Difficulties of estate administration in Australia
Executors, beneficiaries and claimants are often required to come together at a difficult time when a loved one passes away. They may have family tensions, old wounds and strong emotions. Where children are not treated equally in the Will or where children of the first marriage are left out in favour of children of the second marriage, tensions can subsequently arise. More importantly, there is often a misconception that deceased estates may take a short time to finalise when the reality is the time may be significantly long.
Making clear everyone’s roles
It can be complicated where one person may be the executor of the estate and also a beneficiary or claimant against the estate. Co-executors or co-beneficiaries may have different intentions and disputes can arise. Generally co-executors should keep an eye on each other as they can act jointly and severally to an estate administration. Lawyers engaged for a co-executor may not act for another co-executor unless they have the jointly retain the lawyer. It is important to know everyone’s roles and keep everyone informed.
Executor must act in accordance to the Will
Sometimes an executor may want to act contrary to the deceased’s Will out of sympathy or affinity to a beneficiary or potential claimant against the estate. This may lead them to encourage a claim or delay distribution to enable a claim to be made. However, the executor must act in the best interest of the estate which includes following the Will in a prompt manner.
Renunciation during estate administration
The executor may not want to be involved in disputes or not have the time to complete the estate administration process so wish to renounce their executor role. They must also ensure that they do not intermeddle in the estate and if they have already then need to disclose the extent of intermeddling when renouncing their role. Generally, any action taken by the executor to handle deceased estate should be disclosed clearly. Making funeral arrangements or applying for a grant of probate may not be considered intermeddling actions. The court will also not accept a renunciation by an executor where there are children under 18 years of age who are beneficiaries. If you are an executor who wants to renounce their role as an executor, you can contact our estate lawyers.
The court will then appoint another person or trustee company to administer the estate or to a co-executor who was not removed. A person who has the greatest claim to the estate usually gets priority to apply to be an administrator of the estate.
Administrator appointments where there is no Will
When someone dies without a Will, generally there is no fixed rule as to who can apply to be an administrator of an estate and apply for letters of administration. The court has discretion to appoint the administrator, but the person with the greatest entitlement to the estate under an intestacy has the strongest right to apply. For example, a widow will generally be granted first right to apply followed by the surviving children in order of who applies.
Domestic partners right to apply as an administrator
If a domestic partner has been living continuously with the deceased for 2 years before the deceased’s death or has only separated temporarily due to work or health reasons, they can apply as an administrator. The court will look at the togetherness of the couple and will consider the reputation and public aspects of the relationship, their attempts to have children, the partner’s child considered the deceased as a parent.
Challenging the appointment of an administrator
If you have issues with someone being appointed an administrator of the estate, please contact our Australian estate administration lawyers. Usually you will need to have a better right to the estate to apply. You can file a caveat against the grant of the letters of administration application and file grounds of objection. Often this occurs where a domestic partner applies for a grant where the family members reject there was a domestic relationship with the deceased.
General communications with beneficiaries in administering estates
An executor has a duty to act in the best interests of the beneficiaries. The executor or their lawyers will generally notify the beneficiaries of the estate of their entitlements under the Will or pursuant to the relevant Australian State or Territory probate law. Failure to do so can place the executor in a position of conflict. Communications should aim to finalise the estate as soon as possible because the beneficiary can bring an application if an application for a grant is not made within approximately 6 weeks of the date of death, failure of the executor to administer the estate in accordance with their duties, they may remove an executor, ask for an accounting of the estate administration and seeking a court order if the executor delays in doing so, to compel distribution in accordance with the terms of the Will if not made within the executor’s year.
Insufficient deceased estate funds to defend a testamentary provision claim
The executor can apply for orders that the applicant put the estate in funds so that the executor can disclose to the Court of the estate’s financial position. Once accounting demonstrates the estate is represented in the inventory and the estate net assets are minimal to satisfy a claim then the executor can bring an application for summary dismissal of the claim. Legal advice should be sought from our Australian estate lawyers if you require advice.
Bankrupt beneficiaries in estate administration
Where a beneficiary is bankrupt their share will need to be given to the bankruptcy trustee if they are an undischarged bankrupt. As the executor may not be aware of a beneficiary’s financial position, they can obtain a statutory declaration from the beneficiary at the time of distribution that states the beneficiary is not an undischarged bankrupt. Failure to pay the bankrupt trustee may result in the bankrupt trustee removing the executor.
Overpaying a beneficiary
Executors should avoid paying more to a beneficiary than they are entitled to or they may need to indemnify the estate for the amount overpaid.
Allegations of abuse by an attorney of an enduring power of attorney
A beneficiary may argue that an executor misappropriated funds of the deceased when they were still alive when the executor was acting as an attorney under an enduring power of attorney. This allegation might be made if the beneficiary was expecting a larger amount of estate funds as an inheritance. In this respect, a beneficiary can only issue proceedings after a grant of probate has been granted. This may result in the executor may choose not to apply for a grant. Requesting a copy of the enduring power of attorney and accounting might resolve the issue where there is no evidence of abuse to save time and costs of accounting. However, the letter requesting an accounting should detail specific grounds for why the beneficiary believes the estate should be larger than it is before advising that a court application will be made and the letter produced on the question of costs. The beneficiary may also apply to take over as executor if there are proven allegations of abuse of the enduring power of attorney.
Delays in applying for a grant of probate
If the executor is slow in applying for a grant of probate, there a multiple ways to resolve any issues which may arise.
- The executor can renounce their role if they have not intermeddled in the estate to such an extent that the court would not grant the renunciation.
- If the inventory values cannot be determined, the executor can complete the inventory as far as possible and detail in an affidavit the outstanding items that will be included in the inventory, what steps are going to be taken to obtain that inventory information, the timeframe of obtaining the relevant information and why the application needs to be made before the inventory can be finalised. They can also file an amended inventory when further information is available. For example, obtaining valuations of property or a business.
- If co-executors are arguing about their individual entitlements to the Will when it is in possession of a third party such as a lawyer, either executor can apply to the court to require the third party to bring the Will to court.
Beneficiaries who experience estate administration delays
A beneficiary who feels that the executor is being slow to apply for a grant, administration or a lack of information can make a claim for provision from the estate may apply to the Court. Costs can be sought personally against the executor for delays to provide accounts or remove the executor. Delays can be a ground for removal.
Removing an executor
The court can remove an executor if they find the executor is unfit to act. The beneficiary can make an application by originating motion supported by an affidavit. Before starting court proceedings, a letter should outline the issues in dispute and be sent to the executor. This letter and the executor’s response can be included in the affidavit. If the estate has already been administered, the application should be to remove the trustee and not the executor. Factors which determine this are whether there was due and proper administration of the estate and the beneficiaries’ interests. However, the threshold is high as the Courts are reluctant to remove an executor from their role. The court will consider the following factors regarding the executor’s conduct since their appointment pursuant to the grant of probate and usually not beforehand:
- The executor has a serious conflict of interest and duty which prevents them from properly administering the estate as it benefits their own interest. There usually needs to be neglecting of the estate administration. A small conflict is not a good reason to proceed with removing an executor because the testator would likely have considered the potential or actual conflicts of the executor when they made the Will.
- The executor is impeding the administration of the estate for whatever reason.
- The executor has failed to account to the co-executors or beneficiaries.
- There are delays and costs as a result of the executor and beneficiary having a communication breakdown.
- There is some form of positive misconduct by an executor such as an inexcusable delay.
The executor can generally defend their actions by arguing they are acting in the bests interests of the estate and are merely exercising their discretion in good faith upon genuine consideration.
Legal costs of estate litigation
An executor can claim a right of indemnity and reimbursement for costs in litigation in respect of the proper administration of the estate. However, where there is a claim brought against the executor for their removal or because of their improper or dishonest behaviour such as a breach of executor duties, the court can order the executor to pay costs if they fail to successfully defend such an application. Therefore, it is safe for the executor to not use estate funds to defend such an application unless they have court orders to that effect. If the executor is successful in defending an application, then they can seek costs from the plaintiff and reimburse the balance from the estate.
Expert Australian deceased estate administration lawyers
If you require legal advice in relation to the administration of an estate, please contact our estate administration lawyers.
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