At some stage, most individuals will become involved with a Deceased Estate – whether as a Beneficiary, Executor or an Administrator.
The assets and cash that belong to a person who has passed away is known as their Deceased Estate. A Deceased Estate takes the form of a Trust, which comes into existence at the time of a person’s death, and then ceases to exist when the Deceased Estate has been fully administered. Like other Trusts, a Deceased Estate is not a legal entity in its own right, involving a relationship between the trustee (the Executor of the Estate) and the Beneficiaries.
Executor or Executors
This person or persons are effectively the Trustee or Trustees of the Deceased Estate. As such, they control the assets held in the Estate on behalf of, and for the benefit of, the Beneficiaries. An Executor or Executors is or are appointed by the Deceased person in their Will. If the Will does not name an Executor, or Executors, or if the person or persons appointed cannot discharge their duties as an Executor or Executors, the Courts step in and will make the appointment (they will usually appoint a family member).
The role of Executor is at the center of the whole Deceased Estate process. It falls to the Executor to “step into the shoes” of the deceased person, and administer their affairs on their behalf, and in accordance with the terms of the Will. Amongst the duties the Executor will be required to discharge include:
- Arrange the funeral;
- Locate the Will;
- Obtain the death certificate;
- Make the probate application;
- Inform investment bodies of the death;
- Where applicable, notify Centrelink;
- Locate and assess the assets;
- Pay debts, income tax, etc; and
- Distribute income and assets to the Beneficiaries.
These are people that share in the assets and income of the Deceased Estate. The Beneficiaries are usually named in the deceased’s Will, but if no Will exists, then it is usually the deceased’s next of kin who will be made the Beneficiaries.
The Administration Process
- The Will maker passes away, and is then cremated or buried;
- The Executor or Executors appointed either by the Will, or if no Will, then an Administrator will be appointed by the Courts on application to the Court;
- Probate is applied for;
- Assets vest in the Executor or Executors to administer the Estate who pays the debts and testamentary expenses in the following stages:
- Net income of the Estate is applied to reduce the debts;
- Part of the net income of the estate that is not required to pay debts is distributed to the Beneficiaries.
- Administration of the Estate involves lodging a final income tax return for the deceased, (applying for a tax file number for the Deceased Estate if a tax return is required to be lodged), preparation and lodgement of the Deceased Estate’s income tax return is required and then making distributions to the Beneficiaries, after payment of any tax liability of the Estate.
For more information, contact Rockliffs Lawyers on (02) 9299 4912.