Interim Distributions (Qld)
In Queensland, an executor is supposed to delay the distribution of a deceased estate for at least six months before finalising the estate administration. On some occasions, an executor or the Supreme Court of Queensland must make interim distributions to the beneficiaries of a will. The rules about interim distributions in Queensland are complicated, so read on for some insight into interim distributions.
Distribution Of A Deceased Estate
When an executor assumes responsibility for a deceased estate, they do so on the understanding that they cannot distribute the estate immediately. In Queensland, a sensible executor will wait at least six months from the date of the deceased’s death before they start distribution of the estate. The executor reserves this period of time for eligible parties to challenge the will’s validity or make a Family Provision Claim against the estate.
However, an executor does have the discretion to consider an early release of funds for cases of genuine hardship. A beneficiary can also directly approach the court for an interim distribution order. This interim payment cannot exceed the beneficiary’s final entitlement under the will.
What are Interim Distributions In Queensland?
Several circumstances merit an interim distribution in Queensland. The executor can release funds to a beneficiary who urgently needs financial assistance. Additionally, an executor will make interim distributions because there are ongoing delays to the estate administration. For instance, an executor can take several years to finalise a contested will proceeding before the court.
An interim distribution might be necessary if the testator had financial dependents when they died. These dependants may have relied on the testator for necessities (e.g. food, shelter, education) and may be vulnerable if they have to wait six months. Those at particular risk are minor children, spouses without financial resources of their own, and relatives who cannot earn an independent income and/or who are not entitled to social security in Australia.
Legal Authority To Make Interim Distributions In Queensland
Section 52 of the Succession Act 1981 outlines the duties of an executor in Queensland. One of the executor’s duties is to distribute the deceased estate “as soon as may be”. As such, there is no legal impediment to an executor making an early distribution. An executor can and should make interim distributions from the estate if there is no risk to the beneficiaries or the administration of the estate. The executor should only make this distribution when they are confident that there are sufficient funds to cover both liabilities of the estate and the final distribution.
Should An Executor Make An Interim Distribution In Queensland?
An executor who waits the entire limitation period receives protection from personal liability. Therefore, an executor should carefully consider the risks of making early distributions from the deceased estate. The executor should be conservative in their approach to interim distributions if there is any chance of a legal challenge or contest of the will. If there is any sign of a legal dispute over the estate, the executor should delay distribution until the claim is resolved or withdrawn.
The executor can gain protection from personal liability if they formally communicate any possible interim distribution to all estate beneficiaries. If possible, the executor should obtain the beneficiaries’ written consent. An executor will often find that other beneficiaries will use this opportunity to ask for early distribution. If an executor is still in doubt, they can approach the court for further direction. A court order protects an executor from any personal liability.
A testator leaves an estate worth several million dollars equally to his children. One child makes a Family Provision Claim against the estate several months after the executor obtains a Grant of Probate for the will. The executor and the claimant cannot settle privately, and the case is listed for a hearing in the Supreme Court. When the court dismisses the child’s claim, she appeals the decision to the Queensland Court of Appeal. These legal delays mean that the estate is not finalised for several years as the case progresses through the courts.
During this time, the testator’s youngest child loses his job and needs immediate financial assistance. He can approach the executor and ask for an interim distribution from the estate to help him during this period. Given the size of the estate, the executor can provide the son with a generous interim distribution knowing that the outcome of the court proceeding cannot alter the final distribution to that extent.
In summary, a beneficiary can sometimes request or even compel an executor to make an interim distribution before the estate administration is complete. The executor or Supreme Court will need to assess “with conservation and prudence” whether it is appropriate to make the distribution given the circumstances. Please give the experienced team at Armstrong Legal a call on 1300 038 223 or use this link to discuss this matter further.