What Is A Deceased Estate? (Vic)
In Victoria, a deceased’s financial assets and liabilities constitute what is called a “deceased estate”. A personal representative, such as an executor or administrator, assumes responsibility for managing this deceased estate until such time as the debts are discharged and the bequests are legally transferred. There are statutory rules that govern the administration of deceased estates in Victoria, set down in the Administration and Probate Act 1958 and common law precedent. This article enumerates some of those rules and broadly outlines the process.
Who Administers A Deceased Estate In Victoria?
Personal representatives, known as executors or administrators, are tasked with administering deceased estates in Victoria. A testator chooses an executor (often a close relative or professional solicitor) and nominates them in their will. In the event that there is no named and willing executor, the Supreme Court of Victoria will appoint an administrator to manage the deceased estate. The administrator and the executor work with basically the same mandate, except that the executor follows the testator’s wishes as set out in the will (in so far as they are consistent with law), and the administrator must abide by intestacy rules of succession.
One of the first duties of deceased estate administration is the preparation of an Inventory of Assets and Liabilities, which catalogues the property and valuables as well as any debts of the deceased. This inventory must then be submitted as an addition to the application for a probate grant.
The administration of a deceased estate takes as long as necessary, but there are statutory minimums for the settlement of estate matters in Victoria. Bequests cannot be delivered for at least six months while the will goes through probate and the mandatory waiting period. This allows for any challenges to the will and claims and contests against the estate. The personal representative not only protects the estate against these legal contests; they must also protect the physical safety of the assets of the deceased estate. This protection may take the form of insuring valuables, or placing them in storage, for instance.
What Is An Asset And Liability In A Deceased Estate?
An asset in a deceased estate is anything of value, including saving accounts, houses and land, investments and personal and household belongings. Australia has no estate or inheritance taxes, so the liabilities of a deceased estate are limited to the personal debts of the deceased, such as mortgages, credit card and personal loan debt.
Debts of the estate are paid according to the directions left in the will and/or according to the legislated order. The first priority is the payment of immediate expenses, such as testamentary and funeral costs, followed by tax liabilities, and secured debts for homes and vehicles. The next priority is provision for any parental responsibility debts, such as the payment of past and future payment of child support for dependent children. If the deceased has an outstanding HECS-HELP study assistance liability, then an instalment payment will be made in the final tax return, and the residual debt will be waived.
Unsecured debts are the final category of liability paid from a deceased estate. An unsecured debt could, for instance, take the form of funds loaned to the deceased by a friend or family member. When a testator makes provision for their repayment in a will, then they will be paid last if there are sufficient available funds. However, if the estate is insolvent, or the testator has not left explicit instruction that they should be paid, there is no legal obligation for the unsecured debt to be discharged by the deceased estate. This is just one example of why it is important that anyone entering into a loan arrangement with family should formalise the loan with a contract and assigned security.
Distribution Of A Deceased Estate
A deceased estate is distributed depending on whether the deceased had a valid will or died intestate. The court always gives preference to the wishes of the deceased if there is a valid testamentary record, otherwise, the assets of the estate are distributed in accordance with intestacy succession rules. In Victoria, these succession rules privilege the next of kin, typically the spouse and children of the deceased. If an individual wishes to make provision for people other than a spouse or child they need to make a will to ensure that these wishes are realised. It is only by writing a will that it is possible to leave anything of value to friends, siblings, more distant relatives, or organisations or charities.
The specialist solicitors at Armstrong Legal can answer any questions you might have about deceased estates and the duties of administration. They can advise you on all legal matters, including probate and succession law. Please telephone our office on 1300 038 223 or send our team a message to make an appointment.