If you have been named as Executor to someone's Will and that person passes away, you will have certain duties and responsibilities that need to be met. This article provides an overview of some of those duties.
Make Funeral Arrangements
The Executor will need to organise the funeral for the deceased.
If there are clear instructions in the Will about final arrangements, then this is an easy task. However, difficulties may arise if family members disagree about any final arrangements that need to be made.
The Executor has the final say and has the power to override the family's wishes.
2. Manage Assets
An Executor needs to collect, protect and maintain the deceased's estate before any benefit is distributed, and after the repayment of all debts.
Make a list of everything the deceased owned and any entitlements the deceased may have had at the time of death, such as an employment benefit, superannuation fund or life insurance. This is known as a Statement of Assets and Liabilities or Inventory of Property. Include an estimate of what the current market value is for each item.
3. Obtain Probate
The Executor may need to obtain the authority of the court in order to administer the assets of the deceased's estate, referred to as a Grant of Probate.
Probate gives an Executor the power to deal with and discuss arrangements with financial and other institutions about releasing assets, paying debts and arranging for the distribution of assets.
4. Repay Debts
List all debts and liabilities of the deceased. The total of the assets less liabilities will be the net value of the deceased estate.
The sale of assets (step above) need to be deposited into a bank account in the deceased's estate name, then debts and expenses such as funeral expenses, tax, loans or mortgages are paid from this account.
5. Pay Tax
The deceased probably earned an income and paid tax prior to his or her death. If so, the Executor will need to lodge any outstanding tax returns and pay the required tax to the ATO.
If an asset such as property needs to be sold, Capital Gains Tax (CGT) may need to be paid on that property from the deceased estate.
6. Establish Trusts
If the Will established a testamentary trust, such as holding benefits in trust for minors until they reach a certain age, the Executor is appointed as the trustee of the trust (unless the Will specifies another trustee).
The trustee has a duty to administer and distribute the assets prudently and diligently. The Executor is then responsible for administering the trust as well as the estate.
7. Distribute Assets
The last thing the Executor needs to do is distribute the assets remaining from the estate to the beneficiaries, the person or persons named as receiving a gift in the deceased's Will.
8. Keep accurate records
An Executor must keep 'proper' records and accounts of the administration of the estate and make sure everything is properly accounted for by receipts and other relevant documentation.
The Executor of a Will has a duty to administer the estate in accordance with the Will within a certain time or the beneficiaries may have the right to sue the Executor for undue delay.
This article contains information of a general nature only and is not specific to your circumstances. This is not legal advice and should not be relied upon without independent legal or financial advice.