Deceased Estates (NT)
When a person passes away in the Northern Territory, the assets and debts they leave behind make up their deceased estate. Deceased estates are managed by either an executor (who is a person chosen by the deceased), or an administrator (who is appointed by the Supreme Court of Northern Territory). This article defines a deceased estate and explains the administration of deceased estates in the NT.
Who Administers Deceased Estates In the NT?
The deceased’s personal representative (executor or an administrator) is responsible for administering the estate. The executor is named in the deceased’s will and is charged with following the deceased’s instructions as they are set out in their will. If the named executor is not available, or the deceased did not make a will, an administrator is selected to manage the deceased estate. The administrator manages the deceased estate according to the testator’s instructions or the intestacy rules set out in the Administration and Probate Act 1969.
The personal representative has myriad responsibilities to the deceased estate, including:
- Arranging the deceased’s funeral and burial or cremation;
- Obtaining a death certificate;
- Applying for a Grant of Probate or Letters of Administration;
- Paying the estate’s debts and liabilities;
- Informing relevant authorities of the deceased’s death;
- Defending the estate from legal claims and challenges; and
- Distributing the remaining estate according to either the deceased’s will or statutory rules.
Deceased Estate Assets
The assets of the deceased estate include all of the deceased’s property that has a monetary value, such as real estate, vehicles, investments, cash in bank accounts and personal items of value like jewellery and furniture. Sometimes the deceased estate also includes the deceased’s superannuation and life insurance policies. At other times, the deceased has made a binding death benefit nomination, meaning these assets are excluded from the deceased estate. The assets of the deceased estate also include the deceased’s pets, which are considered property under Northern Territory law. A well-drafted will makes provision for all of the deceased’s assets and can specify who should take care of beloved family pets.
A will often specifies that a certain item should be given to a particular beneficiary. If an asset is not designated as a bequest, the executor usually sells the item at market value. The proceeds of the sale revert to the residual estate unless otherwise specified in the will.
The deceased’s possessions that have little to no value, such as clothes and personal effects, also form part of the deceased estate. These assets can usually be sold, donated, or given away at the discretion of the executor.
Deceased Estate Liabilities
A deceased estate also contains liabilities that survive a deceased’s death, such as a mortgage, credit card debt, or personal loan. Whether debts are repaid or not depends upon whether there are sufficient funds in the estate, and the order of priority. The first debts that must be paid out of a deceased estate are the funeral and burial costs. Next, the personal representative must fully discharge any taxation liability before taking further action. After that, any secured debts (like home or car loans) must be repaid, either from the estate or by selling the asset to discharge the loan.
The personal representative must also prioritise the ongoing payment of child support from the deceased estate for any dependent child. The last category of debts that is paid are unsecured debts, such as a credit card or a loan to a family member. These debts are the most likely to remain undischarged if the estate is insolvent. This is an excellent reason to formalise and register a loan to a family member against proper security.
Estate liabilities are discharged using estate assets before any remaining assets are distributed to the rightful beneficiaries. All assets in a deceased estate can be sold to pay off the debts, regardless of whether the testator left instructions in their will for a particular asset to be bequeathed to a beneficiary. The exception to this rule is life insurance and superannuation death benefits that are included in the deceased estate, as these assets cannot be used to pay deceased estate debts.
When the deceased estate has insufficient funds to cover the liabilities, the debts are paid according to bankruptcy and insolvent estate law provisions. No one else is responsible for paying the deceased’s debts unless they owned property jointly with the deceased, was a joint borrower, or was a guarantor on their debt. Some debts, such as a HECS-HELP education debt, die with the deceased (apart from that year’s contribution payable alongside the taxation liability).
Distribution Of Deceased Estates in the NT
When the person leaves a will, they outline instructions on the distribution of their possessions to selected beneficiaries. The personal representative must follow these instructions as much as possible in accordance with Federal and Northern Territory law. Otherwise, the distribution of the estate is dictated by intestacy rules that privilege the rights of the deceased’s spouse and children.
The team at Go To Court Lawyers can help if you have questions about deceased estates in the NT or your own obligations as a personal representative. Contact 1300 636 846 for experienced advice on any element of deceased estate administration or estate litigation.