Estate Administration (NSW)
In New South Wales, the term “estate administration” denotes the procedures that govern the management of a deceased estate. These rules are codified in the Probate and Administration Act 1898 and in common law (past court decisions). There are two kinds of personal representative who are responsible for following these legal rules: executors and administrators. The role of the administrator and the executor in estate administration are very similar. The difference is that the testator names an executor in their will to administer their estate, and the Supreme Court of New South Wales appoints an administrator to manage the estate of a deceased. This article outlines the practice of estate administration in New South Wales with particular emphasis on the role of the personal representative.
The Role of Executor in Estate Administration (NSW)
A testator selects an executor to carry out their final wishes after their death. An executor can be a paid professional such as a trustee or solicitor, or a trusted friend or family member. There is no legal obstruction to appointing a beneficiary of the estate to act as executor: indeed, this commonly occurs. Occasionally, the nominated executor is unavailable, which may be because they predecease the testator, or are still a minor when the testator dies. In the latter case, the court usually appoints the legal guardian of the child to act as on behalf of the estate.
A named executor may also not want to take on the responsibility of estate administration. This can happen when a testator fails to consult someone before naming them executor or the nominated person has a change of circumstances that prevents them from taking on the role. If the named executor wants to decline, they need to formally renounce the role as soon as possible, as it is much harder to renounce after commencing estate administration.
If there is a second nominated executor in the will, that person can undertake the duty alone. If they are not prepared to do so, the Supreme Court of New South Wales will grant Letters of Administration to an applicant who volunteers to manage the estate administration. Letters of Administration are usually granted to the spouse or adult child of the deceased. If no beneficiary is available to act as administrator, any interested party including a creditor can apply for a grant to administer the deceased estate.
Duties of Estate Administration (NSW)
Before an administrator or executor can begin the process of estate administration, they must apply to the Supreme Court for a Grant of Representation (either Letters of Administration or Grant of Probate). These grants confer authority on the personal representative to start collecting together the Inventory of Property for submission to the Supreme Court. The administrator or executor is tasked with transferring the residual assets from the Inventory to the beneficiaries of the estate after any debts have been discharged. The executor is legally obligated to follow the wishes of the deceased, as long as they do not contravene estate administration law in New South Wales. For example, a testator may bequeath a certain property to a beneficiary, but if the estate has large debts, the asset must be sold to discharge the liabilities.
A guiding principle of estate administration in New South Wales is that the personal representative must protect the valuables of the estate until such time as they are given to the designated beneficiaries. Property must be safely secured, insured and the estate defended from any legal challenge or contest. If the executor or administrator acts negligently in their duties, the beneficiaries may complain to the Supreme Court for remedy.
Estate administration takes as much time as it is necessary to locate and value all assets and liabilities of the estate, defend the estate from challenges and contests, and distribute the estate to the beneficiaries. The minimum time frame for finalising an estate in New South Wales is six months after death but most estate administration is completed within 9 and 12 months. However, if there are taxation issues, difficulty locating beneficiaries, legal challenges, or discretionary trusts involved, the estate administration may continue for several years.
The Role of the Trustee in Estate Administration (NSW)
Sometimes a will appoints a trustee to oversee discretionary trusts. These trusts may be set up to manage assets on behalf of minor children or adult beneficiaries who lack intellectual or legal capacity to manage their own affairs. While a personal representative is obligated to finalise the estate administration expeditiously, a trustee continues to act on behalf of the estate for as long as the trust endures. The obligations and responsibilities of a trustee in New South Wales are established by the Trustee Act 1925.
Remuneration for Estate Administration (NSW)
A testator can leave provision in their will to compensate an executor for undertaking the estate administration. If, however, the testator fails to reward the executor for their hard work, the Succession Act 2006 (NSW) authorises the executor to receive a commission based on the total value of the estate.
Armstrong Legal can provide more information about estate administration in New South Wales, and answer any questions you might have about wills and estates. Please call our team on 1300 038 223 or send an email to make an appointment.