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Probate and Letters of Administration

Thu, 02/07/2013 - 11:41 -- alexr

Administration of a Deceased Estate

It is the duty of an executor to take care of the deceased's assets and property, arrange payment of the funeral and administration expenses as well as the deceased’s debts and taxes from those assets and to distribute the assets to the beneficiaries.

Depending on the nature of the assets and the size of the estate, it may be that there is no need to obtain a Grant of Probate or Letters of Administration as many smaller assets such as a bank account can usually be dealt with by production to the bank of the will (if there is one) and a death certificate (or certified copies).

Where there is no will, the death certificate or a certified copy is generally provided together with evidence of the identity of the next of kin. The account will generally be closed and payment may be made to the next of kin who will then be liable for payment and distribution of the estate as required by law.

In respect of larger estates or estates that have assets in the form of real property or land, a Grant of Probate or Letters of Administration will be required. Application is made to the Supreme Court of New South Wales and is determined by the Probate Registrar (unless the application is contested in which case it may go before a Judge).

Where the deceased passes away leaving a valid will, an application is made for Probate. The deceased person’s estate is then to be collected and distributed as set out in the will.

If a person dies without having a valid will, they die “intestate”. In that situation, the appropriate application is for Letters of Administration. Once Letters of Administrationare granted and the assets have been collected and all estate debts have been paid, the estate will be distributed according to a statutory order of inheritance contained in the Succession Act 2006 (NSW).

Regardless if a person dies with a will or intestate, there are is a possibility that a beneficiary (or a person who believes that they ought to have been a beneficiary) may make a claim on the estate for a provision or a provision greater than that which they are to receive under the Will or the laws of intestacy. Previously those claims were made under the Family Provision Act 1982 (NSW) but for all deaths after 1 March 2009 are now made under the Succession Act 2006.

Persons who make claims must first prove eligibility and then inadequacy of any provision before any order is made in their favour. We have extensive experience in acting for both claimants and executors / administrators of estates in relation to such claims.

We have a large team of experienced lawyers that can:

  • Advise you in detail about the rights and responsibilities of an executor;
  • Prepare the documents required to apply for Probate of a Will or Letters of Administration where there is no Will, including the necessary Summons, inventory of property, publications and affidavits;
  • Assist you to identify and collect the deceased's assets, including dealing with banks, mortgagees, and retirement villages;
  • Advise on the possibility of a tax liability and assist in having tax returns prepared and lodged;
  • Advise you about the legal order in which debts must be paid and the remaining assets distributed;
  • Explain the process of distribution of the estate;
  • Assist you with any claims that may be made against you over administration of the estate
  • Defend any claims against the estate such as claims for family provision orders under the Succession Act 2006;
  • Prepare a case for a provision under the Succession Act 2006.

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Administration for a Grant of Probate

The administration of a deceased’s estate is the process of getting in and distributing the assets of a deceased person in accordance with his or her will.

A valid will details who is to be the executor and how all of the deceased person’s estate is to be distributed. If the will does not deal with both matters, a partial intestacy may arise such that the assets that have not been dealt with by the will are dealt with by the law of intestacy and the statutory formula in the Succession Act 2006 (NSW) will be applied to that asset.

Where a deceased person leaves a will and the assets are of a size (over about $20,000) or a type (the deceased held an interest in real property or land), an application for a Grant of Probate will generally be required.

Applications are made by Summons and filed in the Supreme Court of New South Wales under the Probate & Administration Act 1898 (NSW). Applications for Probate are generally required to be made within 6 months of the testator's death. If the application is not made within that period, an explanation of the reasons for delay may have to be given in the form of an Affidavit of the executor.

Costs

The costs of the legal work of and incidental to obtaining the Grant of Probate are regulated by a scale of fees. A smaller fee is charged for smaller estates however, the fee is fixed according to the scale. Similarly, the filing fees payable to the Court are based on a separate scale.

The legal work expected to done in the administration of the estate after the Grant of Probate is obtained are usually estimated separately and will largely depend upon the level of work required – such as if there are numerous bank accounts, shares or properties, where there is more work required to be performed.

Assets that do not form part of the estate

Where there are jointly owned assets (as opposed to co-ownership or ownership as tenants in common), they do not form part of the deceased person’s estate and automatically become owned by the surviving joint tenant, subject to formalities to update title particulars.

Why Us?

We can assist and advise the executors or administrators of a deceased person’s estate in relation to his or her or their role or responsibilities and the most efficient ways to administer the estate and obtaining a Grant of Probate or Letters of Administration if required.

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Intestacy and Applying for Letters of Administration Where There is No Will

Where a person either dies without a will, the person’s will cannot be located or there is some defect in a will such as the failure to appoint an executor, one of the eligible relatives can apply for what is called Letters of Administration.

Letters of Administration is a court order allowing the deceased person’s estate to be administered by the Administrator and is similar to a Grant of Probate obtained by an Executor where there is a valid will. Applications for Letters of Administration are made by Summons and filed in the Supreme Court of New South Wales under the Probate & Administration Act 1898 (NSW).

If an estate is very small (assets less than $20,000) or it there is no real property, it may be that the relevant assets can be dealt with without the need to obtain Letters of Administration.

Spouse entitlements

Where an intestate person leaves one spouse (a person married to or in a domestic partnership with the intestate) and no issue (no children), the spouse is entitled to the whole estate.

Where the intestate leaves one spouse and issue, and the issue are issue of the spouse, the spouse is again entitled to the whole estate. However, where the issue are not issue of the spouse, the spouse is entitled to:

  • the personal effects;
  • a statutory legacy (presently $200,000); and
  • half the remainder, if any, of the estate,
  • with the remaining half of the residue to be divided amongst the issue equally.

Spouse’s preferential right to acquire matrimonial home

The deceased person’s spouse has a ‘preferential right to acquire property from the estate’ which must be exercised within 3 months of the Grant of Letters of Administration. The price is the market value at the date of death and the Administrator must obtain a valuation.

Multiple spouses

Where there is more than one spouse, but no issue or the issue of the surviving spouses, the spouses are generally entitled to the whole of the estate, in equal shares unless there is a distribution agreement between the spouses or the Court has made a distribution order in that regard.

Where there is more than one spouse, and issue who are not issue of a surviving spouse, each spouse is entitled to share, under a distribution agreement or distribution order (usually in equal shares unless otherwise agreed or ordered):

  • the personal effects;
  • the statutory legacy of $200,000; and
  • half the remainder.

Where there is no surviving spouse

Where an intestate leaves no spouse but issue, those children are entitled to the whole estate, in equal shares.

After spouses and issue, the categories of relatives entitled to the estate comprise, in order, the parents of the intestate, brothers and sisters (siblings of full blood and half blood, which were previously not treated as the same), grandparents, aunts and uncles, and finally, first cousins.

Indigenous persons

The personal representative of an indigenous intestate or a person claiming to be entitled in the estate may apply to the Court for a distribution order in accordance with the laws, customs, traditions and practices of the relevant indigenous community or group.

Such an application must be made within 12 months of the grant of administration, or such longer period allowed by the Court, but no application can be made after the estate has been fully distributed.

Absence of any persons entitled on intestacy

In the absence of any person entitled, the State of New South Wales remains entitled to the whole of the intestate estate and has discretion to make provision in favour of certain persons and organizations.

Costs

The costs of the legal work of and incidental to obtaining the Letters of Administration are regulated by a scale of fees. A smaller fee is charged for smaller estates however, the fee is fixed according to the scale. Similarly, the filing fees payable to the Court are based on a separate scale.

The legal work expected to done in the administration of the estate after Letters of Administration are obtained is usually estimated separately and will generally depend upon the level of work required – the more numerous the assets, there is more work required to be performed.

Assets that do not form part of the estate

Where there are jointly owned assets (as opposed to co-ownership or ownership as tenants in common), they do not form part of the deceased person’s estate and automatically become owned by the surviving joint tenant, subject to formalities to update title particulars.

Why Us?

We can assist and advise the executors or administrators of a deceased person’s estate in relation to his or her or their role or responsibilities in that regard and the most efficient ways to administer the estate and obtaining a Grant of Probate or Letters of Administration if required.

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Challenging and Defending the Validity of a Will

A Will can be invalid for a variety of reasons, including:

  • Incapacity - such as where the person who made the will suffered from some mentally incapacity at the time, such as having dementia, and accordingly, they could not validly sign such an important document as they lacked the requisite testamentary capacity.
  • Undue influence or coercion – such as where the person making the will was placed under pressure from others to make a Will in certain terms, so it is not in reality their last wishes.
  • Incorrect execution –where the Will was not signed as is required by the Probate and Administration Act 1898 (NSW) such as if there are not 2 adult witnesses or the witnesses are also beneficiaries and not independent.
  • Fraud/forgery – where a will has been created by another person pretending to be the testator or where a will has been altered, destroyed, concealed or otherwise interfered with. It is an offence under the Crimes Act 1900 (NSW) punishable by imprisonment to steal or for any fraudulent purpose destroy, cancel, obliterates or conceals any testamentary instrument.

We have experience in opposing the granting of probate to wills on the basis of invalidity and in applying to have a caveat on probate issued by the Supreme Court. We have also represented may executors in having otherwise informal wills (such as wills where they have not been witnessed strictly as required by the relevant legislation) proven in court and being the subject of a Grant of Probate or Letters of Administration with the will annexed.

Regularly, applications contesting the validity of will are in addition to a claim for a provision or a better provision form a deceased estate under the Succession Act 2006 (NSW) but they are not necessarily linked.

Where there is uncertainty about the terms or effect of a Will, the Court can be asked work ascertain what the deceased really meant to do with their estate. Executors and trustees can also apply to the Court for what is known as “judicial advice” so that they can rely on the Court’s advice in taking steps where there would otherwise be potential for dispute as to the deceased’s intentions or the effect of various provisions.

Most claims are settled by written agreement between the parties following a mediation without the need for the parties to attend a hearing.

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Funeral Expenses

Funeral expenses are the first debt in relation to a deceased estate that are to be paid.

The Executor or Trustee is entitled to claim any expenses relating to the administration of the estate that has been properly incurred before any other debts are paid.

Regularly, Executors or Trustees use their own personal funds to meet estate expenses, or at least the initial expenses before a Grant of Probate or Letters of Administration have been obtained and the deceased’s assets such as bank accounts can be accessed.

Executors or Trustees are indemnified by the estate for all monies that have been properly spent in the administration of the estate however, if there are insufficient funds in the estate, the estate may not be able to pay or reimburse such expenses. Special rules apply to those insolvent estates.

Beneficiaries are not liable for the debts of a deceased person. If however, the deceased person gave a beneficiary substantial assets shortly prior to passing away or if a beneficiary wrongly took assets of the deceased, those assets may be recoverable by an executor for the payment of creditors and proper distribution under the Will, particularly if the assets were given away to avoid paying the creditors.

Why Us?

We can assist and advise the executors or administrators of a deceased person’s estate in relation to the proper administration and distribution of the estate and in obtaining a Grant of Probate or Letters of Administration where required.

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Distribution of a Deceased Estate

Regardless of whether a Grant of Probate or Letters of Administration of a deceased estate is required or whether the estate can be administered without the need for those Court applications, the Executor or Administrator must collect the deceased's assets and take steps to pay the funeral and administration expenses and any debts or taxes that the deceased owed prior to making any distribution.

Your lawyer will contact each of the financial organisations and companies in which the deceased had money invested in order to realise those assets. In view of possible liability for capital gains tax, it is important to find out the date and cost of acquisition of the deceased's assets.

Funeral expenses are to be paid first and there is a particular order in which any other debts must be paid. After funeral expenses are paid, the executor or administrator is entitled to payment of any actual expenses incurred relating to the administration of the estate before other debts are paid.

Once all debts have been paid and the appropriate notices have been published, the assets are either distributed according to the terms in the Will (or the law of intestacy where there is no Will) or they are sold so that money can be divided among the named beneficiaries.

Prior to distribution, your lawyer will prepare a distribution statement for the approval of the Executor or Administrator showing what the assets were, how much money resulted from any sale of assets, what expenses and debts were paid from the proceeds and how the estate is to be distributed.

If the executor is applying for commission for his or her administration, detailed accounts have to be filed at the same time with the Court and all payments and receipts by the executor properly approved prior to distribution.

Why Us?

We can assist and advise the executors or administrators of a deceased person’s estate in relation to the proper administration and distribution of the estate and obtaining a Grant of Probate or Letters of Administration if required.

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Transmission Applications

Unlike where assets, such as land, are held jointly or as “joint tenants”, where assets is held as tenants in common, that asset must be distributed in accordance with the deceased owner’s Will or where there is no will, the laws of intestacy.

In the joint tenancy situation, on the death of one joint tenant, that deceased person’s title or interest in the property does not form part of the deceased person’s estate and rather, it automatically passes to the surviving joint tenant(s) by operation of law This “right of survivorship” operates such that it is not possible to deal with that joint interest in that asset by Will. The interest does not form part of the estate.

With an asset held as tenants in common with other owners, that asset does form part of the deceased person’s estate. Following the Grant of Probate or Letters of Administration and subject to the terms of the Will, the asset will have to be transmitted into the Executor or Administrator’s name pending getting in all of the deceased’s assets and paying the debts (including any mortgages) in the normal course of the administration of the estate.

In relation to real property or land, the Land and Property Management Authority (formerly Land and Property Information, and prior to that, the Land Titles Office) requires a Transmission Application to be used for this purpose. If the Will prescribes that the asset is to be sold rather than ultimately passed to the beneficiaries, then the transmission application will be used to place the land into the name of the executor for sale.

In relation to assets transferred into the Executor or Administrator’s name, if not to be sold, once the estate is ready for distribution, in respect of each asset held as tenants in common, a further Transmission Application is used to transmit that asset to the relevant beneficiary.

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Duties of an Executor or Legal Personal Representative

An executor is a person or persons appointed under a will to deal with the estate of that person when they (the testator) dies and to ensure their wishes are carried out.

When choosing an executor, you should be sure that the person (there can be more than one) you nominate in your will is both prepared to be executor and has the ability to deal with the business matters which arise. It is a good idea to appoint 2 executors or alternate executors so that if one, for some reason, is not available, the other one can act.

In general terms, an executor's duty is to take charge of the deceased's assets and property, see that the funeral and administration expenses as well as any of the deceased’s debts and taxes are paid and then to distribute the remaining assets to the beneficiaries in accordance with the will.

The process normally starts with arranging the funeral and paying the funeral account and the next task is usually finding out and making a list of everything the deceased owned or was entitled to. The list could include a house, car, money, bank or building society accounts, furniture, household appliances, jewellery, boat, trailer, cavaran, shares and other investments, insurance policies, superannuation and unpaid employment entitlements.

You will then generally arrange to see your lawyer to discuss the next steps.

Depending on the size of the estate and the composition of the estate (if the bank accounts exceed say $20,000 or if there is any real property or land), application may have to be made to the Supreme Court of New South Wales for a Grant of Probate. Probate is an order of the court saying that the will is valid and that the executor has the right to administer the estate.

In relation to an estate where the deceased died without leaving a will, that person’s will cannot be located or there is some defect in a will such as the failure to appoint an executor, one of the eligible relatives or beneficiaries can apply for what is called Letters of Administration. The executor equivalent in relation to Letters of Administration is the Administrator.

The duties of an Administrator are the same as those for an executor however instead of distributing the net assets in accordance with the Will, the estate is divided according to the statutory formula prescribed by the Succession Act 2006 (NSW).

Why Us?

We regularly assist and advise the executors or administrators of deceased estates in relation to the proper administration and distribution of the estate and if there is a need to obtain a Grant of Probate or Letters of Administration.

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Beneficiary Rights

If you are a close family member of a deceased person, such as a spouse, de facto partner or child, then generally you may expect to be provided for in that person’s will. This does not always prove to be the case.

We are frequently asked to advise on the rights of persons who believe they are, or ought to be, beneficiaries. Those rights are generally:

  • To be informed promptly of their entitlement under the deceased’s Will or if there is no will, of their entitlement on the deceased's intestacy.
  • To have a copy of the deceased person’s Will (if they are named as a beneficiary) or if the person died intestate, confirmation there is no Will.
  • To be informed of the date of likely distribution of the asset or proportion of the estate to which they are entitled.
  • To be appraised of any reasons for delay in seeking or obtaining a Grant of Probate or Letters of Administration or delays in the administration or distribution of the estate.
  • To be advised of the nature and particulars of any claim against the estate under the Succession Act 2006 (NSW) or otherwise, which affects or has the potential to affect their entitlement.
  • To have the estate finalised within 12 or so months from the date of death (in the absence of any claims, proceedings or any other complicating factors)
  • To receive their entitlement and a distribution statement (showing realisations and payments made on behalf of the estate) which properly accounts for that entitlement.

Many beneficiaries mistakenly assume that they should be invited to a “reading of the Will”. This is not a legal requirement however, some families do ask for and appreciate this.

Any person with the custody or possession of a Will of a deceased person must allow each beneficiary to inspect the Will or have a copy given to them on request. Others that may not be beneficiaries are also entitled to access to a Will, including people named in an earlier Will of that person, whether or not they are beneficiaries in the later Will, surviving spouses, de facto spouses, children, parents and some others in certain circumstances.

We can advise you in relation to your rights in relation to any estate and whether there is a claim for a provision or a larger provision in your favour under the Succession Act 2006 (NSW).

We can also assist in investigating any concerns you may have about the improper use of assets/funds of the deceased and transactions that may have been undertaken in the period shortly prior to the person’s death.

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