Deceased estates don't always go to plan

For most deceased estates, the executor (when the deceased person leaves a will) or administrator (when there is no will) is able to carry out their role without difficulty. But for some, even getting past the first point of obtaining a grant of representation can be a difficult and drawn-out affair.    

Sometimes, court proceedings are brought to challenge the validity of a will or to challenge the standing of a person to obtain the grant of representation.

The executor or administrator, as the case may be, are both formally known as the “legal personal representative” (LPR) of the deceased person. A grant of representation is required to give the LPR the legal authority to deal with the assets of a deceased estate.  Here we examine what is required of an LPR to fulfil their duties where the grant of representation is delayed by litigation.

Duties of a legal personal representative

The core duties of the LPR are to identify, secure and preserve the estate assets, to apply those assets to pay estate debts and then distribute in accordance with the will or, when there is no will, in accordance with the intestacy provisions of the Administration and Probate Act 1958.

For most estates, the process of identifying, securing and preserving the estate assets is usually a relatively straightforward process.  For example, an LPR will typically ensure that:

• any real estate or other valuable property (e.g. motor vehicles) of the deceased have been secured and insured until they are either sold or transferred to one or more beneficiaries
• cash assets (e.g. money in the bank) are continuing to accrue interest.

However, when litigation challenges a grant of representation, this process can grind to a halt, and potentially result in loss to the estate.

Difference between executor and administrator

As similar as their roles may be following a grant of representation, there are key differences between the authority of executors and administrators to make inquiries before a grant of representation is obtained.

When someone dies, the title (i.e. ownership) of a deceased person’s property vests in (i.e. passes to) the LPR. However, the timing of this differs depending on whether the LPR is an executor or an administrator.

• For an executor, the title vests immediately upon death and is confirmed by the grant. This means that it is generally easier for an executor to identify the assets even before a grant is obtained.  An executor will usually be able to make inquires of banks and other third parties, when provided with a copy of the will and the death certificate, to at least identify balances and the location of documents. The reality, however, is that depending on the assets of the estate the executor will need to obtain a grant of probate in order to formally have the power to call in the assets.
• For an administrator, the title only vests upon the granting of letters of administration by the court. The banks and third parties may not be so willing to divulge information to a proposed administrator.

What can you do?

Even if litigation is on foot, it is still recommended that the LPR take whatever steps necessary to at least identify, secure and preserve the estate property until the litigation is finalised, e.g.

• make inquiries with banks and other financial institutions
• undertake property searches to confirm the real estate owned by the deceased, and
• ensure that such real estate is adequately insured where possible.

It is crucial, however, that the LPR not deal with estate property in a manner that leads to loss to the estate before the litigation is finalised, as, depending on the manner in which the estate incurred the loss, the LPR may become personally liable for the loss, e.g. an LPR knowingly:

• choosing to distribute property in accordance with a will which is later deemed to be invalid
• choosing to distribute property during the six months claim period despite having received notice of a claim being brought
• distributing property in a manner which does not accord with a probated will.

Sometimes there is an urgent need to deal with the assets of the estate before a full grant of representation is made.   A common example arises where the deceased enters into a contract of sale of their real property but passes away before settlement.  In such cases, it might be advisable to make an application for a limited grant of representation to enable a person withstanding to deal with a specific asset or issue in the estate while the litigation is on foot regarding the full grant of representation. 

If you’re an executor or administrator of an estate and need assistance, please contact our Wills & Estates team on 9550 4600 – we are here to help.