Executor's

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The Executor is the person named by the deceased in their will whom they want to administer their estate to ensure that the beneficiaries receive their inheritances.  There may be one or more executors and where there is only one they will probably need the assistance of a solicitor to assist with the administration of the estate.  Lay persons who act as executors or administrators have a fiduciary duty to act in the best interests of the estate and the beneficiaries.  In some cases they can apply to the Supreme Court for commission but this is often not done.  Sometimes there is a change of heart after a person has been nominated as the executor of an estate by a person in their will following the death of the testator/testatrix. This does not mean that the court cannot be approached and that some other person cannot be appointed to this position. The role of an executor can be an onerous one as they are charged with the responsibility to administer the financial assets left by the deceased and where they have breached this position of trust and have acted inappropriately they can be sued.

Basically the executors are required to take charge of the deceased's assets and property, discharge liabilities of the estate and distribute the net assets to the beneficiaries.  Specifically executors are to arrange the funeral, prove the will, collect the assets and preserve them, ascertain and pay the debts of the estate, making sure that taxes are paid and finally distribute the assets to the beneficiaries accordingly to their entitlements.  Where there are a number of beneficiaries the assets may have to be valued and a check made of any superannuation trustee to find out whether superannuation monies form part of the estate or whether they pass to nominated person/s under the Trust Deed.  The executor/s are under a duty to keep estate accounts and record all dealings with the assets and liabilities of the estate.

Once all the assets have been located it is up to the executor/s to apply to the Probate Registry of the Supreme Court for a grant of probate. Probate is a court order confirming that the will is valid and the executors have the right to administer the estate. In order to do so there are a number of matters which have to be attended to and the application has to be made in proper form supported by documentary evidence of death, proof of proper signing and attestation of the will and details of the assets and liabilities.  The whole process of administering an estate normally takes approximately one year. Once administration has been completed then the executors hold the undistributed property as trustees and the beneficiaries do not have any proprietary right in the estate although any number of clients try to maintain that they do.  Beneficiaries alone have no power to make decisions about the estate. The trustees hold the legal title and the beneficiaries an equitable interest in the property and it is only when the trustee distributes assets do the beneficiary/s obtain both the legal and equitable title to the property.

Can executors be personally liable when acting in this capacity?

Yes!   Executors are expected to act in the best interests of the estate and the beneficiaries.  They are personally liable for fraud, breach of fiduciary duty, failing to comply with the terms of the will or where they have improperly entered into a contract during the course of administration. The executor is expected to administer the estate efficiently and competently in accordance with the terms of the will. With many estates this can be an onerous and time consuming process, which may require expert legal assistance so that the executor can meet their legal obligations. An executor must act with all due dispatch particularly in times of a falling market to preserve the value of the estate. The executor who stands in the shoes of the deceased may be called to defend the terms of the will against dissatisfied family members as well as persons who consider that the deceased was responsible for their welfare under the Family Provisions Act 1982.
Examples of some of the foregoing are where:

• Executors take too long to administer the estate;
• Assets have not been secured or insured or realised as necessary;
• Assets have been improperly distributed as the will was not fully understood;
• The estate accounts have not been properly finalised as all debtors have not been paid;
• Assets have been distributed at less than fair value; and
• The executor/s has/have attempted to profit from their office beyond applying for commission.

The Role of the Solicitor

Where a solicitor is appointed by the executor/s to advise them, the solicitor has no particular duty to the beneficiaries because the solicitor's client is the executor.  Where a solicitor is also an executor or one of the executors they owe a duty of care to the beneficiaries both as a solicitor and executor.  When acting for the executor their duty is to assist the executor carry out their duties in accordance with the law and the will.  Specifically the solicitor can assist with obtaining probate; dealing with the deceased's assets; drawing up a statement of assets for realisation and distribution to the beneficiaries, advising on the manner of distribution; advising on contingent liabilities eg. taxes and mortgage payments; and advising the executor about the traps and pitfalls associated with dealing with an estate. 

The Executor should move as soon as possible to obtain probate to reduce the contingent risks associated with this position to determine the validity of the will, their position as executor and allows claims against the estate to be settled and assets distributed to beneficiaries quickly. Why take the risk - be better informed and advised - use a competent solicitor and call LAC Lawyers without delay!

 

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Phone LAC Lawyers on NSW 1300 799 888 or VIC 1300 734 638 or send us an email