Estate Administration

The executor's role

An executor or administrator (together, a personal representative) holds the estate on trust for the beneficiaries. They owe fiduciary duties — to act honestly, in the interests of the estate as a whole, without conflict, and to keep proper records. They can be personally liable for distributions made in the face of a known claim or an unmet debt.

Steps in administration

1. Notify. Provide beneficiaries and interested parties with basic information about the estate and the process.
2. Secure assets. Insure real property, redirect mail, collect valuables, arrange for pets and livestock, and secure keys and passwords.
3. Call in assets. Present the grant to banks, share registries, superannuation trustees, and Land Use Victoria to transfer or realise assets.
4. Pay debts and expenses. Funeral expenses, administration costs, secured and unsecured debts, and any tax owing by the deceased or by the estate.
5. Deal with property. Sell, transfer or transmit real estate as directed by the will or as required.
6. Tax. Lodge a final tax return for the deceased and, where the estate holds income-producing assets, tax returns for the estate for each year until it is fully distributed.
7. Resolve claims. Deal with any family provision claims, creditor claims or contested asset issues.
8. Prepare estate accounts. Record all receipts and payments, and provide the accounts to beneficiaries where the will or general law requires.
9. Distribute. Pay legacies, transfer specific gifts and distribute the residue.

Timing and the risk of premature distribution

Distribution should not occur too soon. In Victoria, family provision applications under Part IV of the Administration and Probate Act 1958 must generally be brought within six months of the grant. Distributing before this period expires exposes the personal representative to personal liability if a claim is later made and the estate has been exhausted. In practice, most administrators wait at least six months from the date of the grant before final distribution unless all interested parties have consented.

How we assist

• Preparing correspondence with beneficiaries.
• Coordinating with accountants on tax lodgments.
• Arranging real estate transfers by transmission.
• Advising on family provision claims and settlements.
• Preparing estate accounts and deeds of release on final distribution.

Executor and administrator duties

Executors and administrators owe fiduciary duties to the beneficiaries of the estate. Those duties include collecting the estate assets, paying debts and taxes, keeping the estate property separate from the personal assets of the executor, keeping records of receipts and payments, and distributing the residue in accordance with the will or the intestacy rules. Executors are entitled to obtain professional advice and to charge the cost of that advice to the estate where reasonable.

Sequence of an administration

1. Obtain the grant of representation.
2. Notify banks, superannuation funds, share registries, Land Use Victoria and other asset holders and provide certified copies of the grant.
3. Collect the estate assets — bank balances, insurance proceeds, share proceeds, refunds and, where appropriate, the sale proceeds of real estate.
4. Pay debts, including funeral expenses, testamentary expenses, taxes, and any other outstanding liabilities.
5. Lodge the deceased's final individual tax return, any estate income tax returns, and any other required returns.
6. Wait out the statutory period for family provision claims before distributing.
7. Prepare estate accounts and provide them to the beneficiaries.
8. Distribute the residue and obtain releases from the beneficiaries.

Real estate in the estate

Where the estate includes real estate, the executor decides — subject to the will — whether to transfer the property to a beneficiary or sell it. A transfer to a beneficiary is a transmission application at Land Use Victoria. A sale requires the executor to sign the contract of sale as vendor, disclose the estate's ownership on the section 32 statement, and account for the proceeds to the estate. Legal advice at the point of listing is important because a well-prepared vendor pack reduces the risk of purchaser rescission.

Superannuation and life insurance

Superannuation death benefits are not automatically estate assets. The fund trustee determines the distribution under the fund rules and any binding death benefit nomination. Where the benefit is paid to the estate, it is dealt with under the will. Where it is paid direct to a dependant, it is not. Executors are strongly encouraged to obtain a copy of the deceased's nominations and to seek separate advice on the tax treatment of any benefit paid to the estate.

Records and estate accounts

A well-run administration is documented in a set of estate accounts that record every receipt and payment. The accounts are provided to the beneficiaries with the request for release before distribution. Where a beneficiary is a minor or under legal incapacity, additional protections apply.

Taxation and separate advice

The final individual tax return, any estate income tax returns, capital gains implications of asset realisations, and the tax treatment of superannuation death benefits are matters for the estate's accountant. We coordinate with the accountant on the timing of realisations but do not provide taxation advice.

Limitations of general information

Estate administration is estate-specific. This page is a general introduction and is not a substitute for advice on your matter.