A Guide to Probate and Letters of Administration
The administration of a deceased estate can be a complex and emotional task for a legal personal representative.
At Avery Commercial Lawyers, we regularly advise executors and administrators in relation to administering deceased estates, and applying for probate and letters of administration.
1. Who is an Executor?
An executor is a person who has been appointed in a Will to manage a will maker’s estate in accordance with their wishes as set out in the Will.
2. What happens if there is no Will?
If there is no Will, the next of kin of the deceased usually has to apply to the Supreme Court for Letters of Administration. Approval is usually granted in favour of a family member or another person who has a substantial interest in the estate.
3. What is the role of an Executor/Administrator?
The executor’s duties can be summarized as follows:
- to locate the last Will of the deceased and to check its terms;
- to check the formal validity of the Will;
- to arrange for the funeral (normally subject to the deceased’s or family wishes and any request in the Will);
- to prove the Will (if any), and if there is no Will, to locate the next of kin to administer the estate personally;
- to collect the assets of the estate and preserve them for the benefit of the estate and the beneficiaries and arrange insurance if necessary;
- to ascertain liabilities and pay the debts of the estate;
- to be responsible for income tax returns of the deceased to the date of death, and/or the estate to the date of distribution, and to pay such assessments out of the estate;
- to keep proper accounts and records of estate assets, liabilities and income, and distribution payments;
- to distribute the net assets (if any) of the estate among the beneficiaries immediately entitled and obtain receipts.
4. What is an Estate?
An estate is all of the assets of a person in existence after the death of a will maker.
There are some assets which do not form part of an estate. This may include:
- jointly owned property;
- superannuation and life insurance proceeds (which are not paid directly to the estate); and
- undistributed assets of a family trust.
5. What is probate and why do you need to apply for it?
Probate is a document granted by the Supreme Court which confirms the validity of the Will and the appointment of the executor to look after the estate of the deceased will maker.
Probate is necessary to give the executor the right to deal with certain assets such as real estate and money in bank accounts. Real estate cannot be transferred unless probate is obtained (except to a surviving joint proprietor).
Most banks will not allow the executor to deal with money in the will maker’s bank account where the balance is above a certain amount unless probate has been granted.
6. What documents need to be lodged?
We will assist you with the preparation of all relevant documents. This includes:-
- advertising your intention to apply for probate with the Supreme Court;
- preparing and filing all relevant affidavits, the Will and a copy of the death certificate; and
- preparing a statement of assets and liabilities.
7. Is it always necessary to apply for probate/letters of administration?
No. There are some small estates that do not require for probate to be granted. We can assist you to determine whether applying for probate is necessary.
8. What about the payment of tax?
We will work with you and your accountant to ensure that all taxation obligations in relation to the estate are met.
The executor is responsible for lodging any outstanding income tax returns on behalf of the will maker where necessary.
The estate is also subject to income tax if it earns income, such as rent on real estate or interest on investments, and a tax return may need to be lodged on behalf of the estate. The estate should not be fully distributed until all income tax liabilities are known and accounted for.
There are currently no inheritance taxes or death duties in Victoria.
If property is given to beneficiaries in accordance with the Will, for most transfers there will be no capital gains tax or stamp duty payable by the estate or beneficiaries at the time. However, capital gains tax may be payable by the beneficiaries when they dispose of the property at a later date.
If assets are sold by the estate, then capital gains tax may be charged to the estate. There will be no capital gains tax on the sale of the will maker’s main residence if it is sold and the sale settles within 2 years of the date of the will maker’s death.
9. What happens if someone makes a claim on the estate?
The beneficiaries under a Will, and certain other eligible persons, may make a claim on the estate for a larger share of the assets.
The court is empowered to make orders for a distribution of assets other than as set out in the Will if the court is satisfied that the will maker had a duty to make adequate provision for an applicant and that this was not done.
In Victoria, an applicant must fall within the definition of an eligible person as provided for in the Administration and Probate Act 1958 (Vic) which is a:-
- Spouse or domestic partner;
- Child, adopted child, step child or someone who thought they were a child;
- Former spouse or domestic partner who would have been entitled to bring a family law claim but had not or was part way through proceedings;
- Registered caring partner;
- Spouse or domestic partner of a deceased child, adopted child, step child or someone who thought they were a child, if they died within one year of the deceased;
- a person who is a member of the deceased’s household or had been and was likely to be again the near future.
At Avery Commercial Lawyers, we will work with you and your professional advisors to assist you with all aspects of this process and to defend any proceedings if a claim is made on the estate.
If you would like more information on administering a deceased estate, please feel free to contact me to discuss.
About the Author
Matthew is an experienced commercial lawyer who regularly advises parties in relation to rent roll transactions. He is a member of the Law Institute of Victoria (LIV).
The information contained in this article is intended to provide general information only and is not legal advice or a substitute for it. You should always consult your own legal advisors to discuss your particular circumstances.