The role of the executor is not one to be taken lightly. It carries with it serious responsibilities and the executor must act upon the wishes of the deceased person. The person appointed is not only responsible for managing the estate within the terms of the Will but is equally responsible for paying the debts and taxes of the estate. Hence, being named an executor of a Will is a much larger responsibility than many people realise. It is complex and demanding and requires an understanding of the law.
In this article, we have summarised the roles and responsibilities of the position in order to help executors that are trying to make sense of it all.
Who is an Executor?
An executor is the person who is responsible for ensuring that the terms of the Will are carried out. The person must be at least 18 years of age or older. People often choose to appoint a friend or relative as their executor.
What do I do as an Executor?
There are many steps involved in being an executor. The duties of an executor may include:
Notifying the Beneficiaries
If you have been named an executor, you must locate the Will and contact the beneficiaries immediately after the person dies. Also, you must notify the decedent’s bank and credit card companies.
You must then apply to the Supreme Court for the authority to deal with the deceased’s estate. This is often referred to as ‘Probate of the Will’. An application to the Court must be made within 6 months of the person’s death and the assets of the deceased person will remain frozen until probate is granted by the Court.
Looking after the Estate
Following the grant of probate, as an executor you must also manage the property or goods left in the will. You could do this by:
- Safeguarding any income
- Investing money not needed immediately
- Collecting any valuables
- Insuring all property
Valuing the Estate
You must also identify and account for all assets and liability. This means that you need to obtain written confirmation from banks, financial institutions, insurance companies, share registers, title office and creditors. Thus, the value of the estates must be ascertained.
The estate includes all:
- Business interests
- Personal effects
- Real estate
- Sale of property
- Debts due
- Debts owing
Completing Income Tax Returns
You are also required to finalise any tax returns for the deceased, as well as for the estate (if required). The best approach is to seek advice once the assets and liabilities of the estate have been determined to ensure any tax liabilities are dealt with before the estate can be distributed.
Paying all Debts
After receiving the clearance from the Australian Taxation Office, creditors, funeral expenses, income tax, fees for administering the estate and out-of-pocket expenses must all be paid. This means that you may have to sell some assets. However, beneficiaries may choose to provide funds to cover these expenses to keep the assets of the estate intact.
Dividing the Estate
Lastly, you are responsible to pass the assets on to their new owners. After paying all debts, you are then free to distribute the remaining assets according to the directions laid out in the Will. The deceased person will have, ideally, named who each of their assets will go to.
If you are wanting to make your own will, refer to our step-by-step guide to creating a will.
What Rights do I Have as an Executor?
You have two main rights as an executor of an estate:
- The right to compensation
- The right to decline being an executor
What if I Want to Decline my Right as an Executor?
If you have been appointed as an executor and you do not want this responsibility you don’t have to go through it. So, if you refuse to act as an executor, a different executor of the estate can take on your duties. However, if there are no mentions of other executors, you can still apply to have a court-appointed administrator take the reins.
Is There a Set Time Limit for me to Finish my Duties?
As an executor you must act with great care. However, a year is generally seen as a reasonable time to finish all your duties.
We understand that being an executor of a Will can be a bit overwhelming. So, if you would like assistance in understanding your role as an executor, get in touch with an estate planning lawyer today.