How to Define Letters of Administration
The legal definition of Letters of Administration is “a formal document issued by a court of probate appointing a manager of the assets and liabilities of the estate of the deceased in certain situations”. This description may not greatly assist someone to understand the function of Letters of Administration. This article defines the role of an administrator acting under a Grant of Letters of Administration, identifies when it is necessary to apply for Letters of Administration, and who is eligible to become an administrator.
How to Define Letters of Administration
A Grant of Letters of Administration is a short document issued by a court. This document is usually required when someone dies intestate (that is, without a will). Letters of Administration are issued to confirm that someone has the authority to take responsibility for a deceased estate, including the assets and obligations of the deceased. In particular, financial institutions, government entities, or stock trade agents will usually require Letters of Administration before they will release an asset to an administrator of a deceased estate.
Where there is a valid will, there is no need for Letters of Administration because the will has already appointed an executor to assume responsibility for the estate. However, Letters of Administration may be required if the executors nominated in the will are not able to assume this responsibility. On occasion, a well-prepared estate is disrupted when it is discovered that an executor pre-deceases the testator, or is otherwise unavailable to act. In these circumstances, the only recourse is to have the estate managed by a court-appointed administrator.
Who is Eligible to Obtain Letters of Administration?
The courts will only issue Letters of Administration to someone who is entitled to the whole deceased estate, or to a share of the estate. If the only person entitled to the estate lives outside Australia, they can appoint a solicitor to obtain Letters of Administration on their behalf.
If more than one person is entitled to part of the estate, these individuals can apply jointly for Letters of Administration, or one individual can obtain written consent (in an affidavit) from any other entitled people endorsing them to act in the role. If the potential beneficiaries cannot agree on who should act as administrator, they can all petition the court, and the court will rule on the merits of competing claims. Letters of Administration are usually granted to the closest relative of the deceased, which is likely to be a married or de facto spouse of the deceased, or if there is no spouse, a child of the deceased.
The court may appoint a temporary special administrator while it assesses competing claims to act as administrator. A temporary administrator has limited authority over specific property, rather than full authority to dispose of the estate. If no next of kin is willing or able to apply for Letters of Administration, the court may appoint a State Trustee or another suitable person to administrate the estate (including a creditor of the estate).
How to Define the Duties of an Administrator and Executor
An executor is responsible for managing and protecting an estate and its assets in accordance with the wishes of the deceased. An executor must comply with instructions set out in a will in so far as they are consistent with the law, including laws governing social security and taxation.
The executor will first locate the will, and if required, apply for a Grant of Probate. They are then tasked with the payment of any debts, and the collection and distribution of assets to the beneficiaries in accordance with the terms of the will. They are responsible for lodging a final tax return for the deceased and establishing and managing any long-term trusts. An executor may also need to defend the will in court if it is challenged (if the validity of the will is questioned) or if the will is contested (if someone claims that they should have received a greater share of the estate).
The duties of an administrator are largely the same as the duties of an executor, but an administrator is required to first apply to the court for a Grant of Letters of Administration. In addition, if there is no valid will the administrator must manage the estate according to laws of intestacy. This responsibility can impose a significant burden on the administrator.
The key difference between an executor and an administrator is that the testator chooses an executor to carry out his or her final wishes. Ensuring that your estate is administered by someone of your own choosing is just one of the reasons that it is important for everyone over eighteen to have a valid, up-to-date will.