Getting clear on the basics
An Estate is all of the property and debts of an individual who has passed away that needs to be managed.
The Executor of the Estate is the one nominated by the Willmaker to be responsible for collecting the deceased's assets, paying any debts and then distributing the assets to the beneficiaries.
- Nobody lives forever
- Life must go on
- With much responsibility comes much accountability
- A helpful way to see the bigger picture
- Responsibility and Legal Liability
- 1. Make the funeral arrangements.
- 2. Start the paperwork
- 3. Locate the Last Will
- 4. Make a list of all the beneficiaries mentioned in the Will and their contact details
- 5. Obtain a Certificate of Probate from the Supreme Court in your particular state.
- 6. Make a list of all the Assets and Liabilities of the Estate
- 7. Set up a separate Estate Bank Account
- 8. Keep a list of all Expenses paid by the Estate.
- 9. List separately Estate Assets from the Non-Estate Assets
- 10. Make a list and check it twice.
- 11. Lodge the final tax return of the Estate
- 12. Protect the Estate assets while all this is being handled
Nobody lives forever
At some point, we all have to come to grips with the practical reality of someone we love passing away, whether expected or otherwise and what to do with their property.
- For the adult child of a departed parent, dealing with their Estate and acting as the nominated Executor of the Will, brings with it many jobs - some anticipated and some surprising.
There's a multitude of decisions to be made;
- from finding debts to pay and savings accounts to consolidate,
- listing and locating important people, possessions, policies and property, and
- dealing with the practical emotional side of where to store the things you’re not yet ready to depart with.
Dealing with the ‘final’ financial decisions is overwhelming on so many levels.
It can be a maturing process and a great burden at the same time.
Life must go on
Don’t wait until you're an Executor of someone's Will (deliberately by design or by default because no one else is available) to start learning more about what needs to happen.
You can be a better helpful friend or family member if you can help point the way for others when they need to know where to start learning these skills.
For many people dealing with the loss of a loved one, getting things organised and finally sorted, is one important way to help make that transition easier
With much responsibility comes much accountability
An Executor is the nominated person (or organisation) responsible for overseeing the many complex and often long processes involved in finalising the deceased’s Estate.
From the outset, you need to realise most Executors use the expertise of Solicitors, Accountants and Financial Advisers as part of the overall process (so you don't have to do things outside your abilities)
A helpful way to see the bigger picture
The Executor is like a project manager who organises much of the materials, collects information about people, places, assets and values and who ultimately takes responsibility for overseeing the different parts of the process are completed fairly and in a timely manner.
- Once you understand an Executor is the manager of the processes and not necessarily the technician doing all the complicated work, you can focus on your responsibility.
If at any stage you feel overwhelmed, you can always outsource the majority (or even the entirety) of the process too.
Responsibility and Legal Liability
It’s important to understand, ‘that with much responsibility comes much accountability’.
The Executor can be held legally responsible for not safeguarding property assets in the estate, for not paying the taxes before distributing assets to beneficiaries and for not dealing honestly with their position.
So understanding the responsibility and the liabilities involved will help you see the importance of getting this duty right. As always, when needed, seek professional advice from a legal professional who specialises in these types of issues.
1. Make the funeral arrangements.
This should occur as soon as practicable after the death of the person concerned.
The funeral instructions may be already outlined in the Will (or there may be a pre-purchased funeral plan in place). Either way, it starts with getting a copy of the Will and any related documents.
2. Start the paperwork
Request a copy of the Death Certificate and have a number of certified copies of the document made available.
For example, if the deceased had 3 bank accounts, you can expect each bank will request a certified copy of the Death Certificate when dealing with you to verify the information. The more complex the Estate, the more certified copies of the Will you may need to have available.
3. Locate the Last Will
Hopefully, this document has been placed into secure storage by the legal firm who has drafted the Will.
Sapience clients who have used our Finally Sorted Modern Estate Planning Service simply have to contact us or the Legal Firm handling the document storage to start that process.
Pro tip: You should be prepared to provide 100 points of photographic ID to verify yourself and your address when you are requesting the original Will.
Pro tip: Check if there's a Letter of Wishes of the deceased, filed along with their last Legal Will. While this document is not binding, it's designed to be a helpful guide for the Executor in their duties and for the Courts in any future challenge to a Will or its distribution.
Pro tip: A Letter of Wishes is usually a private document and not made public like the Will is. These private instructions to the Executor might clarify why unequal distributions are to be made to different beneficiaries of the Will and the deceased's Estate.
4. Make a list of all the beneficiaries mentioned in the Will and their contact details
These should be listed in the Will. You can ask a Solicitor to make contact with them (if you prefer) to inform them of the news of the passing of the deceased.
5. Obtain a Certificate of Probate from the Supreme Court in your particular state.
This is usually done with the assistance of a Solicitor employed by the Executor.
- Until a Certificate of Probate is granted, you should expect the deceased's assets to be frozen.
- Any Power of Attorney or Power of Enduring Guardianship will be no longer usable after the person has passed away.
Their affairs are now under the control of their nominated Executor.
Pro tip: If the deceased died without a Will (and therefore without nominating a person to act as Executor), you will still need to apply to the courts to be granted Letters of Administration to legally give you the power to administer and finalise the Estate of the deceased.
6. Make a list of all the Assets and Liabilities of the Estate
The Estate is usually comprised of assets and debts owed by and owned to, the deceased.
- Make a list of all the assets and where they are found or held safely.
- Make a list of all the debts and liabilities who owned how much for what.
7. Set up a separate Estate Bank Account
As much of an Executor's duties include keeping good records, it's a good idea to have a separate Estate Bank account as a way to track income and expenses and increase the transparency of the Executor's actions.
8. Keep a list of all Expenses paid by the Estate.
There are some expenses that may need to be met while the Estate distribution is being arranged.
- Local Council Rates may need to be paid
- Property insurance premiums for fire and storm may come up for renewal.
- Funeral cost may need to be paid.
Pro Tip: Where possible paid these bills from the account by electronic transfer or Bpay. This will reduce the risk of paying personal bills from estate monies and make reconciling bill, debts and entitlements easier to calculate and demonstrate to beneficiaries of the Will.
9. List separately Estate Assets from the Non-Estate Assets
Not all assets are considered estate assets and able to be distributed by the Will. There are many assets that fall outside the power of the Executor and the Will to deal with and called Non-Estate assets.
- Superannuation is usually considered a Non-Estate asset and needs separate documents and advice from your Financial Adviser on how to best deal with them.
- Assets held in a Family Trust, its assets are not owned by the deceased but held on trust to different individuals.
- Wealth held inside Self Managed Superannuation Funds are equally held in trust for its members and considered a Non-Estate Assets (and therefore outside the reach of the Executor of a Will)
- Real estate that is structured as Joint Tenancy has different legal status for those structured as Tenancy in Common where two or more people to have a defined share of a property and to transfer their interests independently and via a Will.
- Business and Partnerships can also be classed as non-estate asset.
Make sure to check the difference between the assets of the estate and non-estate assets as you help manage the expectations of the beneficiaries.
10. Make a list and check it twice.
You can expect the average time for settling an estate can take at least 6 months or more. Depending upon the complexity, some can take years.
- Check who owns money to the deceased (and by implication now the Estate) and prepare to call in these debts for repayment to the estate.
- Check who the deceased may owe money to eg; a bank mortgage) (and therefore the Estate will have to verify and pay).
Remember this may include the Tax Office so before you distribute and divide any assets or funds to beneficiaries named in the Will, you will need to file a final Tax return
11. Lodge the final tax return of the Estate
For more information on how to do this, visit the ATO website or speak with your Accountant.
12. Protect the Estate assets while all this is being handled
While you're preparing the Estate for final distribution, you will still need to safeguard the assets until while the necessary paperwork and lists are being completed.
- Do you need to change the locks on a property?
- Do you need to inform an insurance company a property is now vacant for more than 90 days?
- Can you confirm that the property is still insured?
- Do you need to park vehicles off the street and into a garage?
- Do you need to consolidate bank accounts?
- Should all the funds be consolidated into a separate bank account in the name of the Estate and placed into interest-bearing deposits?
Finally, the day will come where the estate is ready to be distributed, its debts paid and closed and the lawyers will notify all the needed parties and file the necessary documents with the Probate Court.