Five Surprising Facts About Executors (NSW)
Most people are familiar with the basic function of an executor of an estate. It is widely known that an executor is responsible for carrying out the deceased’s last wishes as they are written in a will. However, some aspects of the role and the powers of an executor are not as well known. This article explains five surprising facts about executors in New South Wales.
Surprising Fact #1: Executors Decide Funeral Arrangements
Planning a funeral can be a cathartic process for the deceased’s family, providing an opportunity to celebrate the deceased’s life. It may come as an unpleasant shock to the deceased’s family to discover that they do not have the right to make funeral arrangements for the deceased. Family members often have strong opinions about how the burial and funeral should happen. Still, it is the executor who has the final say over all funeral and burial arrangements (excluding cremation decisions). The executor can choose the location, date and type of funeral and limit the guest list as they see fit. It is up to the executor whether they consult with the family about the funeral arrangements. The executor does not even need to abide by the testator’s instructions, although an executor often feels a moral responsibility to follow the testator’s and/or family’s wishes.
Typically, an executor checks the will to see if the deceased left any instructions on their preference and implements these directives even if they are contrary to the family’s wishes. When the testator has left no instructions, the executor should check with the family, and if there is disagreement, make an overriding decision. In fact, the executor may have to make entirely different arrangements because of cost, practicality and whether it is legal under state and federal law.
Surprising Fact #2: Executors Do Not Have To Follow The Will
Surprisingly, an executor can deviate from the instructions in a will. In effect, the executor has the final say over the distribution of the estate as long as they comply with NSW law.
An executor has a fiduciary duty to protect the estate and act in the best interests of the beneficiaries. As such, the executor can change the will with the beneficiaries’ consent. For instance, if the beneficiaries agree that the distribution was unfair, the executor can distribute the estate contrary to the testator’s wishes. The executor can organise this alteration of the will through a deed of variation.
It is also fairly common for an executor to make out-of-court settlements that change the distribution of the estate. The executor can negotiate a valid claim to avoid a court proceeding over a Family Provision Claim. This negotiation is done in the estate’s interest to avoid lengthy delays and extensive legal fees. However, the executor should only undertake this negotiation with legal assistance or advice.
The executor may also distribute the estate contrary to the will because it is legally or practically unworkable. It is sometimes impossible to carry out the terms of the will because the bequeathed property is no longer in the deceased estate or the beneficiary predeceased the testator.
Surprising Fact #3: Executors Can Sell Property Left To A Beneficiary
Most people assume that if the testator has bequeathed them a particular piece of property in a will, then they will receive that exact item. Actually, an executor has the authority to vary the terms of the will and sell bequeathed assets to pay the estate’s debts. Sometimes the debts are so extensive that few assets remain in the estate. The executor will have to distribute the remainder according to the legal order of priority, and beneficiaries will have to take less or even nothing from the estate.
Surprising Fact #4: Executors Take Possession Of Estate Property
Something that might surprise people is that an executor actually takes legal possession of the property of an estate. In NSW, section 44 of the Probate and Administration Act 1898 states that upon a Grant of Probate, an executor takes possession of all the deceased’s personal and real estate. However, it is essential to note that the property vests with the executor not for their own benefit but for the estate’s benefit.
Surprising Fact #5: An Executor Can Request A Commission
Most people are aware that the job of a non-professional executor is unpaid. It may be surprising to know that in NSW, an executor can apply to the Supreme Court for a so-called executor’s commission. This commission compensates an executor for the “pains and trouble” involved in administering an estate. An executor who received a legacy in the will in return for taking on the role is not entitled to apply for an executor’s commission.
The executor must present the estate accounts to make the application. The court has the discretion to decide the actual rate of commission, depending on several factors. The court will judge the complexity of the task, the size of the estate, the diligence of the executor, and whether there were any legal complications during the estate administration. Typically, the commission is somewhere between:
- 25% and 1.25% of the assets;
- 25% and 2.5% of the income generated from capital realisations; and
- 1% and 5% of income collection.
The executor should consult with the will’s beneficiaries before making an application. The beneficiaries may agree to give the executor a commission so that the executor does not need to apply to the court.
The wills and estate team at Armstrong Legal can advise on the rights and responsibilities of an executor in NSW. Please call 1300 038 223 or contact the team online for expert advice on any probate or testamentary matter.