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When a person dies, their assets and debts need to be identified, managed and eventually distributed to the people who are entitled to them. This process is known as estate administration.
What happens next will depend largely on whether the person left a valid will.
If there is a will
A will sets out a person’s wishes for what should happen to their estate after their death. It usually names one or more executors to carry out those wishes.
Where a valid will exists, the executor may need to apply to the High Court for a grant of probate.
What is probate?
Probate is the legal process by which the High Court recognises the authority of the executor named in the will to administer the deceased person’s estate.
Once probate has been granted, the executor can generally deal with the deceased’s assets, pay the estate’s debts and expenses, and distribute the estate in accordance with the will.
Not every estate necessarily requires a grant of probate. In some smaller estates, assets may be able to be dealt with without obtaining a grant, depending on the circumstances and the requirements of the organisations holding the assets.
If there is no will
If a person dies without a valid will, they are said to have died intestate.
In this situation, there is no executor appointed by the deceased’s will. Instead, an eligible person may apply to the High Court for a grant of letters of administration on intestacy.
The person appointed under the grant is known as the administrator.
Unlike an executor, an administrator does not distribute the estate according to the deceased’s will. There is no will to follow. Instead, the estate is administered and distributed according to the legal rules that apply to intestate estates.
The identity of the person who can apply may depend on their relationship to the deceased and their priority under the applicable rules.
Executor or administrator — what is the difference?
The simplest way to understand the distinction is:
Where there is a will
An executor is usually appointed by the will.
The executor may apply for probate.
The estate is distributed according to the will, subject to the law.
Where there is no will
An administrator must be appointed.
An eligible person may apply for letters of administration.
The estate is distributed according to the statutory intestacy rules.
Both executors and administrators are responsible for properly administering the estate.
What does estate administration involve?
Whether an estate is being administered by an executor or an administrator, there are a number of important steps.
1. Identify the assets
The personal representative needs to establish what the deceased owned. This may include:
· property;
· bank accounts;
· vehicles;
· shares and investments;
· personal belongings; and
· money owed to the deceased.
The assets may need to be valued and secured while the estate is being administered.
2. Identify and pay debts
The deceased’s liabilities must also be identified. These may include loans, credit cards, outstanding accounts, taxes and other debts.
Funeral and administration expenses may also need to be paid from the estate.
Generally, the estate’s debts and expenses should be dealt with before the estate is distributed to beneficiaries.
3. Deal with the beneficiaries
Once the estate has been properly administered and the relevant debts and expenses have been dealt with, the remaining estate can be distributed.
Where there is a will, the executor follows the gifts and instructions contained in the will.
Where there is no will, the administrator distributes the estate according to the statutory rules governing intestacy.
Sometimes a beneficiary may receive an asset itself rather than cash. For example, a beneficiary might receive shares, a vehicle or another asset as part of their entitlement. This is commonly referred to as an in specie distribution.
4. Keep proper records
Executors and administrators should keep clear records throughout the administration of the estate. This includes records of assets, debts, expenses, receipts, payments and distributions.
Proper estate accounts help demonstrate how the estate has been administered and what each beneficiary has received.
What if an executor cannot act?
Sometimes the executor named in a will may be unable or unwilling to act. For example, they may have died, become incapable of acting or formally renounced probate.
The appropriate procedure will depend on the circumstances and the terms of the will.
There can also be situations where an executor has already obtained probate and later dies. In certain circumstances, the chain of representation may allow the executor of that executor’s estate to continue administering the original estate.
What if the estate is small?
A grant of probate or letters of administration is not required for every estate.
Some smaller estates may be capable of being administered without a formal grant, depending on the value and nature of the assets and the requirements of the organisations holding them.
It is therefore important to consider the circumstances of the particular estate before deciding what procedure is required.
Why get legal advice?
Estate administration can involve much more than simply distributing a person’s belongings. It may involve Court applications, property transfers, debts, beneficiary entitlements and potential claims against the estate.
Executors and administrators also have responsibilities to administer the estate properly and in accordance with the law.
Getting legal advice early can help identify whether probate or letters of administration are required, clarify the responsibilities of the personal representative, and ensure the estate is administered and distributed appropriately.
In simple terms
If there is a valid will: Will → Executor → Probate (if required) → Administration of estate → Distribution under the will
If there is no valid will: Intestacy → Administrator appointed → Letters of administration (if required) → Administration of estate → Distribution under intestacy rules
Every estate is different. If you have been appointed as an executor, need to apply for probate or letters of administration, or are dealing with the estate of a family member, obtaining legal advice can help ensure the estate is dealt with correctly and efficiently.
Article written by Raf Kim
