You may have been asked by a close friend or relative to be the executor of their estate. While being honoured with the offer of this position of trust and dependability, you may also be apprehensive about the responsibility and a little uncertain about the duties required.
This easy guide will help you learn more about the role and obligations of an executor and give you some essential background as you decide to take on this significant commitment.
Understand the Role of an Executor
Even in the most straightforward cases, executors need to perform a range of services. They may choose to perform these themselves, or arrange for legal professionals to take care of them.
Advise the Beneficiaries
It is the duty of the executor to locate the will of the deceased person and contact the beneficiaries and any business associates immediately.
Obtain Authorisation to Administer the Estate
In many cases the executor needs to make application to the Supreme Court to gain legal authority to manage the estate. This is known as the granting of probate and provides official endorsement that the will is recognised and valid. This approval is needed before any further administration can be completed.
Some very small estates which do not involve any real estate property and are solely bank account assets, may not require probate if the money is to be transferred to a surviving joint account holder.
Manage the Estate
The executor needs to account for all assets, including investments and property, as well as the liabilities of the estate. An inventory of all items is needed and may entail an appraisal from a licensed valuations company for any high value items.
Written documentation from such organisations as financial institutions, banks, companies, share registers and creditors are essential.
It is also the responsibility of the executor to ensure that any assets do not decrease in value while awaiting approval for distribution.
Often consideration needs to be given to such things as any money collected from the sale of assets which may need to be invested. Perhaps a property should be rented out to maintain the value.
Arrange Payment of Debts
As well as making payment to any creditors, and settling debts that may be owing, other expenses for administering the estate need to be paid. There will be funeral costs to cover and a clearance sought from the Australian Taxation Office that no tax debt or capital gains are involved.
Distribute the Estate
When all debts are paid and requirements met, the executor is then able to distribute the estate among the beneficiaries according to the directions in the will.
Minimise the Potential for Conflict
Regular communication with all recipients about the progress of the administration of the estate will minimize misunderstandings and potential conflicts. It can be quite a confusing and emotional time for family members as they come to terms with their loss.
Consequently it is important to maintain honest, open information as the executor to help avoid disagreements and distrust.
Unfortunately, conflict may arise between beneficiaries and then it is vital not to take sides.
Naturally, executors are keen to finalise their responsibilities as efficiently and quickly as possible and beneficiaries are keen to receive their entitlements.
Finalizing an estate will depend on many variables and the number of steps that are necessary. Third party involvement from organisations such as banks and share companies may take some time to supply the required information.
Deciding to be theexecutor of an estate can be quite a substantial decision and involves more than most people realize. That is why you would be well advised to seek professional assistance and legal advice from a firm of first-rate probate lawyers, principally to unravel the mysteries of probate law.