ESTATE ADMINISTRATION PROCESS – WHAT IS IT?
The estate administration process involves managing the assets (and liabilities) of the deceased. This includes paying any outstanding debts, as well as distributing any assets. In the will, an 'executor' will often be appointed. This is the individual responsible for the distribution of the estate as well as resolving any claims against the estate (e.g. family provision applications, or claims by creditors of the deceased etc.).
Where an executor is not appointed, or there is no will in place, a personal representative such as a family member, close friend or solicitor will be appointed to administer the estate by the court.
The executor or personal representative is required to administer the estate in accordance with the final will of the deceased, or if the deceased did not leave a will, in accordance with the rules of intestacy.
WHAT OBLIGATIONS DOES AN EXECUTOR HAVE TOWARDS THE ESTATE?
The executor of an estate has certain duties and obligations which they must comply with when dealing with a deceased's estate. These obligations are outlined under Section 52 of the Succession Act 1981 (Qld) ('the Act') and include:
(a) administering the estate in accordance with the law;
(b) providing a full inventory of the estate and rendering an account of their administration of the estate when required by the court;
(c) delivering up the grant of probate or the letters of administration, when required by the court;
(d) distributing the deceased's estate, subject to the administration of the estate, as soon as practical; and
(e) paying interest on any general legacies in the Will (at a rate of 8 per cent per annum).
In addition to the general obligations which the executor of an estate must adhere to, they are also under a fiduciary obligation to:
(a) avoid conflicts of interest;
(b) act in the best interests of the estate; and
(c) receive no profits, except for any commissions that the executor may become entitled by way of a court order
EXECUTORS DEALING WITH FPA CLAIMS (PROTECTIONS)
Some family members of the deceased may be unhappy about being excluded as a beneficiary under the will, or may consider that they have not been provided with adequate provision. In those instances, those persons may bring a family provision application against the estate. It will be the responsibility of the executor to resolve this application, or where a resolution is not possible, defend any family provision applications brought against the estate. For more information regarding family provision applications, please read part 2 of our article series, which can be accessed here.
Executors must be careful not to prematurely distribute the estate where they are on notice of an application or intended application for family provision. There are two timeframes relevant to determine when an executor may distribute the estate:
- six months from the date of death of the deceased. If within this time frame the executor has not received any notice from any person of a current or intended family provision application, then the executor may distribute the estate in accordance with the terms of the will or rules of intestacy (whichever applies); and
- nine months from the date of death of the deceased. If within this time frame the executor has not received written notice that an application for family provision has been filed the executor may distribute the estate in accordance with the terms of the will or rules of intestacy (whichever applies).
If the executor makes a distribution of the estate within the above time frames, the executor could be held personally liable to any persons negatively impacted by the distribution (e.g. any potential applicants on a family provision application who claim further provision from the estate). The executor must ensure that any distributions made by them are properly made and in accordance with the terms of the will or rules of intestacy (whichever applies).
WHEN MAY A BENEFICIARY HAVE A CLAIM AGAINST AN EXECUTOR?
There are certain circumstances in which a beneficiary may be able to establish a claim against an executor. This may arise in situations where the estate assets have not been distributed properly or where it can be proven that there is unreasonable delay in administration.
An interested party (usually a beneficiary under a will) may make an application to the court, requesting the removal of the executor in the event they have unreasonably delayed administration of the estate. The court may then order the administration of the estate by an independent person such as the Public Trustee (this is referred to as an "administration order").
However, an administration order is usually a last resort. In the alternative, the court will likely make an order requiring the executor to:
(a) furnish accounts of their administration of the
(b) do or abstain from doing any act relating to the estate;
(c) approve transactions such as the sale of assets; or
(d) determine any question arising in the administration of the estate.
Where a beneficiary to an estate can prove that the executor has engaged in misconduct (e.g. taking estate assets for their own benefit, or prematurely distributing the estate etc.), then they can make a claim for compensation from the executor personally.
Where an individual is not satisfied that the executor has fulfilled their obligations, an application may be made to the court. However, the court will often be reluctant to remove an executor unless there is compelling evidence of misconduct or unreasonable delay. Ultimately, the court will consider the best interests of the beneficiaries of the estate in determining any claims against an executor.
COMMON SIGNS AN EXECUTOR HAS ACTED AGAINST THE BEST INTERESTS OF THE ESTATE
There are some 'red flags' beneficiaries may become aware of which could indicate an executor is acting improperly or for their own personal benefit:
(a) The executor taking money or possessions out of the estate
for their own personal benefit or the benefit of an
(b) The executor failing to uphold their responsibilities to collect, protect and maintain the assets of the estate e.g. they have delayed the payment of outstanding bills to creditors or neglected to appear at mandatory court hearings on behalf of the estate;
(c) The executor acting outside of their role (e.g. preparing sales contracts when it is outside their scope of expertise, rather than engaging professionals);
(d) The executor is failing to keep adequate records for the estate (e.g. the executor makes an interim distribution to a beneficiary, but fails to keep a written record); and
(e) In circumstances where the executor is also a beneficiary, they have made early distributions or distributions to themselves that exceed their entitlement under the will.
If an executor is acting improperly in administering an estate, there is a risk that the beneficiaries could miss out due to the estate assets being diminished. Therefore it is important for beneficiaries or potential beneficiaries to monitor the actions of the executor, particularly if any of the above red flags are present.
OUR ROLE IN THE ESTATE ADMINISTRATION PROCESS
If you are a beneficiary under a will or entitled to a distribution on an intestacy and believe there has been unfairness in the administration process, Ramsden Lawyers are able to assist you. We are happy to arrange an initial consultation to assist you in navigating the procedures set out under the succession legislation or assist you in bringing a claim against an executor where appropriate.