The obligations and responsibilities of an executor of an estate are extensive and if inadvertantly mishandled, there can be severe consequences for the executor. Do you want to put a family member or a friend under that pressure?
The obligations placed upon executors of estates are considerable. Without legal advice, some obligations can be easily overlooked and could result in the executor becoming personally liable to the estate’s creditors. Even with simple estates, executors can be required to:
Notify the beneficiaries - Locate the deceased’s Will and contact all beneficiaries and business associates.
Look after the estate - All assets must be protected, which can include arranging insurance if required. The immediate needs of beneficiaries must also be assessed to ensure they do not suffer any unnecessary financial hardship.
Value the estate - The executor must identify and account for all assets and liabilities and obtain a valuation of each asset. Written confirmation from financial institutions and other relevant bodies must be obtained for each item.
Obtain authority to administer the estate - Apply to the Supreme Court for Probate.
Complete income tax returns - Clearance must be obtained from the ATO to distribute the estate. Details of all unlodged income must be obtained.
Pay all debts - Creditors, funeral expenses, taxes, fees and other expenses must all be paid, which may require the sale of some assets.
Divide the estate - When all debts have been paid, the executor must then distribute the remaining assets according to the directions laid out in the Will.
Establish trusts - Executors must set up trusts for underaged or mentally incapable beneficiaries, or if there are specific instructions in the Will. Such trusts need ongoing administration, often over many years.
Before nominating an executor, serious consideration should be given to who you choose. Whilst a family member may be your initial thought, consider whether they have the time and expertise to perform the required duties. A better choice could be a professional, such as a member of our 360Private Succession and Estate Planning Team who can take the strain away from your family and ensure the correct handling of your estate.