A Guide to Professional Estate Administration

Estate administration refers to paying debts and taxes and distributing assets to the beneficiaries as specified in a Will. The person who administers an estate is called an executor. The duties of the executor of the estate can be lengthy and complex, and can include the following tasks:

• Locating the Will to ensure that any wishes regarding the deceased’s funeral are carried out.
• Releasing money from the deceased’s bank account to pay for the funeral.
• Making an inventory of all estate liabilities and assets, and ensuring those assets are secure, insured as appropriate and protected from theft, damage and any form of deterioration.
• Applying to the Supreme Court to be granted authority to administer the estate i.e. obtaining probate.
• Identifying the beneficiaries – modern circumstances may make this more complicated than at first glance. Overseas beneficiaries, blended families and relationship breakdowns sometimes impact on an executor’s ability to accurately determine all beneficiaries.
• Valuing all estate assets.
• Giving notice of death to all potential claimants against the estate, such as creditors and beneficiaries. If a claim is received, the executor needs to decide whether or not to pay it.
• Managing any disputes and/or litigation.
• Ensuring distribution of the estate occurs after the expiration of the Testator’s Family Maintenance claim period to avoid any personal liability.
• Lodging tax returns for the deceased for the current financial year, and past years if the deceased failed to lodge a return.
• Acknowledging that the estate itself represents a separate tax paying entity and the executor must apply for its tax file number, and lodge a tax return each year the estate received income.
• Distributing the estate.

Phew - what a list! It’s no wonder that appointing a professional executor is becoming more commonplace…

Appointing a professional as the executor of the estate

Providers such as Australian Unity Trustees Limited can be appointed to act as an executor, which ensures that all these duties are completed in a timely and accurate manner. In providing the estate administration services, the professional body will also deal with third parties (such as government departments and agencies, courts, banks, share registries, insurance companies, employers, lawyers and accountants) and beneficiaries who all require notification and consultation as part of deceased estate administration.

Enlisting the help of professional executor services in undertaking the hefty task of administering a deceased estate means that it is left in the hands of those who understand legal responsibilities, have thorough knowledge of the process and who will act impartially. This is because the professional executor does not have a vested interest in the Will. It can also spare the person who might be otherwise named as the executor the heartache of the following:

Loss of personal time

It is the executor’s responsibility to ensure all tasks are completed in a timely manner. Given the volume of and time-consuming nature of the duties involved, this may result in needing to attend to tasks most days of the estate’s administration. This can take anywhere between six months to two years, or even longer. For many people, that means taking time off work and using a significant amount of time to complete tasks, adding up to a significant imposition on personal time.

Being personally liable for the estate suffering financial loss

An executor could be personally liable if the estate suffers financial loss due to their action (or lack thereof). This is a risk even if the executor’s actions were taken in good faith.

Potential issues may include:

• Damage or theft of estate assets
• Business deterioration
• Taxation not being paid in full
• Genuine claimants coming forward following the early distribution of the estate
• Financial loss due to inappropriate management of estate assets

If an executor makes a mistake that results in any of the above, they can be held personally liable for financial loss. A professional executor can work to shield them from personal legal liability.

Damage to personal reputation (and sanity)

The role of the executor is often a thankless task. It can also be a position which places your personal reputation at risk due to unhappy beneficiaries unfairly accusing you of any of the following:

• Taking too long to finalise the estate
• Under-valuing assets that often have a high emotional but low financial value
• Withholding what they believe is their fair entitlement to the estate

When the responsibility for administration of a deceased estate sits with a professional provider of executor services, there can be a consultative approach to assist all beneficiaries to feel they are being heard and treated fairly. 

A few final considerations

Many people shy away from choosing a professional executor because of the associated fees and charges for the services. This is because a professional executor is someone who is employed to administer the estate while a personal executor, such as their next of kin, will not be paid for their services unless it is stipulated in the Will. While there may be comfort in leaving the administration of the estate to a loved one who will be personally committed to enforcing final wishes and acting in the best interests of the deceased, a professional can step in and conduct the same duties more efficiently, and without the risk of a conflict of interest.

If you have been nominated as executor but don’t believe you’re in a position to fulfil all the required duties, there are services designed to help you with all the executor tasks while you keep full control over the estate process. This means you can seek help with specific tasks such as obtaining probate, or alternatively receive a full administration service. Online-based estate planning platforms like Willed are making these services more accessible than ever. 

Disclaimer: The content of this blog is intended to provide a general guide to the subject matter. This blog should not be relied upon as legal, financial, accounting or tax advice.