Following is a list of frequently asked questions, when putting together Wills and management of Estates
At what age can you make a Will?
Anyone over the age of 18, and anyone under 18 who is married, can make a Will. Persons under 18 who are unmarried can make a Will with the approval of the Court.
What happens if the Will doesn’t appoint an Executor?
One of the beneficiaries, usually a major beneficiary, can apply for “Letters of Administration with the Will Annexed”. When that Application is granted the applicant is the Administrator of the Estate, with all the duties, obligations, rights and powers of an executor to carry out the wishes of the deceased as set out in his/her Will
What if the executor appointed in the Will is under 18?
A limited grant of Administration can be granted to his/her guardian, to expire on the Executor turning 18. At that time a grant can be obtained by the Executor to complete the administration of the Estate.
Can a Will be registered in NSW?
There are private companies offering Will registration facilities. These do not have the support of the Law Society which will recognise only a facility established under the law in NSW. The Registrar in Probate has a facility for lodgement of a Will in the testator’s lifetime, although this is rarely used. In view of the ease of making a new Will or codicil, Will registration offers no certainty of proof.
When should Probate be sought?
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 a Will need a grant of Probate before assets of the deceased can be dealt with?
Yes, normally but 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 bank, credit union or building society accounts of not more than $20,000, these can usually be dealt with 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. The Executor is and remans personally liable for the payment of the funeral expenses and debts of the deceased, 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.]
What happens if there are more than one Executor and they die before the Estate is fully administered?
It is the Executor of the last surviving Executor, who is automatically the Executor in the first estate “by right of representation” as soon as he or she obtains a grant of Probate of the Will of that last surviving Executor.
If that person dies without a Will, a further grant will be required to complete the administration of the first estate. The application to the Court will be for Letters of Administration cta. dbn. (cum testamento annexo, de bonis non administratis) (with the Will annexed, in respect of the unadministered assets).
What is the position if there are two Executors and they don’t agree?
The duty of the Executors, if they decide to accept their appointment, is to obtain Probate and discharge their duty of care towards the beneficiaries. If the disagreement between executors is causing delay in the application for Probate, one of them, preferably with a solicitor’s advice, should give notice to the other that he/she intends to apply for Probate and call on the other executor to join in the application. If that executor fails to respond within the specified time, the first Executor may proceed to apply for Probate on his/her own, with leave being reserved to the other executor to come in and prove the Will at a later date.
What if the disagreement relates to the identity of, or the disposal of, the Estate property?
Either or both of the Executors can apply to the Court under Section 63 of the Trustee Act for an opinion, advice or direction on any question regarding the management or administration of the estate property or regarding the interpretation of the Will.
Provided no fraud, misrepresentation or wilful concealment is involved, an Executor who acts in accordance with the opinion, advice or direction of the court is deemed to have discharged his/her responsibility as 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. In an intestate estate and in the construction of any disposition of property, s.99 of the Adoption Act provides that an adopted child is deemed to be related to any child or adopted child of his/her adoptive parent(s): as a brother or sister of the whole blood (if adopted by two spouses jointly) and as a brother or sister of the half blood in any other case.
Under s.100 of the Adoption Act, trustees and personal representatives who give the notice referred to in s.60 of the Trustee Act or s.92 of the Probate Act receive the benefit of the statutory indemnity in respect of a claim by any person (including an adopted child) on expiration of the period fixed by the notice.
Do Estate monies have to be placed in an Estate Bank 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 53 Trustee Act 1925.
When do legacies have to be paid?
Gift should be paid as soon as practicable – and once the executor has made provision for the payment of all debts and liabilities of the deceased and the estate. If not paid within 12 months after the death of the deceased, the legacies bear interest from that time at the rate prescribed in the Wills Probate and Administration Regulation, currently six per cent per annum.
How is an Executor or Trustee protected against further claims?
A Notice of Intention to Distribute the Estate (or Trust) should be advertised in accordance with the Supreme Court Rules, in the prescribed form, giving at least one month’s notice of the intention to distribute. If the executor has received notice, formal or informal, of an intention to make a claim against the estate under the Succession Act, notice of intention to distribute must be also served on any such intended claimants. If a longer period of notice is given, by the executor, that period will have to expire before the executor gets statutory protection from subsequent creditors or claimants.
Are Probate costs regulated?
The costs of the legal work of and incidental to obtaining the grant of Probate, up to delivery of the grant of Probate by the Court, are regulated as to the maximum amount chargeable. The current scale applies and the amount chargeable under the scale is required, under the Costs Rules, to be disclosed to the executor at the time when instructions are first received by the solicitor, together with the basis and expected amount of charges for legal work done in the administration of the estate after the grant of Probate.
Is an Executor automatically entitled to the payment of commission for his or her efforts?
On rare occasions in the Will a specific legacy is left for the executor to cover his or her Executorial work. In that event no further order is needed for payment of the commission specified. Similarly if there is a legacy or other bequest to the executor contained in the Will, there is a prima facie presumption that the legacy or bequest is intended to cover any entitlement to commission. Otherwise, payment of commission may be authorised by the Court on application by the executor on the filing and passing of accounts in the estate. The payment of a commission may also be agreed by all the beneficiaries provided they are of age and not subject to any legal disability.
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 principal and residual beneficiaries, other than those due to receive small legacies.
“I am acting for two executors, one of whom wishes to apply for commission.”
Can this be done by agreement or by court order?
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. 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.
How is commission calculated?
The normal range is between 1% and 1.5 % of the gross value of corpus, and about 2 per cent on income. The quantum of payment of commission can be agreed to by all of the beneficiaries if they are sui juris, 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. Excessive payments of commission or costs are liable to be set aside under s.86A of the Probate Act.
When do Accounts have to be filed and passed?
When required by the Court. The accounts will be required to be passed where the executor (or one of them) is a solicitor or an accountant, or where any of the beneficiaries are minors or charities, except where the estate is less than $150,000.
Is a Power of Attorney liable to Stamp Duty in NSW?
Does a Power of Attorney have to be registered before a contract can be signed by the Attorney?
No; it must however be registered in the General Registry of Deeds before a Memorandum of Transfer is signed prior to completion.