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All about Probate

1. What is Probate?

Probate is a written authority from the Supreme Court given to an executor to enable the administration of a deceased estate.

2. When does an executor’s duties commence?

The executor’s duties commence at the moment of death of the testator. It becomes the executor’s responsibility to ‘gather in’ the estate and make sure that it is maintained so that the beneficiaries get the full benefit. In many cases, but not all, an executor may have to get further authority to act on behalf of the deceased by getting a grant of probate.

3. When does a Power of Attorney end?

An enduring power of attorney ends when at the moment of death of the deceased. If it was a general power of attorney it ends when the donor lost mental capacity to make decisions.

4. Who pays for the funeral?

The estate of the deceased is responsible for all testamentary and funeral expenses. Testamentary expenses are those expenses incurred in the management of the estate. Any of these expenses can be recovered later from the executor before there is a distribution to the beneficiaries. Frequently it is the next of kin who pay. However, if the deceased had a bank account, that bank will draw a cheque payable to the funeral director on producing the invoice, avoiding the need for someone else to pay.

Personal possessions are generally not disposed of in the will and with exceptions, are of relatively minor value. It is customary for family to jointly decide who takes what and do that whenever it suits them. Some personal possessions such as motor cars will require taking the Death Certificate and the Registration papers to the Motor Registry to complete the transfer. The Death Certificate may take several weeks to issue.

5. Do I need Probate?

Not necessarily. You will always need probate if the home or other land being distributed under the will is in the deceased’s name only. If you own this land or property as joint tenant with the deceased person you will not need probate.

If the deceased is a tenant in common with one or more others then that share will require probate to enable the transfer of that share in the land.

If there is no land in the deceased’s name only, probate may not be essential and is often not required.

Whether or not you need probate depends on the requirements of each institution, for example a bank, which holds an asset of the deceased.

6. What is Joint Tenancy?

Joint tenancy exists where more than one party own property together. They each own the whole of the property jointly. When one of the joint tenants dies the survivor(s) automatically inherit the property and, with real estate, the change of ownership is done by registration with little difficulty. Jointly owned property cannot be disposed of by the will of the deceased joint tenant.

7. If I need probate can I do it myself?

Yes. Getting probate is now a quick and relatively simple process. It is not necessary to use a solicitor. You should be able to handle it yourself by using a Probate Kit from the Law Consumers Association and carefully filling in the forms.

The only extra costs of doing it yourself are advertising and filing fees (plus a small amount for stamps and telephone calls).

Using a solicitor, a Trustee Company or the Public Trustee would cost a lot more. The larger the value of the estate the more you have to pay. For example, the value of an estate including a home and some assets could these days easily be $550,000.

As a rule of thumb, solicitors charges are about half that charged by the Public Trustee. The Public Trustee has a scale cost of $12,600 plus other charges for property of this value.

The Probate Company Pty Limited offers an intermediate service for those who do not wish to make the application themselves.

8. If the will is with a solicitor do I have to use that solicitor?

No. If you want to do the work yourself there is no need to be embarrassed. The Executor has the right to collect the original will, so ask for it.

Some wills have a clause which says, for example, ‘Solicitors Smith & Co should do all work associated with my estate.’ This is not binding and you can still take the will and administer it as you choose.

9. Do I need to have the assets in the deceased’s estate valued?

No. You used to when there were death duties, but they were abolished in 1981. Your estimate of the value of each asset is all that is required. However, if the estate comprises real estate and you intend to keep it, then it may be wise to get a valuation as a liability for Capital Gains Tax in the hands of the beneficiary commences from the date of death. Capital Gains Tax does not apply to jointly owned property on the change of ownership to the survivor.

10. Can I give away things that the deceased owned before I get probate?

Yes — but with some provisos:

. the assets must not be needed to pay debts owed by the deceased;

. there must be no dispute about who should have the assets; you must follow what the will says about who is to get what;

. You should also get a receipt from the person you give things to.

You can, of course, give away things that the will leaves to you. Some people give secondhand clothing and other items such as unwanted furniture to the Salvation Army, St. Vincent de Paul or similar bodies who can make good use of them.

11. What does an executor do?

The first obligation of an executor is to get the original of the last will made by the deceased. It does not matter who has possession of the original will, even a solicitor, they must give it to the executor. The executor can then carry out the instructions in the will.

The next obligation of the executor is to gather in the estate. This means taking possession of all the property of the deceased. It may mean securing real estate with new locks.

The executor has an obligation to maintain the estate so that its value does not diminish for the ultimate benefit of the beneficiaries. This includes keeping insurance policies current in the name of the estate of the estate or reinsuring. These are all costs of the estate.

The estate can only be distributed when the executor has identified and got control of the estate. Getting control means just that – control. To get control may mean getting a grant of probate from the Supreme Court.

12. Does an executor have to employ a solicitor?

No. Even if in the will the deceased has expressed a wish that his solicitor should be employed the executor may disregard this instruction if, in the executor’s view, a better outcome for the beneficiaries may otherwise be achieved.

13. What rights, duties and duties of care does an executor have?

The rights, powers and duties of care of an executor are quite extensive. Simply, the executor has the same rights and powers of the deceased. Where someone holds a valuable asset of the deceased they may refuse to give up possession to the executor unless the executor has obtained the grant of probate. This applies to large amounts of money with a bank and land.

14. When does an executor become a trustee?

Most executors become a trustee at some stage. It most frequently occurs when the executor’s job has finished and property is held in trust pending distribution to the ultimate beneficiaries. Sometimes the period of trusteeship can be quite long if the estate cannot be wound up for some reason or a beneficiary is a minor and the benefit has to be held until that person reaches 18 years of age. The Trustee manages the estate on behalf of the beneficiaries making real decisions but always within the limitations of conduct allowed under the Trustee Act and any specific variations that are put in the will by the deceased.

15. How long should it take to wind up an estate?

This depends upon what is in the estate. If it is a business or a farm it may take years but if it is a typical estate comprising a house, bank accounts, investments etc then it should take no longer than 6 weeks to get a grant of probate and with that the executor can transfer title to the house and distribute or transfer funds within days.

16. Can an executor be a beneficiary?

Yes.

17. What happens if a beneficiary has witnessed the will?

If a beneficiary witnesses a will in which the testator has made a gift to them, that gift cannot be taken and the gift generally goes into the residue of the estate and is passed on according to whoever is entitled to the residue. This also applies if the witness is a spouse of a beneficiary. But, in certain circumstances the gift may stand.

18. Interpreting the will

Wills can look deceptively simple. Some ‘simple’ wills can cause interpretation problems. The general rule is that they are interpreted literally, meaning not necessarily as you would have expected the testator meant.

19. What are the discretionary clauses in a will?

Discretionary clauses allow the executor to make decisions, generally within guidelines. This allows executors to make things fit to circumstances rather than be bound by a rule.

20. Who gets a copy of the will?

There is no fixed rule as to who is entitled to a copy of the will. It is preferable for an executor to provide all beneficiaries or expectant beneficiaries to see what the testator has decided. This will remove any doubt as to who got what and if they got nothing, probably why. It also confirms who the executor is.

21. What information will the Court provide?

The Court contains a record of all the applications for probate. Anyone can make a request a copy (exemplification) of a previous grant. They are only entitled to a copy of the first page of the grant which sets out details of the deceased and his executor and a copy of the will. Only a beneficiary named in the will (not a ‘might be’ beneficiary) can get a copy of the inventory of property.

22. When does the distribution of the estate occur?

The distribution of the estate can occur at any time by the executor with the consent of all the beneficiaries and after the executor has gathered in all of the estate. If the executor has to get a grant of Probate, distribution will occur after that date because the grant will be needed to access or sell the assets. Gifts left in trust cannot be distributed until the terms of the trust are fulfilled.

23. Can a partial distribution occur?

Yes, but only with the consent of all the beneficiaries.

24. What is a testamentary trust?

A testamentary trust is a trust deed within a will. It is generally not as elaborate as many trust deeds and is generally set up to make provision for under age children.

25. What happens with insurance policies?

This depends upon the type of policy. With life policies, some allow for the benefit to be paid direct to the person nominated in the policy. In this case, the policy does not become part of the estate and cannot be used to pay debts of the estate. Some employment benefits include a death benefit. This is normally a life policy and may be protected from creditors of the estate. Executors should get further advice to confirm the status of insurance policies.

26. Who are beneficiaries of superannuation funds?

This depends upon the type of policy and the trust deed which establishes the fund. Executors should get further advice to confirm the status of superannuation funds.

27. What rights do beneficiaries have if there is delay or differing interpretations of the will?

Beneficiaries are very much at the mercy of the executor. An efficient executor should keep all the beneficiaries up-to-date with progress. If there are genuine difficulties with an interpretation of the will or the executor makes the wrong assumptions with regard to entitlements to beneficiaries, the Registrar in Probate will raise requisitions (questions) when the application for probate is filed. If the matter is contested by any party, the Court will ultimately decide.

28. Can there be more than one executor?

Yes. This is frequently the case and usually administration proceeds smoothly and each executor signs everything. For convenience some executors renounce leaving the administration of th estate to one.

29. What happens if joint executors cannot agree?

If the estate requires a grant from the Court one of the executors can make an application independently of the other. The Court leaves it open for the other to also make an application. This situation is unsatisfactory and if the distribution of the estate or an application for a grant does not proceed within a reasonable time, the executors should take care that the estate is not dissipated by neglect, for they are responsible.

30. What happens if an executor has died?

Generally the will provides for an alternative executor should the one first nominated die and the application will proceed normally by the surviving executor. Where no alternative has been provided in the will, the most senior next of kin will make an application for Letters of Administration relying on the will. The administration and distribution of the estate will go according to the will.

31. Can an executor refuse to act?

Yes. It may be that this executor is either unable or unwilling and he can “renounce’‘ his appointment. If there are more than one then the remaining appointed executors carry on. If there is only one, then the next of kin or someone with an interest in the estate makes an application for a grant of Letters of Administration with the Will Annexed.

32. Can a beneficiary refuse a gift?

As unlikely as it seems, yes. Sometimes this is done to allow the gift to go directly to someone else.

33. What happens if a beneficiary has died before the testator?

This depends on the will. Most wills provide specific directions if this happens. If not, the gift fails and it again depends on how the will has provided. In the event there is no provision in the will, the gift has to be dealt with as if there was no will.

34. What if part of the estate is outside NSW or Australia?

Generally, either a grant of probate in that state is required or if a grant in another state has been obtained to deal with assets in that state then that grant may be “resealed” in the other state or country. In Queensland it may not be required for some real estate. The need depends upon the requirements of the organisation holding the assets. Some banks treat an account opened in one state to be dealt with by an executor with a grant in that state.

To get a grant in NSW, only the assets in NSW need to be disclosed in the Inventory. Assets outside of NSW should be noted in the inventory but do not become included for the purposes of valuing the estate.

35. Can an Executor appoint an Attorney?

Yes, but not for the purpose of delegating the duties of an executor. Only an executor can make and sign affidavits. Appointing a real estate agent is a permissible delegation.

36. When does Capital Gains Tax and Land Tax apply?

CGT applies to all property bought after 20 September, 1985.

Land Tax does not apply to the principal place of residence of the deceased unless it is held by the executor for more than 1 year.

Property bought before that date by the testator is exempt from CGT but becomes liable for CGT in the hands of the beneficiary from the date of death.

37. How long has an executor got to sell real estate before Capital Gains Tax and Land Tax applies?

If an executor is going to sell the property and then distribute the funds, CGT does not apply if the property is sold within 2 years from the date of death (but may apply to the estate if bought after 20 September, 1985).

Land Tax may not apply if the property is sold within 1 year from the date of death.

38. If a grant of probate is required how long have I got before making the application?

There is provision in the Act for another party to make the application if the executor fails to do so after 3 months. This provision is rarely exercised. The Court will require the executor to give reasons for any delay after 6 months.

39. On what basis is the filing fee calculated?

On the gross amount of the estate. Note that the amount of a mortgage debt cannot reduce the gross amount.

40. Who can get access to a file in the Court?

The will becomes a public document and is available to anyone. A beneficiary is able to also get a copy of the Inventory of Property. Other persons with sufficient reason and authorised by the Registrar may also be able to get access to a file.

41. What happens to the Certificates in the file?

The Court will not release the Will or the Death Certificate. Other certificates may be released at the discretion of the Registrar.

42. What happens if there is no will and there is property?

An application for Letters of Administration is made. The process is much the same as for probate but more complex. Many of the above comments apply.

43. What forms does the Supreme Court require to make an application?

The following list is not exhaustive – a lot depends on circumstances.

For a grant of probate (where there is a will) use:

Forms, 111, 112, 92, 97, 96, 94, Affidavit under Part 78 r 11.

For a grant of Letters of Administration (generally where there is no will) use:

Forms 111, 112, 92, 98, 96, 94, 101, Affidavit under Part 78 r 11.

44. Do I have to go to Court?

No (unless there is a dispute which goes to a hearing), the process is by application and administrative and does not require a hearing in court. The Probate Registry Office handles the application and mails the grant back to the applicant.

45. What are the costs of getting a grant?

The costs, as a minimum, comprise your professional fees, a filing fee with the Court and the cost of an advertisement. Go to www.lawlink.nsw.gov.au for current filing fees.

46. How long does take to get a grant?

It can take a minimum of 3-4 weeks depending on the workload in the Registry and the efficiency of your professional service provider.

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