Probate and Letters of Administration
Does a will need a grant of Probate or Letters of Administration before assets of the deceased can be dealt with?
It depends on the nature of the assets. If the estate is small and the assets comprise say a motor vehicle, furniture and personal effects and a small bank, credit union or building society account, these can usually be dealt with – in the case of a will – by production to the bank or financial institution of the will, a death certificate, evidence of the executor’s identity, a completed withdrawal form and a completed indemnity in the form required by the bank or institution. In this case the executor is personally liable for the payment of the funeral expenses and debts of the deceased, up to the value of the estate, and is personally liable to the beneficiaries for payment of their entitlement.
Where there is no will, in the above circumstances, subject to production of the death certificate, a completed withdrawal form and a completed indemnity as above, and evidence of the identity of the next of kin, payment may be made to the next of kin who will then be liable for payment and distribution as above to the persons entitled.
One disadvantage to proceeding without a grant of probate or letters of administration is that the person dealing with assets is not able to obtain protection from liability for claims through the publication of statutory notices. An option to consider is to refer a small estate to the New South Wales Trustee and Guardian who has additional powers in dealing with small estates including the filing of an election to administer the estate which provides all the protections of a grant of probate or administration.
When should Probate be applied for?
The Probate Rules require an application for Probate to be made within six (6) months of the testator’s death. If the application is not made within that period an explanation of the reasons for delay will have to be given in the form of an Affidavit, either a separate Affidavit or included in the Affidavit of the Executor.
Does an adopted child qualify as a “natural” child in an estate?
The Adoption Act 2000 provides (s.95) that an adopted child has the same rights in relation to the adoptive parent(s) as a natural child born to them; they are regarded in law as the parents of the adopted child, who is regarded in law as the child of the adoptive parents and as having ceased, on the making of the adoption order, to be the child of the birth parents. The intestacy provisions of the Succession Act 2006 provide that an adopted child is regarded as a child of the adoptive parent and for the purpose of distribution and the child’s biological relationships are to be ignored.
Administration of Estate
Can a solicitor-executor come to an agreement with him/herself on the legal costs payable, apart from the costs up to the grant which are regulated?
No, similarly if the solicitor is a co-executor with another person. Disclosure of the basis and estimated amount of costs will need to be disclosed to the beneficiaries affected, usually the residuary beneficiaries.
When do accounts have to be filed and passed?
Under s. 85(1AA) of the Probate and Administration Act 1898, accounts must be verified and filed or verified, filed and passed where the executor or administrator is:
(a) a creditor of the estate of the deceased,
(b) the guardian of a minor who is a beneficiary of the estate of the deceased,
(c) the executor or administrator of the estate where the whole, or a part which, in the opinion of the Court, is a substantial part, of the estate passes to one or more charities or public benevolent institutions,
(d) a person, not being a beneficiary, or, in the opinion of the Court, a substantial beneficiary, of the estate, selected at random by the Court, or
(e) a person otherwise required to do so by the Court.
Further, an executor or administrator may wish to file accounts, for example, in order to apply for commission.
When do legacies have to be paid?
As soon as practicable once the executor has made provision for the payment of all debts and liabilities of the deceased and the estate. As a general rule, if not paid within 12 months after the death of the deceased, the legacies bear interest from that time at 2% above the cash rate last published by the Reserve Bank of Australia before 1 January in the calendar year in which interest begins to accrue.
Do estate monies have to be placed in an Estate account?
Not necessarily; if the monies are going to be received from the realisation of assets and paid out within a short period-a few months only-they can be paid to the credit of the estate in a solicitor’s trust account. However, if there is any significant delay in investment of monies not required to be distributed, those monies should be invested prudently by the executor as provided in section 14A of the Trustee Act 1925.
Are Probate costs regulated?
The costs of the legal work of and incidental to obtaining the grant of Probate or Letters of Administration, up to delivery of the grant by the court, are regulated as to the maximum amount chargeable. Costs in the administration of estates are deregulated. Practitioners must disclose to their clients, before commencing the retainer, their fees, including GST, for work in estates whether costs are regulated or deregulated. However, note that the disclosure requirements do not apply where the total of the legal costs, excluding disbursements, are not likely to exceed $750 or any amount prescribed by the regulations, whichever is higher.
I am acting for two executors, one of whom wishes to apply for commission. Can this be done by agreement or by court order?
The quantum of payment of commission can be agreed to by all of the beneficiaries if they are sui juris (have legal capacity), otherwise application should be made to the Court for an order for payment of commission at the time of filing and passing the estate accounts.
The amount which may be allowed to the executor seeking commission will depend on the degree for which he or she has been responsible for the discharge of the office of executor. The commission for private executors will be based on their “pains and trouble”, and will be such as is “just and reasonable”, having regard to their involvement in the administration. The normal range is between 1 and 1.5 per cent of the gross value of corpus and about 2 per cent on income. Excessive payments of commission or costs are liable to be set aside under s.86A of the Probate and Administration Act 1898.
There is a decision of the Supreme Court in Buckley and Others v Permanent Trustee Co Ltd (1990) 21 NSWLR 112 in which it was held that a trustee company may be liable to a reduction in its normal rate of commission if the co-executor had participated in discharging the executorial duties.