Being Appointed as Executor Or Administrator Of An Estate – Role, Responsibilities, Risk And Rewards
A Will is arguably the most important and fundamental legal document a person will create in their lifetime. This means that if you have been named as executor, you have been placed in a position of great trust and confidence to carry out their last wishes. In this article, our Wills & Estates Team explores the 4 R’s of being an executor or administrator of someone’s Will – the: (1) Role, (2) Responsibilities, (3) Risk, and (4) Rewards.
ROLE – Estate Administration
The executor of a Will is a person who has been appointed by the individual making the Will (referred to as the ‘Testator’) to carry out the terms of the Will and the Testator’s wishes when they pass. The executor of a Will essentially steps into the shoes of the Testator to wind up the deceased’s personal and financial affairs.
Conversely, when a person dies without a valid Will in place, they are said to have died intestate. In these circumstances, their estate, comprised of their assets and property, will be dealt with under the rules of intestacy and the Succession Act 1981 (Qld) (‘Succession Act’). Where a person dies intestate, an eligible person (i.e. family member of the deceased) may apply to the Courts to be appointed as administrator of the deceased’s estate. This is effectively the same role as that of an executor, however the administrator is appointed by the Court instead of being chosen by the Testator.
The Courts or the Testator, as the case may be, can appoint multiple executors or administrators (but no more than 4) to act jointly in the administration of the estate. Additionally, a person’s Will may name successive (i.e. substitute) executors for where someone appointed in the first instance is either unable or unwilling to act.
Throughout this article the roles of executor and administrator will be collectively referred to as ‘Executor’ for simplicity, except where specified otherwise.
As already indicated, the main responsibility of the Executor is the administration of the deceased’s estate. An Executor must act pursuant to the Testator’s Will and the Succession Act.
Part of these responsibilities may involve ‘proving the Will’ by applying for probate, where required. A grant of probate is essentially an endorsement by the Court to recognise that the Will is legally valid and that the Executor is authorised to deal with the estate.
That said, regardless of whether probate is required, an Executor will have a number of other duties in the administration of the estate which may include (but is not limited to):
(a) Locating the Will;
(b) Arranging the deceased’s funeral;
(c) Determining, locating and notifying the beneficiaries (persons entitled to receive some benefit or a gift under the Will);
(d) Gathering, protecting and taking control of estate property and assets;
(e) Lodging tax returns and finalising other tax matters;
(f) Determining the debts and liabilities of the estate;
(g) Advertising to creditors and paying out any debts or liabilities;
(h) Finalising any financial or business affairs of the deceased;
(i) Complying with any trusts that are in place (including testamentary trusts);
(j) Selling or transferring the assets and property of the estate as required; and
(k) Distributing the assets and property of the estate to the beneficiaries.
Given the degree of trust and responsibility conferred to an Executor, a corresponding degree of risk is also placed on them. For instance, an Executor has a duty (along with their fiduciary and other common law duties) to:
(a) Act in the best interests of the estate and beneficiaries;
(b) Ensure all debts and liabilities are paid out prior to distribution; and
(c) Promptly and efficiently apply for probate and administer the estate.
Where the above obligations are not complied with, or an Executor has negligently or intentionally breached their duties, they may be removed from their position. In these circumstances, an Executor may also be held accountable for any loss the estate has been exposed to.
Another issue will arise if an Executor was to distribute the estate prior to handling the debts and liabilities of the estate (including tax liabilities). In this situation, the Executor can and usually will be held personally liable for those debts and liabilities and cannot claw back the assets and property of the estate to settle these debts. Even more concerningly, an Executor can be accountable for any debts that arise after distribution in certain circumstances. Therefore, Executors must ensure that adequate time and care is taken to advertise to creditors and determine any debts and liabilities.
Finally, in the case of family provision applications (‘FPA’) an Executor will have an obligation to handle and respond to any FPA or challenge to the Will, including beneficiary entitlements. For more information about FPA’, see our recent article: CLICK HERE.
As daunting as being appointed as an Executor may be, there is also some light at the end of the tunnel for those willing to act in this capacity.
In addition to giving effect to the last wishes of a loved one, an Executor is also entitled to claim commission for the costs incurred and work involved in the administration of the estate. While the amount of commission payable is at the discretion of the Courts, there are very few instances in which an application for commission will be refused.
Any commission is paid from the residual estate, being that part of the estate left over after the payment of all gifts, legacies and debts.
Estate Administration – WHAT SHOULD YOU DO?
The role of Executor is not one to be taken lightly and can be both very rewarding and challenging at times.
Therefore, a person who has been appointed as an executor under a Will may choose to do any of the following:
(a) Accept the role of executor including the responsibility, risk and reward that comes with it;
(b) Renounce their appointment as executor and relinquish their duty; and/ or
(c) Appoint the Public Trustee or a professional executor (such as a law firm) as executor to act in an independent manner.
On the contrary, and as previously discussed, the role of an administrator is not one that is forced upon an individual, and an eligible person must apply to the Courts for letters of administration in order to take up this role.
RAMSDEN LAWYERS – HOW WE CAN HELP WITH ESTATE ADMINISTRATION
The administration of a deceased estate is a long, costly and potentially complex process, depending on the size of the estate and the assets held. As outlined above, if an estate is not administered properly it can result in an Executor being removed or held personally liable for the losses and liabilities of the estate.
If you have been appointed as Executor and seek legal advice or assistance with obtaining a grant of probate or letters of administration, distribution or the overall administration of a Will, Ramsden Lawyers can assist you. We are happy to arrange an obligation-free initial consultation to assist you in navigating the procedures set out under the relevant legislation for your circumstances.
Ramsden Lawyers can also act as a professional executor to administer your or a loved one’s estate independently and professionally.
The content of this article is intended to provide general guidance to the subject matter and must not be relied on as legal advice. Specific advice should be sought about your circumstances.