Executor of Estate in Sydney
In Sydney, the executor of an estate plays an important role in wrapping up the affairs of a deceased person. A testator places a great deal of trust in their executor to carry out their testamentary wishes in a thorough and effective manner. This article explains the duties and responsibilities of an executor of estate in Sydney.
Who Is An Executor Of Estate In Sydney?
When a testator drafts a will, he or she selects a person to be responsible for the administration of their deceased estate. Typically, a testator appoints their next of kin or chief beneficiary, as this person has a vested interest in safeguarding the estate. Alternatively, a testator can choose a trusted, close friend, or employ a professional to undertake the role of executor. In fact, it is preferable for a testator to name several people as possible executors to provide redundancy if one of the executors is indisposed and unable to act.
Duties Of An Executor Of Estate In Sydney
Broadly speaking, an executor is responsible for safeguarding the assets of a deceased estate until it is time to transfer them to the legal beneficiaries. More specifically, the executor may manage different administrative tasks, including:
- Making funeral and burial arrangements;
- Locating any testamentary documents;
- Applying for a Grant of Probate within six months of the testator’s death;
- Calling in the estate so that all the assets of the deceased vest in the executor;
- Finalising any outstanding debts to the estate;
- Lodging a final tax return on behalf of the deceased;
- Defending the estate from legal contest or challenge;
- Communicating appropriately with interested parties; and
- Dispersing bequests to the beneficiaries of the will.
Responsibilities Of An Executor Of Estate In Sydney
It is up to the executor to ensure that they do not squander the assets of the estate through inaction or malfeasance. If the estate suffers because an executor fails to act promptly or take proper advice, then the beneficiaries of the estate can hold the executor personally liable for their loss. The executor can best protect him or herself legally by keeping proper accounts of all transactions and investments of the assets of the estate.
Preserve The Assets Of The Estate In Sydney
An executor should arrange insurance on any real property, and if necessary, ensure that the smaller assets (such as antiques and collectables) are relocated to secure storage.
An executor might be surprised to find that they can also be responsible for preserving the value of any business or company that is part of the deceased estate. An executor may have reason to keep running a business, wind up a company or arrange its sale. Indeed, the business may need to continue to operate so that it can be sold as a going concern. The death of the owner can disrupt the smooth running of a business, and the executor will need to mitigate damage to the asset to the best of their ability, whether that means literally taking over day-to-day operations of the business, or hiring someone to assume that responsibility.
The testator may leave instruction in their will for the executor to carry on the business, giving the executor the authority to sign contracts and purchase goods. When the testator has left no such instruction, then the executor needs to obtain a court order in order to assume control of a business while avoiding personal liability.
Paying The Debts Of The Estate
Once the executor has called in the assets of the estate, the next step is to pay any debts and liabilities. The executor should prepare a list of liabilities from their own research and with regard to the claims of any creditors that come forward upon the publication of the Notice of Intention to Apply for Probate. An executor pays these debts in a different order depending on whether the estate is insolvent (which occurs when there are not enough assets in the estate to discharge the estate’s liabilities).
In Sydney, the executor first pays all the testamentary and administrative expenses involved in the deceased estate before discharging other outstanding debts. Unless the testator leaves instructions to the contrary, the executor should use any cash and saleable assets that are not specifically bequeathed in the will to pay the debt. If it is not possible to satisfy all of the liabilities of the estate with such assets, the executor may also be required to liquidate assets that were bequeathed to individual beneficiaries in order to avoid bankruptcy of the estate.
Distribute The Estate
The last duty of the executor is to distribute the assets of the estate according to the instructions in the will. Unless the will contains a contrary intention, bequests should be paid within the “executor’s year” or twelve months from the testator’s death.
Executor’s Commission
An executor in Sydney is often also the major beneficiary of an estate and invested in completing the administration for his or her own benefit. As such, they generally act without the expectation of pay or reward.
However, if the testator engages a professional to act as executor, they will receive a commercial fee. There is also provision for a non-professional executor to receive compensation for their efforts. In addition to reimbursement for any expenses incurred during their duties, an executor can apply to the Court for an executor’s commission. In Sydney, the Probate and Administration Act 1898 makes provision for an executor to receive a reasonable commission that reflects the complexity of their administrative duties, typically in the range of 1-2% of the total value of the estate.
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