IN BRIEF - HOW WILL YOUR ESTATE BE DEALT WITH AFTER YOUR DEATH?
Many people do not consider how an estate is dealt with after death, until they are in a position where they are dealing with the death of a loved one or acting as the executor of an estate.
Certain processes need to be followed in order to deal with the estate of a deceased person. Among other factors, in instances where an estate is not contested, whether or not involvement of the Supreme Court is required will depend on the nature and value of the assets of the deceased's estate.
It is important to have a valid Will in place so that if a Grant of Probate is required, it can be obtained without undue cost and delay. Read more about preparing your Will in our article Formal requirements for a valid Will.
WHAT IS PROBATE?
Probate is a document granted by the Supreme Court which gives the executor of an estate legal authority to deal with estate assets.
Without Probate, various institutions such as banks or share registries will not allow estate funds to be released. In New South Wales, without obtaining a Grant of Probate, an executor would not be able to sell or otherwise deal with real estate of a deceased person in order to transfer it into the names of beneficiaries.
Generally, an executor will need to apply for Probate within the jurisdiction where assets are held. If assets are held between various jurisdictions within Australia, Probate may need to be "resealed" in each state where assets are held so that it is duly recognised for transacting purposes in those states.
WHAT ARE LETTERS OF ADMINISTRATION?
While there are formal requirements that outline what constitutes a valid Will, it doesn't preclude informal documents or electronic documents that outline testamentary intentions from being submitted to the Court for verification. This applies to any jurisdiction within Australia.
If an individual dies without a valid Will, their executor (or next of kin) cannot apply for Probate. Their executor would apply to the Court for what is known as "Letters of Administration".
There are varying types of Letters of Administration. However, each add an additional burden on an executor, as they will be required to provide evidence as to why the formal requirements of preparing a Will were not followed. Often, finding such evidence is a challenging task and the additional fact finding is likely to unnecessarily draw out the time it takes to administer the estate and increase the cost involved.
WHAT HAPPENS IF THE DECEASED DID NOT LEAVE A WILL?
In circumstances where the deceased did not prepare a Will, there is a set statutory schedule dictating how their estate must be distributed. The prescribed distribution varies between states. This distribution may not necessarily be in line with what the deceased would have chosen had they had the foresight to prepare a Will.
Not having a Will in place is likely to cause delay when administering an estate and increase costs incurred against the estate where additional Court processes, preparation of supplementary documentation and legal attendances need to be undertaken. This, in turn, will reduce the amount beneficiaries receive and prolong the time it will take for them to receive their distributions.
HAVING A CAREFULLY PREPARED WILL SHOULD BE A PRIORITY
It seems as though many people take the view that preparing a Will is not something that needs to be completed as a matter of priority. This is evident by the fact that approximately 45% of Australians do not have a valid Will. From the experience of lawyers who see families emotionally struggling during an understandably difficult time, a Will that is properly prepared will alleviate unintentional stress on family and friends.
Additionally, it will create efficiency when arranging estate administration and significantly reduce the cost to your estate.
You should consider speaking to a lawyer together with your accountant or financial planner regarding your Will and estate plan.
|Chris Rumore||Maryanne Pollifrone|
|Wills, estates and succession planning|
|Colin Biggers & Paisley|
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.