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Executors Giving Away Property (NSW)

An executor of an estate is in a position of considerable trust and must handle the distribution of the deceased estate in line with the testator’s wishes as expressed in their will. An executor has significant latitude to administer the terms of a will but they can face serious consequences if they act in ways that are not in the best interests of the beneficiaries of the estate. One aspect of the work of an executor that can be challenging is determining when property within the estate has no value and can be donated or thrown away. If this decision is made incorrectly, the executor may expose him or herself to liability for failing to manage the assets of the estate. This article deals with the consequence of executors giving away property.

List of Assets And Liabilities

One of the first tasks that an executor must complete is to prepare a list of the deceased’s liabilities and assets. This list provides a safeguard against the executor acting inappropriately in keeping, selling or giving away any property except in accordance with the testator’s wishes or in line with the Succession Act 2006.

Executor Authority Over Deceased’s Property

An executor has a responsibility to protect the property of a deceased estate, and to preserve and realise the value of these assets. They need to make sure that the property is in much the same condition when a beneficiary receives the bequest. For example, a vehicle that is bequeathed to a family member should have basically no extra miles or wear and tear added to the condition after it comes into the care of the executor.

Under the Probate and Administration Act 1898, once an executor obtains a Probate Grant to legally oversee the deceased estate, they are vested with the property contained in the estate. This means that the executor takes legal, and sometimes physical, possession of the assets, but they are held only for the benefit of the eventual beneficiary under the terms of the will. In this situation, an executor can sometimes mistake their degree of authority over the assets of an estate, and make unilateral decisions about giving away property.

Executors Giving Away Property Legally

The executor needs to carefully read the will to understand the testator’s wishes about the distribution of property. A solicitor-drafted will should be straightforward and clear, but sometimes, particularly with self-drafted wills, the testator’s intention is unclear. In this case, it is best to ask an experienced wills and estates solicitor for advice, and it may even be necessary to apply to the court for a clarification of the testator’s intent. Otherwise, the executor can be liable if a piece of property is given away to the wrong beneficiary.

Executors Giving Away Property

Many testators will leave instructions in their will about dividing personal belongings and household items amongst specific beneficiaries. When an executor arranges to clear out a deceased’s house, some of the items will be designated bequests that must be held until transferred to the rightful beneficiary, such as items of jewellery or artwork. Typically, the rest of the household contents will be left to a specific beneficiary, in which case the executor needs to communicate with that beneficiary about their wishes as to the disposal of household contents. Otherwise, if the deceased left no specific instructions, the contents of the house are included in the residue of the estate, which will belong to the residual legatee after the payment of all debts, costs, gifts, and taxes. In that case, the executor needs to consult with the residual legatee as to his or her wishes about what to do with the unaccounted-for property.

Sometimes an executor is empowered to clear a house for sale so that the proceeds can be divided amongst beneficiaries. In this case, the executor will usually arrange for the relevant beneficiaries to have their pick of items within the home, and then organise for any remaining items to be sold at auction or garage sales. The proceeds of the sale of these household chattels will be held in the deceased estate for distribution to appropriate beneficiaries.

The executor must have the permission of the relevant beneficiary to dispose of any of the deceased’s items that hold no monetary or sentimental value. This will include not only rubbish and used items such as toiletries, but also items such as furniture and kitchen utensils and equipment that cannot be sold. In that case, the executor is justified in giving away this property. The court is unlikely to be concerned about the disposal of second-hand clothing and furniture unless these are items that have particular value.

A simple rule for executors is to not give away any property of the estate unless it is sold at a fair market value, and they should only dispose of property that has no value with the consent of the relevant beneficiaries or with the authorization of the court. When an executor is giving away property that is intended for a beneficiary or has sentimental or monetary value, then this is misconduct and the executor should be removed from their position.

Please call 1300 038 223 or contact our experienced team for more information. The contested wills team at Armstrong Legal can provide assistance for anyone who believes that an executor is unlawfully giving away property or acting in any way that is inappropriate or neglectful. The team can give advice on having the executor removed and replaced, and provide representation in case there are court proceedings.

Dr Nicola Bowes

This article was written by Dr Nicola Bowes

Dr Nicola Bowes holds a Bachelor of Arts with first class honours from the University of Tasmania, a Bachelor of Laws with first class honours from the Queensland University of Technology, and a PhD from The University of Queensland. After a decade working in higher education, Nicola joined Armstrong Legal in 2020.

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