Key Practice Areas
Tips for Executors
Monday, June 25, 2018
The process of administering someone’s estate after they die can be a complex undertaking. However, with the right legal advice the process can be streamlined. Many people do not realise that when they engage a lawyer to help them to administer their loved one’s estate, the lawyer is actually acting for the executor and has a duty to ensure that the executor is protected from any claim that may later be made by a disgruntled beneficiary. The lawyer will also inform the executors of their rights; for example, the right to claim executor’s commission.
The purpose of this article is to give a few tips that will assist executors as they work through the process of administering an estate.
TIP No. 1: Don’t delay.
The executor’s job is to collect the assets of the deceased, pay the deceased’s debts, finalise the deceased’s taxation affairs and distribute the estate. Where the deceased owned a house that was his/her main residence, it is important that it be sold within the correct time-frame to ensure the estate can take advantage of the capital gains tax exemptions for residences. If settlement of the sale of the property is not completed within two years after the date of death, the executors may lose the exemption. The exemption can be worth thousands of dollars to the estate.
TIP No. 2: Keep good records of all funds coming into and being paid from the estate.
Different beneficiaries may be entitled to different types of funds. It may be relevant whether estate funds are received on closure of a bank account or on the sale of an asset (capital), or from dividends or rental (income).
By the same token, payments made from the estate should be paid from the correct funds. For example, if there is a house in the estate that is rented out, any debts associated with the house may need to be paid from the rental payments, not from the general pool of estate funds.
The executor is required to provide an account to the beneficiaries for the administration of the estate. It is far better to properly allocate the receipt and payment of funds than to try to recoup funds from a beneficiary where it is later discovered that that beneficiary should not have received those funds.
TIP No. 3: Know who is liable to pay what debts.
If the Will gives a particular asset to a beneficiary, that beneficiary must also take on the responsibility for any mortgage or charge that is registered over that asset.
If the Will gives the deceased’s investment house to one particular beneficiary, then the expenses for that house should be paid from the rent. If there is not enough rent to pay the expenses, the beneficiary may be required to pay the expenses from his/her own funds. The expenses should not automatically be paid from the general estate funds. This would not be fair to the general beneficiaries.
TIP No 4: Be patient and proactive.
Even a straightforward estate administration can take six months to complete. More complex estates can take 12 to 24 months. Where the deceased has not left his/her affairs in good order, merely sorting through the paperwork, finding all the assets and debts, and finalising the taxation affairs can be time-consuming. Executors need to work with their lawyer and accountant to provide information and sign paperwork as promptly as possible.
TIP No. 5: Communicate with the beneficiaries and be sensitive to their needs.
Well-informed beneficiaries will usually allow the executor time to do his/her job properly. Where the administration is going to be complex and time-consuming, a good lawyer can help you to:
- keep the beneficiaries informed,
- work out what funds need to be retained to pay future debts, and
- determine whether a partial distribution can be made to the beneficiaries.
Sometimes a beneficiary may have an urgent need for money from the estate. There are laws that allow an executor to make an early distribution of some funds to a beneficiary (even a child beneficiary) in certain circumstances.
How We Can Help
At Quinn & Scattini we have the systems and the expertise to assist executors to administer their loved one’s estate with a minimum of fuss.
Our expert estate lawyers are available at any of our local offices.