Administering a deceased estate after probate is granted

The grant of probate confirms the executor's authority to act. What follows is the substantive administration of the estate — the weeks or months during which assets are converted or transferred, liabilities are settled, tax is dealt with, and the estate is finally distributed to beneficiaries. Most estates take between nine and eighteen months from the date of death.

Presenting the grant

Once the grant is issued, sealed copies (or authenticated copies) are provided to banks, share registries, Land Use Victoria and other asset holders. Each holder has its own process. Some banks accept a scanned copy; others insist on originals.

Collecting cash assets

• Bank accounts are closed and balances transferred to the estate account.
• Term deposits are broken (usually without penalty on death).
• Refunds — Medicare, Centrelink, unused prepayments — are recovered.
• Superannuation and life insurance proceeds, where payable to the estate, are received.

Dealing with shares and managed funds

Shares are either sold or transferred to the beneficiaries. Sale is administratively simpler; transfer preserves the asset in specie for the beneficiary and allows CGT to be deferred until the beneficiary later sells. Each option has tax consequences — for the estate and for the beneficiary — that should be considered before deciding.

Real property

Real property held in the deceased's sole name is dealt with by:

• Transmission application to Land Use Victoria, registering the executor as the legal personal representative on the title.
• Subsequent transfer to the beneficiary (or beneficiaries) named in the will, or by sale to a third party and distribution of the proceeds.

Where property is held as joint tenants with a survivor, no probate is required for that property — a survivorship application transfers the title to the surviving owner.

Business and trust interests

Where the deceased was a director, shareholder or trustee, prompt attention is needed:

• Update ASIC records with the change of director or shareholder.
• Review shareholder agreements and buy-sell arrangements.
• Consider the impact of trustee change provisions in any trust deed.
• Where the deceased ran a business, decide whether to continue, sell or wind up.

These issues are often the most complex part of an estate and often the most valuable.

Tax

The executor is responsible for:

• The deceased's final tax return — covering the period from the start of the financial year to the date of death.
• Estate tax returns — where the estate earns income during administration.
• Capital gains tax — on assets sold by the executor. Assets transferred in specie to beneficiaries generally do not trigger CGT until the beneficiary sells.

Tax file numbers, tax returns and any refunds are managed by the executor. Accountants are usually engaged for this stage of the work.

Debts and claims

Between the grant of probate and distribution, monitor for any emerging claims:

• Late-notified debts.
• Family provision claims within the six-month period.
• Claims from de facto partners or other dependants.
• Disputes about the validity of the will.

Where claims arise, take legal advice before responding. An executor's response can bind the estate.

Interim distributions

Where the estate is clearly sufficient to meet all liabilities and no family provision claim is anticipated, interim distributions can sometimes be made. The executor retains a reserve for any unresolved matters. This is typically driven by beneficiary needs — a child's school fees, a beneficiary's own cash flow — rather than by administrative convenience.

Final distribution and estate accounts

Once liabilities are settled and any claim period has expired, the executor prepares estate accounts, distributes the balance in accordance with the will, and obtains signed releases from beneficiaries. The releases are the executor's protection against later challenges to their conduct.

Common causes of delay

• Slow banks or share registries.
• Property sales that stall in the market.
• Tax matters — particularly overseas assets or business interests.
• Family disputes.
• Missing beneficiaries.

For legal assistance administering an estate after probate, see our estate administration service and the broader probate and deceased estates area.

Notifying institutions and collecting assets

Once the grant is issued, certified copies are provided to each bank, superannuation fund, share registry, insurer and other asset holder. Each institution has its own process for releasing or transferring assets, and the executor should retain a record of every letter sent and response received. Real estate held in the sole name of the deceased is transferred at Land Use Victoria by way of transmission application or, where the estate is to sell, by a contract of sale executed by the executor.

Paying debts and taxes

Funeral and testamentary expenses, secured and unsecured debts, and any tax liabilities are paid from the estate before distribution. The deceased's final individual tax return and any estate income tax returns are prepared by the estate's accountant. Capital gains tax on the sale of assets, and the tax treatment of superannuation death benefits paid to the estate, are technical and should be confirmed with the accountant before assets are realised.

Family provision period and interim distributions

Family provision claims must be commenced within a defined period after the grant. Distributions made before that period expires can expose the executor to personal liability if a successful claim is later made. Where beneficiaries need funds urgently, an interim distribution supported by a partial release from those beneficiaries may be appropriate, but that step should not be taken without legal advice.

Estate accounts

The executor prepares a set of estate accounts recording every receipt and payment and provides them to the beneficiaries with the request for release. The accounts are the executor's record of the administration and, in the event of a later dispute, the primary evidence of what happened. Well-prepared estate accounts also give the beneficiaries confidence that the administration has been handled properly.

Final distribution and release

Once debts, taxes and expenses are paid, the family provision period has expired, and the accounts have been provided, the executor distributes the residue in accordance with the will. Beneficiaries provide a written release confirming they have received their entitlement. The estate file is then archived, typically for a period consistent with the Victorian limitation rules.