Executor

What is the role of an executor?

An executor is the person appointed by a Will to administer a person’s estate when they die.

The role of an executor is basically to ensure the deceased person’s debts are paid and that their assets are dealt with as is stated in the Will.

The first task for an executor, after tending to any funeral arrangements, is to secure the assets of the estate such as cash and jewellery. The next task is to obtain a grant of Probate.

To apply for Probate, the executor needs to determine what the assets of the estate are (so that your lawyer can prepare an Inventory of the estate property) and what liabilities the deceased person may have. This often involves searching the deceased’s person’s records and liaising with their accountant and financial advisors.

Following that, steps such as making life insurance claims, notifying banks, superannuation funds and checking the insurance status of large assets are taken. Some assets may need to be sold and tax returns may also need to be lodged.

The specific steps that need to be taken will to a large extent depend on the terms of the Will and the deceased person’s assets and liabilities.

Usually an estate is administered within 12 or so months of the date of death however things such as claims for family provision orders under the Succession Act and other matters adding complexity can delay this.

What if the named executor has passed away?

If a named executor has passed away, then depending on whether they obtained probate before their death, either that executor’s executor or any substitute executor named in the Will takes over.

If there is a Will but there is no person named as executor or no named executor or alternate executor that is alive, then Letters of Administration with the Will annexed can be applied for and the Court appoints an administrator (in place of an executor) to administer the estate as set out in the Will.

What if there is no Will?

If a person dies without leaving a Will, they have died intestate and the relevant legislation details how their estate is distributed.

FURTHER INFORMATION

For further information, please contact McKillop Legal on (02) 9521 2455 or email help@mckilloplegal.com.au 

This information is general only and is not a substitute for proper legal advice. Please contact McKillop Legal to discuss your needs.

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in Estate Planning / Probate / Superannuation / Tax Planning / Trusts  by 01 Jul 2024 0 comments

Renouncing probate

Once a person has died, the executors named in their Will generally need to apply for Probate

Often the person making a Will has appointed all of their children as executors however, as many people relocate interstate or overseas for work, it may not be practical for one or more of them to act in the role of an executor of an estate.

Being out of the jurisdiction is not a problem in relation to being an executor, but it can slow down matters as getting documents signed and in dealing with institutions and things like verification of identity can be cumbersome. There is no requirement for a named executor to act as such.

There is a process that allows one or more of the named executors to leave it to  the other/s to deal with the estate – this is known as “renunciation“. So what is renouncing probate?

Renouncing probate simply means that you are renouncing the rights, powers and responsibilities of being an executor of a Will. Once you have renounced your role as executor, you may not later seek to be, or act as, executor of the estate unless the Supreme Court allows it.

To renounce your role, you must not have intermeddled (dealt with estate property) or undertaken any significant steps in relation to the estate.

FURTHER INFORMATION

For further information, please contact McKillop Legal on (02) 9521 2455 or email help@mckilloplegal.com.au 

This information is general only and is not a substitute for proper legal advice. Please contact McKillop Legal to discuss your needs.

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in Estate Planning / Probate / Trusts  by 01 Apr 2024 0 comments

Am I entitled to a copy of a Will?

At a very emotional time, often there is confusion as to what rights and obligations exist in relation to obtaining a copy of someone’s Will.

Many clients ask us “Am I entitled to a copy of a Will?” or “Do I really need to give them a copy of the Will?”

It should go without saying that no-one is entitled to see the Will of a person who is still alive! After death however, the Succession Act 2006 (NSW) provides that any person who has possession or control of a Will of a deceased person must allow any one or more of the following persons to inspect or to be given copies of the will (at their own expense):

“(a) any person named or referred to in the Will, whether as a beneficiary or not,
(b) any person named or referred to in an earlier Will as a beneficiary of the deceased person,
(c) the surviving spouse, de facto partner or issue of the deceased person,
(d) a parent or guardian of the deceased person,
(e) any person who would be entitled to a share of the estate of the deceased person if the deceased person had died intestate,
(f) any parent or guardian of a minor referred to in the Will or who would be entitled to a share of the estate of the testator if the testator had died intestate,
(g) any person (including a creditor) who has or may have a claim at law or in equity against the estate of the deceased person,
(h) any person committed with the management of the deceased person’s estate under the NSW Trustee and Guardian Act 2009 immediately before the death of the deceased person,
(i) any attorney under an enduring power of attorney made by the deceased person,
(j) any person belonging to a class of persons prescribed by the Regulations.”

As you can see:

  • there are a number of persons that have a right to a inspect or to be given a copy of the Will; and
  • the executor or person with possession or control of a Will (which could include a lawyer or firm that holds it in safe custody) have an obligation to provide a copy on request.

Of course, there needs to be proof provided that the person who made the Will has in fact died – ie, provide the death certificate (which usually happens via the executor or next of kin).

The purpose of this access to the Will is partly to allow an persons with a claim on a deceased estate to know if they have been provided for in the Will, that it is the deceased person’s latest Will and who the executor is.

There is sometimes also confusion as to the effect of clauses in Wills that provide for the appointment of a particular person or firm as the estate’s lawyers for the purposes of obtaining probate. The executor is free to choose whichever lawyer or firm they wish to act for them in obtaining probate and assisting with the administration of a deceased estate.

The Probate and Administration Act 1898 provides that the Will of the deceased, once admitted to probate, is a public document and that anybody is entitled to apply for a copy of it from the Supreme Court of New South Wales  (and paying the relevant fee) however, it is generally best to contact the person in possession of the document for a copy, before approaching the Supreme Court.

FURTHER INFORMATION

For further information in relation to Wills, Probate, estate planning or even International Wills, please contact McKillop Legal on (02) 9521 2455 or email help@mckilloplegal.com.au 

This information is general only and is not a substitute for proper legal advice. Please contact McKillop Legal to discuss your needs.

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in Dispute Resolution / Estate Planning / General / Litigation / Probate  by 01 Oct 2020 0 comments

No Will – dying intestate

If you were to pass away without leaving a Will, then your estate will not necessarily pass to the people that you may wish to benefit.

Dying without a Will in place is called dying “intestate” and the ultimate beneficiaries of your estate will miss out on important and valuable benefits that could have been provided had you put in place a Will such as asset protection and tax minimisation opportunities like those in Testamentary Trusts.

Making an application to the Supreme Court to deal with the estate of a person who dies intestate is similar to seeking a grant of Probate but it is called applying for “Letters of Administration”. If a Will is left but fails to appoint an executor, it is “Letters of Administration with the Will Annexed” but at least then the Will would explain who you want to benefit following your death.

In addition to the Summons, Inventory of property and Affidavit of Administrator, things that need to be provided to the Court include: proof of enquiry into the existence and whereabouts of any Will; the identity of the deceased’s eligible relatives (death, birth and marriage certificates); proof of notification of the application to interested persons; an affidavit regarding the relationship status of the deceased; and possibly provision of an administration bond.

The reason for this evidence of a spouse/domestic partner is that the law provides for a formula as to how an intestate estate is to be divided and a lot depends on the marital relationship of the deceased.

Chapter 4 (sections 101-140) of the Succession Act 2006 (NSW) provide that the statutory order of inheritance in relation to an intestacy is:

RELATIVES LEFT

 ​ENTITLEMENT

A spouse and no children

The spouse is entitled to the whole of the estate.

A spouse and child(ren) from that relationship

The spouse is entitled to the whole of the estate.

A spouse and child(ren) from a that (or a previous) relations​​hip

The spouse is entitled to receive:

  • the personal effects of the deceased;
  • a statutory legacy of $350 000;* and
  • half of the residue of the estate.

The spouse also has a ‘right to elect’ to acquire property from the estate.

All of the deceased’s children, including children^ from previous relationships and from the current spouse (whether they are from a previous relationship or from the spouse) are entitled to equal shares of the other half of the residue.

Multiple spouses

The spouses are entitled to equal shares of the estate (unless varied by Order or agreement between them). There may be more than one spouse if the deceased was married and had one or more domestic relationships/de facto spouses. Children get nothing in this case.

Children only (no spouse)

 The children are entitled to equal shares of the estate. If a child of the deceased has already died leaving children (ie, the deceased’s grandchildren), the grandchildren are entitled to their parent’s share in equal shares.

No spouse or children

The deceased’s parents are entitled to equal shares of the estate.

No spouse, children or parents

The deceased’s full and half blood brothers and sisters are entitled to equal shares of the estate.

No spouse, children, parents, brothers or sisters

The deceased’s grandparents are entitled to equal shares of the estate.

No spouse, children, parents, brothers, sisters or grandparents

The deceased’s full and half blood aunts and uncles are entitled to equal shares of the estate.

No spouse, children, parents, brothers, sisters, grandparents, aunts or uncles

The deceased’s first cousins are entitled to equal shares of the estate.
No spouse, children, parents, brothers, sisters, grandparents, aunts, uncles or cousins

The State government is entitled to the whole of the estate.

* Adjusted by CPI. If this amount is not paid within 1 year from the date of death, the spouse is also entitled to receive interest on this amount.

^ Children who are not legally the children of the deceased (eg, step children) are not included. Adoptive children are included.

Special rules also apply in relation to indigenous persons.

FURTHER INFORMATION

Craig Pryor is principal solicitor at McKillop Legal. For further information in relation to probate, letters of administration, estate planning or business succession, contact Craig Pryor on (02) 9521 2455 or email craig@mckilloplegal.com.au.

This information is general only and is not a substitute for proper legal advice.

Please contact McKillop Legal to discuss your needs. Stay up to date – LinkedIn | Facebook | Twitter

in Dispute Resolution / Estate Planning / General / Probate  by 01 Oct 2019 0 comments

SMSF owns property. Member dies. Oh oh!

Do you, like many Australians, have a self managed superannuation fund (SMSF)?

If you want to own direct investments within your superannuation or have greater control of your superannuation portfolio, a SMSF can be a suitable alternative to retail superannuation funds.

SOME ADVANTAGES OF SMSFs

SMSFs have:

  • direct investment choice
  • access to wholesale managed funds
  • the benefit of being able to combine the superannuation balances of up to 6* people
  • the advantage of 15% taxation on investment earnings (as opposed to marginal or company tax rates) and potentially reduced capital gains tax
  • the ability to assist with estate planning and possibly for non-lapsing binding death benefit nominations

DIRECT PROPERTY

Often seen as a key advantage is the ability of an SMSF to invest in direct property, such as owning office or factory space from which a business operates from (assuming your SMSF’s Investment Strategy allows for direct property).

Where member balances are insufficient to buy a property outright, SMSFs can also borrow but only using a limited recourse borrowing arrangement (LRBA) using a bare trustee that holds the property on behalf of the SMSF for the duration of the loan and once the debt is paid, the legal ownership of the property passes to the SMSF.

Property values hopefully go up over the next 20 or so years and the members benefit from and can live happily off the benefits during retirement …

… well that’s the plan anyway. So, what happens if a member dies or gets really sick a few years into the plan? (hint – it can ruin everything, for the other members).

CONSEQUENCES OF DEATH OR TPD

On the death of a member, that member’s superannuation balance is to be paid out (to the member’s estate of their nominated beneficiary/ies) as soon as is practicable.

On the total and permanent disablement (TPD) of a member, the member may be able to exit from the SMSF and call for their member balance to be paid out.

… but if the SMSF’s cash is all tied up in the property and the property is still subject to the LRBA, where does the money come from to pay out the member balance?

The property may have to be sold to fund this! That is, unless there is a SMSF Member Death & TPD Exit Deed in place.

SMSF MEMBER DEATH & TPD EXIT DEED

A SMSF Member Death & TPD Exit Deed can help in reducing the financial effects arising from the unexpected death or TPD of a member by for example:

  • requiring the SMSF members to effect a life insurance policy over the lives of the other members and where there is a death and a payout under the policy, the policy owners contribute funds to the SMSF with the intention of paying out the deceased member’s superannuation balance (and using any remainder to reduce or pay out any debt on the property under the LRBA); and
  • requiring the SMSF members to either put in place appropriate TPD cover or to agree that on the occurrence of a TPD event of a member, that member may remain a passive investor in the SMSF but cannot immediately call for payment of their member balance, even if they would otherwise be entitled to under the superannuation legislation, but rather, if they want the payment, their member balance is to be paid out over several years (ie, from the SMSF’s cashflow).

Unless there are appropriate insurances in place or an agreement for members to only get paid out benefits over time in the event of a TPD event, then the likely outcome of the death or TPD of one member is the sale of the SMSF’s property.

This can be a particularly bad problem if the SMSF has only recently acquired the property and had therefore incurred all of the legal, financial planning and accounting costs as well as stamp duty, but had no time for the asset to generate income or appreciate in value. The death or TPD of the one member therefore affects up to 3 other members who may not even be related to the affected member!

FURTHER INFORMATION

Craig Pryor is principal solicitor at McKillop Legal. For further information in relation to estate planning, business succession, superannuation or SMSFs, contact Craig Pryor on (02) 9521 2455 or email craig@mckilloplegal.com.au.

This information is general only and is not a substitute for proper legal advice. Please contact McKillop Legal to discuss your needs.

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*amendment 01 July 2021 – only 4 members were allowed prior to 1 July 2021.

SMSF owns property. Member dies. Oh oh!

in Business / Commercial Law / Dispute Resolution / Estate Planning / Probate / Risk management / Superannuation / Tax Planning / Trusts  by 07 May 2018 0 comments

Deceased estate litigation

Succession Act claims

We are often called upon to advise clients in relation to claims on estates in relation to such things as challenging the validity of the Will (such as due to lack of mental capacity when the deceased person made the will or duress) or what is known as a Succession Act claim or a family provision claim (where a person says that adequate provision was not made for them in a Will). We discuss the latter here.

The purpose of the Succession Act is to seek to ensure that “adequate” provision is provided from a deceased’s estate to the family members of a deceased person (and others). Claims under the Act are based on needs.

Important facts

  • Claims must be made within 12 months of the date of death of the deceased (although in limited circumstanced, this time limit can be extended).
  • To make a claim, you must first establish that you are an “eligible person”.
  • Assuming you are an “eligible person”, you must demonstrate needs beyond the provision that was made for you in the Will (if any) for your proper maintenance, education or advancement in life.

Who is an eligible person?

Those who are eligible to make a claim for a provision out of deceased estate include:
  • A spouse of the deceased at the time of the deceased’s death;
  • A person in a de facto relationship with the deceased at the time of death
  • Children (including adopted children) of the deceased;
  • Former spouses of the deceased;
  • Someone with whom the deceased was in a close personal relationship* at the time of their death;
  • Those who have, at any time, been wholly or partly dependent upon the deceased:

- were either a grandchild of the deceased; or

- were, at any time, member of a household of which the deceased a member.

* A “close personal relationship” is a relationship other than a marriage or a de facto relationship between two adult persons, whether or not related by family, who are living together, one or each of whom provides the other with domestic support and personal care but not for reward or on behalf of another person or organisation.

What is involved?

To make a claim, the proceedings are usually commenced in the Supreme Court by way of Summons and evidence will be required in an affidavit setting out the nature and history of the relationship, contributions made to the deceased’s property and wellbeing, details of your financial need and any other relevant factors.

Simply having financial needs and showing some level of dependence on the deceased is not the end of it. The Court will have to weigh up many other factors, such as the size of the estate, the deceased’s wishes (such as those stated in a statement of testamentary intention or other similar document), competing claims from others, circumstances and events that may tend to dis-entitle a person from a benefit and so on.

Time and costs involved

Litigation is a lengthy and time-consuming process and it is an emotional one with family relationships being strained by what may be contained in affidavits or said in the witness box at a hearing. That said, often the estate pays the costs (or a large proportion of them) involved in such cases so it may not be a financial burden to enforce your rights.

Most cases settle prior hearing and usually at a mediation that can be arranged by the Court or by private agreement between the parties. Settlement is often advised to avoid the risks, costs (and emotional cost) of litigation and to help preserve any family relationships.

Often we act for the executors of an estate, but we also act for beneficiaries and those that are not mentioned in Wills at all.
Further information

If you would like any more information in relation to Wills, deceased estate litigation or estate planning/business succession issues generally, please contact Craig Pryor on (02) 9521 2455 or email craig@mckilloplegal.com.au
in Dispute Resolution / Estate Planning / General / Litigation / Probate / Trusts  by 15 Feb 2017 0 comments

Why have a Will?

WHAT IS A WILL?

A Will is a legal document that outlines how you wish to have your assets distributed on your death. You get to choose who administers your estate for you and who and how your beneficiaries are to receive your assets.

Generally, to make a Will, you must be over 18, have proper mental capacity and sign a document in the presence of 2 independent witnesses.

If you pass away without having a valid will in place (called ‘dying intestate’) then the provisions of the Succession Act 2006 (NSW) will apply and your estate will be divided up without regard to your wishes.

Take control of who controls your estate and who inherits by putting in place a will today.

EXECUTORS

An executor is the person you appoint in your Will to deal with your estate on your death and to ensure that your wishes are carried out.  Often, people appoint 2 executors or provide for an alternate executor so that if one person is not willing (for example, due to age or infirmity) or able (for example, if they are dead or incapacitated) to act, then the other/alternate executor can act.

WHAT CAN A WILL INCLUDE?

Any asset that you own can be deal with in your will, whether bank accounts, motor vehicles, boats, jewellery or any other item. Particular items can be left to particular people, the whole of your estate can be left to one person or to several people in various fractions or percentages and conditions of gift can be imposed, such as paying out encumbrances such as mortgages.

Real property (houses and land) that is owned as ‘joint tenants’ (as is often the case for married couples) cannot be left by Will because when one joint owner dies, it automatically passes to the surviving owner. Where land is owned as tenants in common, it can be transmitted by Will. There can be good reasons for holding property in either way.

Life insurance and superannuation benefits are not able to be dealt with by a Will where specific beneficiaries have been nominated by policy owner. If the estate is nominated as beneficiary, a nomination has lapsed (they often lapse after 3 years) or no nomination has been made, the proceeds will usually be paid to the estate and distributed under the Will however, the trustee or the insurer may have discretion as to who to pay the benefit to. Your financial advisor would be able to advise you in relation to any superannuation death benefit nominations.

Often, wishes are expressed in Wills such as those relating to cremation or burial and directions regarding guardianship of infant children.

WHEN IS A NEW WILL REQUIRED?

If you get married or if you get separated or divorced from your spouse or partner or if your family circumstances change (for example, through a birth or a death or if you have a significant change to your finances, like an inheritance, bankruptcy, changes in business structure etc), you should make a new Will.

Your Will should be regularly reviewed (every few years at least) to ensure it still reflects your current wishes.

TESTAMENTARY TRUSTS

Consider whether your beneficiaries would benefit from having Wills with Testamentary Trusts as they can offer significant and ongoing benefits, including:

  • asset protection from creditors, and
  • taxation advantages such as income splitting.

This is particularly useful where your beneficiaries are in business and have their own asset protection measures in place, if they are ‘at risk’ or where you have income producing assets. Speak to us about how testamentary trusts can benefit your family.

FURTHER INFORMATION

Craig Pryor is principal solicitor at McKillop Legal. For further information in relation to estate planning, business succession or any other commercial law matter, contact Craig Pryor on (02) 9521 2455 or email craig@mckilloplegal.com.au.

in Estate Planning / Probate / Tax Planning  by 08 Feb 2017 0 comments