Executor Duties and Responsibilities

What is an Executor?

The executor of a will is the person named in the will or appointed by a court to handle the deceased person’s financial affairs after their passing. An executor’s responsibilities include tasks such as managing property (should there be any), paying bills, handling taxes, and ensuring that assets are properly distributed to the rightful beneficiaries. If you have been chosen as an executor, it is essential you understand your obligations

1. Your Role as an Executor

Being named as an executor is a significant responsibility, indicating the deceased person’s trust in you to manage and execute various tasks with complete authority.

The Court broadly outlines the duties of an executor as follows:

2. Funeral Preparations

As the executor, it is your duty to arrange the burial or cremation of the deceased as soon as practicable after their death. The family often wishes to be involved in the funeral arrangements, and where possible, you should consult with them to ensure the deceased is laid to rest respectfully and in line with any religious beliefs.

Additionally, you should consider any wishes the deceased expressed in their Will. However, in NSW, the deceased cannot dictate the disposition of their body; this remains the executor’s responsibility. The exception is if the deceased explicitly directed in writing (including within the Will) not to be cremated or specified another form of disposition.

The reasonable costs and expenses of the funeral are to be paid from the estate funds.

3. Get Probate

The executor is responsible for obtaining Probate for the deceased’s last Will and Testament (what is Probate? Find out here).

The application for Probate must be lodged within 6 months from the date of the deceased’s death. If more than 6 months have passed, the Court will need evidence in the form of an affidavit explaining the delay. Penrose Lawyers ensures that any delays are addressed in the executor’s affidavit submitted with the Probate application to the Court.

4. Contact the Estate

Section 44 of the Probate and Administration Act stipulates that upon the Grant of Probate, all assets of the deceased (including both real estate and personal property) are transferred to the executor.

While section 44 grants the executor legal authority over these assets, in practice, the executor must provide a copy of the Probate, Death Certificate, and various other required forms to the asset holder. This is necessary to register the transfer of the asset from the deceased’s name to the executor’s name. For instance, the Department of Lands requires a Transmission Document for land and real estate. Financial institutions generally require account closure forms, and Share Registries need Transfer of Share paperwork.

In addition to managing the deceased’s assets, the executor is also responsible for pursuing any claims that the deceased might have had against third parties, provided the right to pursue these claims did not end with the deceased’s death. For example, if the deceased had loaned money to individuals, the executor must collect these loans according to the terms of the loan agreement. Penrose Lawyers can offer advice on which claims survive the deceased’s death (both for and against the estate) and which do not.

Joint Assets, Superannuation, and Life Insurance

Assets held jointly with another person do not become part of the estate and cannot be claimed by the executor. Legally, the deceased no longer holds an interest in these assets from the date of death, with the surviving joint tenant inheriting the deceased’s share. However, the executor should list any jointly held assets in a separate schedule when lodging the Probate application.

Superannuation generally does not form part of the estate as it is a contract between the deceased and the superannuation trustee, designating specific beneficiaries or classes of beneficiaries upon the deceased’s death. The superannuation benefit may become part of the estate if the superannuation trust deed allows it or if the trustee decides to pay the benefit to the estate at their discretion.

Protect the Estate from Waste

An executor must ensure that the estate’s assets are not squandered due to any action or inaction on their part. If the executor fails to act promptly in administering the estate or neglects to seek proper advice, they could be personally liable to a beneficiary or creditor if their inaction or mistakes lead to a decrease in the estate’s assets.

To prevent this, the executor must keep accurate records (receipts) and ensure that any assets sold or invested are handled in accordance with the Will or legal requirements and suitable advice. For example, if an executor is selling real estate, they must avoid diminishing the estate’s value by selling the property in a way that results in an unfair market price, such as through a distressed sale without proper marketing.

Running a Business

An executor can generally avoid waste of the estate by acting promptly and seeking professional advice, such as from Penrose Lawyers for the Grant of Probate, an accountant for tax returns, and a real estate agent for land sales. However, challenges may arise if the deceased owned a business.

A business can be one of the estate’s largest assets. If the deceased was integral to the business’s success, their death will likely negatively affect its daily operations and overall profitability and value.

Unless the Will provides explicit or implied authority for the executor to continue running the business, the executor cannot manage the business and must instead liquidate it to realise its assets. Any business-related actions by the executor, such as signing contracts or purchasing goods, would be without proper authority, potentially leading to personal liability with no recourse for indemnification from the estate’s assets.

To avoid this issue, an executor should seek a Court order to permit the continuation of the business. This order would protect the executor from personal liability. Penrose Lawyers can obtain such Court orders and expedited limited Grants of Probate to safeguard the estate’s assets.

5. Clear Debts

Once the estate assets have been gathered, it is the executor’s responsibility to settle the estate’s debts. The executor will be informed of these debts through the inquiries and searches conducted before filing the Probate application and from the notice of intended application published.

The method and sequence of debt payments depend on whether the estate is solvent (having enough assets to cover all liabilities) or insolvent (lacking sufficient assets to meet its obligations).

Regardless of the estate’s solvency, funeral, testamentary, and administration expenses (including fees charged by Penrose Lawyers to obtain Probate) must be paid first before addressing any other debts.

The executor must ensure that debts are settled using the appropriate estate assets. Initially (unless the Will specifies otherwise), the executor should use assets not specifically allocated in the Will to pay off debts. Care must be taken to ensure there are enough funds to cover any pecuniary legacy (a monetary gift).

For example, if John passes away leaving a Will that appoints Emmanuel as the executor, bequeathing his house, car, and “all the rest of his estate” to his wife Jenny, except for $20,000 given to his brother Eric, and if John’s only debt is a $5,000 credit card balance while also having $50,000 in shares, Emmanuel should use the proceeds from the shares to settle the estate’s debts (including funeral costs). This is because the house and car have already been allocated to Jenny, and the share proceeds are sufficient to cover both the debts and the pecuniary legacy to Eric.

If you are uncertain about which assets to use for paying estate debts, consult with Penrose Lawyers.

6. Distribute the Estate as Instructed by the Will or as Required by Law

Once the estate’s assets have been collected and debts settled, the executor’s final duty is to distribute the estate according to the Will’s instructions, or if the Will doesn’t specify, in line with the intestacy rules (see ‘Who is entitled to the assets of the deceased if there is no Will?’). Typically, Wills drafted by solicitors will include a comprehensive provision to ensure that all assets are passed to a designated individual. However, this provision is ineffective if the named individual has predeceased the testator (the deceased).

Generally, the executor must administer the estate and pay all beneficiaries within 12 months of the testator’s death. Unless the Will specifies otherwise, beneficiaries (other than those claiming under intestacy rules) cannot demand interest from the executor, provided the estate is administered within this ‘executor’s year’.

To start the application for Probate or if you have any questions contact us on 1800 473 676.