5. Don’t wait too long to distribute the Estate

While you should not feel pressured to distribute the estate straight away, you must also be careful that you don’t delay distribution unnecessarily.

If you do not administer the estate in a timely manner:

a) the beneficiaries of the estate can seek to have you removed from your position as executor;

b) The beneficiaries may be entitled to interest for undue delay;

c) You may be personally liable to the beneficiaries or creditors of the estate adversely affected by a delay which you could have avoided or for which you do not have a justifiable reason.

6. Pay all Liabilities of the Estate First

You should pay all liabilities and debts of the estate, including taxation liabilities and estate administration costs, before distributing to beneficiaries.

Once you have made a distribution to beneficiaries, it may be difficult to get a refund from them in order to pay an invoice you have received or liability you have only just become aware of.

Funeral expenses, Probate and administration costs should be paid first.

7. Keep Proper Records

As soon as you begin managing the assets and liabilities of the estate, you should begin keeping records. This is particularly important if you are personally paying debts of the estate (i.e. funeral expenses or outstanding bills) for which you will seek reimbursement from the estate funds.

Beneficiaries maybe entitled to see all accounting records in regard to the estate and if you have not kept proper records you may find yourself struggling to explain your actions or to justify a reimbursement of expense.