Executor Obligations in the NT
When a person makes a will, he or she typically appoints at least one executor to carry out their testamentary wishes after their death. The executor is responsible for wrapping up the deceased’s affairs, paying their debts and passing on their possessions to the rightful beneficiaries. The executor follows the deceased’s wishes as much as possible according to the regulations contained in the Administration and Probate Act 1969. While acting as an executor is a position of trust and honour, it can also be a difficult and complicated task. This article explains the many executor obligations in the NT.
What are the Executor Obligations in the NT?
The executor has an obligation to abide by the laws that govern estate administration. In the Northern Territory, the Administration and Probate Act proscribes the executor’s actions, but the executor is also subject to other statutory restrictions contained in legislation such as the Supreme Court Rules 2008, the Trustee Act 1983 and the Land Title Act 2000.
A testator should choose their executor carefully as someone they know to be trustworthy and diligent in fulfilling their obligations. In fact, a testator will usually name multiple people in their will to act as executor. This provides an alternative in case one executor is unable to accept the responsibility, or several people wish to act as co-executors. In the Northern Territory, there is no limit on the number of executors a testator can appoint in their will or the number of executors that can be granted probate at any one time. If more than one executor is granted probate, they must act jointly to exercise their authority over the estate. The executors are obligated to consult one another and agree on all major decisions regarding the estate administration.
Executor Obligations And Duties in the NT
An executor’s first obligation is to the deceased and their estate. That means that they have to abide by the deceased’s wishes as outlined in the will. As long as these wishes are legal, the executor should follow them closely. However, the executor is also often required to exercise judgement and discretion, especially in cases when a claim is made against the estate.
An executor in the Northern Territory is legally responsible for many administrative duties. Executors are primarily required to:
- locate the will and advise the beneficiaries of their entitlement;
- arrange the deceased’s funeral and burial arrangements. While the deceased’s family often take charge of these matters, it is the executor who has the final say;
- apply to the Court for a Grant of Probate for official authorisation to administer the estate;
- gather and obtain valuations on the deceased’s assets;
- preserve these assets by storing, protecting and insuring them;
- pay outstanding debts and any tax liabilities. This is one of the most important of the executor’s obligations;
- prepare financial estate statements;
- defend the estate against a claim if necessary;
- transfer, sell or give away the deceased’s possessions; and
- arrange any ongoing testamentary trusts.
The executor is sometimes called a Legal Personal Representative (LPR) because they act on behalf of the deceased and the deceased estate. An executor is obliged to apply for a Grant of Probate before they can act as an LPR.
As an LPR, the executor is responsible for defending the deceased estate from any legal challenge or contest. This includes defending the will from accusations that it is not a valid document because of fraud, undue influence or the testator’s mental incapacity. The executor is also the legal representative of the estate in any Family Provision Claim (FPC) proceeding. An FPC occurs when one of the deceased’s family disagrees with the contents of the will, and they ask the court for a redistribution of the estate in their favour. Such cases are often emotionally taxing, complex and of long duration.
Executor’s Fiduciary Duty
An executor has a fiduciary duty to the deceased estate and the rightful beneficiaries of that estate. This is a position of considerable trust and confidence, and the executor must display appropriate conduct. The executor can face severe penalties if they breach their fiduciary duty. The court can remove and replace an executor who fails to meet their obligations by:
- remaining out of the territory for over two years; or
- refusing to perform their duties; or
- being otherwise unfit or incapable of acting as executor.
Given the sometimes-onerous nature of an executor’s obligations, the Administration and Probate Act allows the court to authorise an executor’s commission for “pains and trouble as is just and reasonable”. This commission must not exceed 5% of the entire value of the estate and is only payable when the executor presents financial accounts of the estate to the court.
Our experienced civil lawyers are here to assist if you need further clarification about executor obligations in the Northern Territory. Go To Court Lawyers can provide legal advice or representation in this area and any other area of law. Please call 1300 636 846 or contact our team today.