Estates and probate guide

This straightforward guide will help you cut through the confusion about estates and probate.

When someone you love passes away, a set of rules comes into play to ensure their assets are divided according to their wishes and the law.

The processes — and even the language — can be confusing, especially if you’ve never had to deal with these kinds of things before. Knowing what you must do and what to expect can relieve some of the pressure at a very sad time. Here are some answers to common questions.

What is an estate?

The word “estate” covers anything and everything of value a person owns at the time of their death. Along with cash in a bank account, property, shares and managed funds, this might include anything from jewellery and coin collections to racehorses and cattle. Superannuation can also be included in a person’s estate, subject to trustee’s discretion or a valid binding death benefit directing it to the estate.

What are probate and Grant of Probate?

Probate is a legal process to confirm you’re holding a valid will. When the court is satisfied this is the case, you’ll receive a Grant of Probate, which is a legal document giving the executor or executors permission to begin carrying out the deceased person’s wishes.

What is an executor?

An executor is a person named in the will to ensure the terms of the will are carried out. People need to choose someone they trust, so it’s no wonder they often nominate a family member or close friend. However, this could prove as much a burden as an honour.

“Many people agree to take on the role of executor without understanding the responsibilities and complexities of the role,” Nicole Woodward, Senior Manager Estates and Trusts at Australian Unity says. “Making the wrong decisions could end up costing the estate a lot of money. Or you might have to deal with bad feelings between siblings or a new claim against the estate when you’re halfway through the administration.”

There could also be personal consequences. 

“For example, many executors don’t realise they’re responsible for tax,” Robert Goodridge, National Manager Estates and Trusts at Australian Unity says. “You need to complete a tax return at the date of death, another at the end of every financial year until everything’s settled, then a final return after the distribution of the estate. If tax is owed on the estate and you’ve already paid out all the assets, the executor will be personally liable for the outstanding amount.”

Not surprisingly, some people don’t want to take on the job.

What if the executor won’t, or can’t, act?

Being named in the will doesn’t mean you’re compelled to act as executor. If you want to step down, you can. 

“The role will pass to either another named executor or, with permission, another family member or beneficiary,” Robert says. ““If no one is willing or able to take on the job, they can appoint an entity such as Australian Unity Trustees Limited to take on the role.”

The same applies if the named executor is unable to act.

“Sometimes the person named has already passed away, or has become incapacitated in some way,” Nicole says. “This is why many people choose a trustee company like Australian Unity Trustees Limited. It gives them peace of mind to know we’ll always be here to carry out their wishes.”

Are you sure you have the latest will? 

As part of the probate process, the court looks for evidence that you have the latest will. So what kind of proof do they need?

1. A notice of intention
In some states you need to publish a notice of your intention to apply for a Grant of Probate. For example, in New South Wales, you must publish a notice on the Supreme Court website at least 14 days before you make your application to the court. This lets potential beneficiaries — and anyone else who might want to make a claim on the estate — know the person has died and that you believe you hold the last valid will.

2. Basic searches 
“The executor is expected to search the house for a copy of the will,” Nicole says. “There are obvious places like a desk or safe, although it’s not uncommon for people to keep important documents in a biscuit tin or in a kitchen drawer.”

3. Relatives
It’s important to ask relatives whether they’ve heard anything about a different will or where a new will might be kept.

4. Lawyers and banks 
A family lawyer might have the latest copy or know where to look. “When we’re applying for a Grant of Probate, we also identify which bank accounts the deceased person held, then write to those banks to see whether they had a security deposit box we need to check,” Nicole says. “The last thing you want is for a later document to turn up down the track and turn everything on its head.”

What if there is no will?

When someone passes away without making a will, they’re said to have died intestate.

“As there’s no named executor, you need to appoint an administrator, either the next of kin or a trustee company,” Nicole says. “You can then apply for a Grant of Letters of Administration rather than a Grant of Probate and this will give you the same powers. But as there are no personal instructions for dividing the assets, this will be done according to law. A strict formula sets out how an intestate estate must be shared between family members."

Don’t wait to have important conversations

You can avoid many stresses and complications after the death of a loved one by making decisions well in advance. Talking to your parents and loved ones about their wishes, ensuring the instructions are clearly set out in a will, and that the executor has the time, skills and experience to carry out the task, will go a long way to making a sad time a little less painful.

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