Who Can Be an Executor of a Will in NSW?
In New South Wales, an executor is a person named as executor in a valid will. The person named as executor has no power to act as executor until the person who made the will (known as the testator) has died.Â
Once the testator dies, the executor will have the right to apply for probate and once probate is granted, will be responsible for administering a deceased estate. The executor must ensure that the deceased’s assets are distributed according to the terms of the will. Whilst an executor must comply with their duties and responsibilities, they also have considerable rights and powers which makes the appointment of an executor an important decision.
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Role of an Executor in NSW
Each state of Australia has different laws which apply to an executor of an estate of a deceased person. In NSW, the executor’s rights and responsibilities are generally governed by the Succession Act 2006 (NSW) and the Probate and Administration Act 1898 (NSW) which includes the right to apply for probate, and once appointed as executor, the right to call-in and manage estate assets, the responsibility to pay the deceased’s liabilities (i.e. personal debts, tax liabilities), testamentary expenses (i.e. funeral and burial costs) and estate expenses (i.e. court fees, legal fees and tax liabilities), and to distribute the estate to the beneficiaries in accordance with the terms of the will. Executors are also tasked with defending the estate against legal action. An executor will usually engage a probate lawyer to assist them with the probate process.
Who Can Be Named as an Executor?
Anyone over the age of 18 can be named as an executor in NSW. This can include family members, friends, or a professional such as a solicitor. It’s common for adult children to be appointed executors for their parents. In some cases, the executor may also be the sole beneficiary or one of several beneficiaries of the will. It’s important to carefully consider the choice of executor, as they must be capable of performing the duties involved in administering the estate.
How an Executor Administers and Distributes the Estate
Executors have extensive responsibilities in relation to administration of the deceased estate. Executors are responsible for administering the estate and must act in the best interest of the estate and its beneficiaries, ensuring all legal and financial obligations are met. Key duties include obtaining a grant of probate, collecting and managing estate assets, paying off the deceased’s and the estate’s debts and tax liabilities, and distributing specific gifts and the remaining estate assets to beneficiaries. Executors are also responsible for defending the estate from any legal challenges and disputes.
Obtaining a Grant of Probate
After a person dies, the first step is usually locating the deceased’s will. The person named as executor will have the right to apply to the Court for a grant of probate. The grant of probate is a legal document which gives power to and authorises the executor to administer the estate. The executor will usually engage a probate lawyer to prepare and lodge the probate application. Once probate is granted, the executor will have the power to administer and distribute the estate.
Collecting and Managing Estate Assets
After obtaining probate, duties of an executor include identifying, calling-in and collecting all assets of the deceased estate. This includes locating and securing properties, bank accounts, investments, personal belongings, and any other assets. The executor is responsible for protecting and preserving these assets, ensuring they are maintained and protected until they are distributed to the beneficiaries.
Paying Debts and Taxes
One of the critical responsibilities of an executor is to pay any outstanding debts and taxes owed by the deceased. This involves notifying creditors, settling all liabilities, and ensuring that the deceased’s tax returns are filed and any outstanding tax liabilities paid. Executors must also keep detailed records of all transactions and payments made on behalf of the estate.
Distributing the Assets to Beneficiaries
Once all debts and taxes have been paid (or sufficient money has been put aside to ensure they will be paid), the executor can distribute the estate in accordance with the terms of the will, including specific gifts and gifts of residue. Executors need to ensure that each beneficiary receives their entitled share and that the process is well-documented.Â
Trustee Duties
The person named as executor may also be named as trustee in which case they will also have the right and responsibility to act as trustee for any trust assets. Similar to the role of executor, the person acting as trustee will have a number of duties. The role of trustee involves managing any trusts created under a will, for example, trusts created or arising from gifts to specific people until they attain a certain age, or gifts to minor children.Â
Who can Act as Executor or Trustee
- Fiduciary Duty: Both executors and trustees have a fiduciary duty to act in the best interests of the estate/trust and its beneficiaries. They must administer the estate/trust in good faith and with honesty.Â
- Protecting Estate Assets: Executors and trustees are responsible for safeguarding the assets of the estate or trust. This includes securing properties, valuables, and financial accounts to prevent loss or damage.
- Investing Assets: If the estate or trust contains investments, the executor or trustee must manage these prudently, in the best interests of the beneficiaries.
- Distribution of Assets: Executors and trustees must ensure that the assets are distributed to the beneficiaries as per the terms of the will or in the case of a trust, in accordance with the terms of the trust or trust deed.Â
Communication and Transparency
- Regular Updates: Executors should offer regular updates to beneficiaries about the status of the estate administration to promote trust through transparency.
- Resolving Claims on the Estate: Executors may need to defend claims against the estate, such as a challenge to the validity of the will or a family provision claim.
- Keeping Records: Detailed records of all transactions, communications, and decisions made during the administration of the estate must be maintained.
Estate Planning: Choosing the Right Person to be nominated as an Executor
Choosing an executor is a critical decision in the estate planning process. The right executor will ensure that your estate is administered smoothly and according to your wishes. Here are some important considerations when selecting an executor:
- Trustworthiness: Your executor will be handling your assets and carrying out your final wishes. It is essential to choose someone you trust implicitly. This person should be honest, reliable, and capable of acting in the best interests of all beneficiaries.
- Capability and Competence: The executor must manage various tasks, including legal and financial matters. They should have the competence to handle these responsibilities effectively, or prudence to engage a professional to assist them throughout the process. Consider whether the person has the necessary skills, such as attention to detail, financial literacy, and organisational abilities.
- Willingness to Serve: Being an executor can be a time-consuming and complex role and may be a gratuitous (unpaid) role depending on the terms of the will. It’s important to confirm that the person you choose is willing to take on these responsibilities with regard to the benefit or lack thereof, as the case may be. Discuss your decision with them in advance to ensure they are prepared and agreeable.
- Impartiality: An impartial executor can help avoid potential conflicts among beneficiaries. While it is common to choose a close family member, consider whether they can act impartially and manage the estate without personal bias.
- Proximity: Choosing an executor who lives nearby can be beneficial. They will likely need to manage and distribute physical assets, which can be more challenging if they live far away. However, with modern communication and technology, physical distance may not hinder the role.
- Backup Executor: It is advisable to name a backup (substitute) executor in case your initial choice is unable or unwilling to serve when the time comes. This ensures that there is always someone available to manage your estate.Â
- Professional Executors: For complex estates or to avoid burdening a family member, consider a professional acting as executor. Solicitors or trustee companies can act as executors and bring expertise in estate administration. You can also appoint the NSW Trustee and Guardian.Â
- Legal and Financial Considerations: Executors have the right to apply for probate, and once appointed, to manage the assets, pay debts and taxes, defend legal proceedings and distribute the estate. There are many duties involved in administering an estate. In NSW, executors must comply with the legal requirements set out in the Succession Act 2006 (NSW) and the Probate and Administration Act 1898 (NSW). Failure to comply with an executor’s duties and responsibilities may expose them to personal liability for any losses suffered by the estate or its beneficiaries. Choosing someone with a good understanding of these requirements or who is willing to seek legal advice is crucial. It’s important the executor can handle the duties.Â
- Family Dynamics: Consider the dynamics among your beneficiaries. If you anticipate disputes or challenges, an executor who can handle such situations diplomatically is important. In some cases, a neutral third party might be the best choice to minimise conflict.
If you are seeking professional guidance in estate planning and selecting the right executor, or have been chosen to be an executor and require assistance to best ensure the efficient administration of the estate contact Empower Wills and Estate Lawyers on 1300 414 844. Our experienced team can help you make informed decisions to ensure your estate is in good hands.
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Disclaimer: the information in this article relates to NSW law as at the date it was written and is general information only. It does not constitute legal advice and should not be relied upon as legal advice. It may contain information or links to sources which are no longer current. If you have a question or legal issue, we recommend you contact a lawyer and obtain legal advice that takes into account your specific facts, circumstances, needs and objectives.
Frequently Asked Questions
Can an executor also be a Beneficiary?
In NSW, the executor can but need not be a beneficiary. In fact, it is common for the executor to be the principal or sole beneficiary. However, there can be potential conflicts of interest, so it’s important for the executor to act impartially and in accordance with the law to ensure the fair distribution of the assets.
What happens if the executor named in the will cannot or does not want to act?
If the executor named in the will cannot or does not want to act, they can renounce the role before obtaining a grant of probate. If they have already obtained a grant of probate they may need Court approval to renounce. If an executor renounced (or the first named executor dies or is incapable of performing the duties) before obtaining a grant of probate, the second executor named in the will referred to as a substitute executor can apply for probate. If no named executors are willing to act as executor, another person (usually the person with the greatest interest in the estate) can apply to the Court to become the administrator by lodging an application for Letters of Administration cum testamento annexo (“with the will annexed”) and if appointed by the Court to be an administrator, will have the same power and authority to administer the estate as an executor. It’s often important to name a substitute executor to best ensure the application for probate and the administration of the estate proceeds smoothly.
How can beneficiaries remove an executor who is not performing their duties?
In some cases, beneficiaries can apply to the Supreme Court to remove an executor who is not performing their duties. Reasons for removal can include misconduct, incapacity, failure to administer the estate lawfully, and in some cases, delay. The Court may appoint a new executor or administrator to ensure the proper administration of the deceased estate.
What are the responsibilities of an executor in administering an estate?
The executor is responsible for managing and preserving the assets of the estate of the deceased, paying debts and taxes, and distributing the assets to the beneficiaries. This includes obtaining a grant of probate, handling any claims against the estate, and ensuring that the administration of the estate is carried out efficiently and according to the law. Executors are not typically entitled to a fee for their services, unless the will provides.Â
What should be done if one beneficiary is an executor and there are disagreements about how the assets will be distributed?
If one beneficiary is an executor and there are disagreements about how the assets will be distributed, it is important to address these conflicts promptly. The executor must act impartially and in the best interest of all beneficiaries. If disputes persist, beneficiaries may be able to seek approval from the Court to have a neutral administrator appointed to ensure the efficient administration of an estate. This step helps in maintaining fairness and preventing further conflicts. Executors are also entitled to seek legal advice to handle such disputes effectively.
