What does an Executor do? - Genders and Partners

what does an executor do

Social media and mainstream news outlets are filled with reports about disputes in deceased estates. There has been a big increase in the numbers of these actions in recent years. Often they relate to criticism of how an Executor has administered a deceased estate.

In most cases, a trusted family member or friend is appointed as an Executor. So, what are they doing wrong? Sometimes it isn’t easy to stay on the right side of the law when acting as an Executor.

The primary role as Executor is to ensure that they carry out the ‘terms of the deceased’s Will’.

Proving the Will

Once the deceased person has died, and has left a valid Will, the Executor may need to apply for a Grant of Probate. A Grant of Probate is a Court Order that certifies that the Supreme Court recognises that the document presented is the last valid Will of the deceased, and that the Executor now has the authority to deal with estate assets and liabilities.

In some cases, for example if the estate is a small one, probate may not be required. In some cases, there is no estate to administer (this often happens when a couple owns everything jointly). In some cases there is no valid Will.

Once a Grant of Probate is issued

The Executor’s role following a Grant of Probate can be summarised as:

Identifying and locating all of the assets of the Estate;
Protecting and preserving the assets in the Estate;
Paying all the expenses and liabilities of the testator;
Valuing and publicly disclosing to the Court all of the assets of the Estate;
Taking control of and getting-in all of the assets of the Estate;
Distributing the Estate to the beneficiaries of the Estate according to the terms of the Will.

When doing this, the Executor must:

Preserve, protect and administer the assets of the Estate. This includes securing and insuring any real estate or other valuable property that belonged to the deceased. The assets of the Estate must be secure and insured until you sell the property or distribute it under the terms of the Will;

Keep beneficiaries informed regarding the administration of the estate. This includes promptly notifying beneficiaries of the Grant of Probate and their entitlement under the Will;

Exercise due diligence. The Estate should be administered and distributed as soon as practicable. This can often take up to a year, but if you’re concerned your administration may take longer than this, we recommend you seek legal advice about whether this is reasonable in the specific circumstances of your estate;

Guard against a conflict of interest. The Executor should not put themselves in a position where they have a personal interest (or potential conflict of interest) with the estate they are administering – except if the Will provides otherwise;

Act in the best interests of ALL the beneficiaries at all times. All beneficiaries should be treated equally, with no one treated more favourably than anyone else, even if one beneficiary had a closer relationship with the deceased than another; and

Not profit from their position unless the Will says otherwise. This means that there is no automatic entitlement to payment for your work as Executor. However, the Executor may apply to the Court for an Executor’s ‘commission’ to compensate them for their time and effort.

Executors’ liability

Typically, the reasonable expenses incurred by the Executor when administering the Estate can be paid out of (or reimbursed from) the Estate. However, in certain circumstances, the Executor can be made personally liable for these.

The Executor must ‘account for’ the property of the estate. If there is any loss to the beneficiaries (or creditors) of the estate from a failure to perform their duties properly, the Executor may be required to personally make the beneficiary or the creditor whole, i.e. pay them what they would have otherwise been entitled to from the estate. So for example, if the Executor distributes all of the assets to beneficiaries, and then finds that a creditor has not been paid, the creditor can claim against the Executor for the amount due.

An Executor can also be liable for mismanagement, misapplication or waste of the estate. Both a beneficiary and/or creditor of the estate can bring a claim against the Executor.

The Court has previously found the following to be mismanagement or waste of the Estate:

Failure to pay debts, particularly those that bear interest;
Negligence or wrongful administration of the estate;
Failure to call in investments, including debts;
Sale of assets below their true market value;
Distribution without making provision for future or contingent obligations;
Payments to the Executor for performing their role as Executor if this is not specially allowed under the Will; and
Theft from the Estate.

Where there are two or more Executors, either or both can be held liable for the breach of duty.

standard of behaviour

Standard of behaviour

An Executor should exercise their role with the same level of care as an ordinary prudent person of business would extend to their own affairs. This applies even if you are not a person of business. The standard of care applied to Executors is ‘reasonable care, prudence and circumspection’. If you are not familiar with business affairs, then you should carefully reconsider taking up the role of Executor. Even if you are named in the Will, there is no legal obligation to take up this role.

Acting honestly and in good faith for the benefit of beneficiaries is the very minimum standard of behaviour required.

However, a paid Executor will usually be held to a higher standard as they are expected to have a higher level of diligence and knowledge than someone who is not paid for their role. An even higher level of care is required for any person who advertises their services as an Executor, for example, a solicitor or accountant.

Court and Legal advice

This can all sound very intimidating if you are appointed as an Executor. Luckily, for most people the easy answer is to instruct a lawyer who specialises in the administration of deceased estates. The lawyer will then do the ‘heavy lifting’ for you and keep you out of trouble, as well as relieve most of your stress.

Further, in every Australian State and Territory, Executors have the right to apply to the Court for ‘advice and directions’ about how to administer the estate. The Court can advise you if you are faced with any difficulties in administering the estate.

Beneficiaries’ Interests

Although a beneficiary may know that they are entitled to a gift under the deceased’s Will, the beneficiary does not have an interest in the gift until the Executor has finished their administration duties and the estate is ready to be distributed.

However, if a beneficiary is concerned about how the Executor is administering the Estate, they can make a Court application to compel the proper administration of the Estate.

If you would like further advice about administering an estate, or if you are concerned an Executor is not administering an estate properly, contact our friendly team.

When it comes to Wills, Probate, Deceased Estates, asset protection & estate planning in Australia, you can trust the oldest law firm in South Australia, Genders & Partners to guide you through the tough decisions you must make for your family’s future care and welfare.

If you have any questions, or would like further information, please email us. Would you like a quick phone call to discuss? Feel free email us or use this link and book a timeslot for a free 15-minute phone consultation on my schedule: https://calendly.com/genders

We can help you to protect yourself and your family. We look forward to being of service.

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Disclaimer

The information contained in this document is intended as general information only and has been prepared without taking into account the needs, objectives or financial information of any particular person.

Prior to making any decision, you should assess whether the information is appropriate to your particular needs, objectives and financial circumstances.

While Genders and Partners has taken reasonable care in the preparation of this information, subsequent changes in circumstances (including legislative change) may occur at any time and may impact on the accuracy of this information.