Understanding the role of an executor of a will
When someone passes away, their last wishes and the management of their estate become crucial matters. One key figure in this process is the executor of a will. In this comprehensive guide, we will delve into the responsibilities and duties of an executor, addressing common questions and shedding light on the intricacies of this role. Let’s start by defining who an executor is and what their role entails.
1. Who is an executor of a will?
An executor is an individual appointed in a will to oversee the administration of the deceased’s estate and ensure that the instructions outlined in the will are carried out after their passing.
2.What constitutes an estate?
An estate comprises all the assets and liabilities left behind by an individual after their demise. However, it’s important to note that certain assets do not become part of the deceased’s estate. Some examples include:
- Property owned jointly with another person (not as tenants in common), where the deceased’s share automatically transfers to the co-owner upon their death.
- Superannuation and life insurance proceeds directly paid to beneficiaries, bypassing the estate.
- Undistributed assets held within a family trust
3. Who is a beneficiary?
Beneficiaries are individuals or entities, including charities, designated to receive gifts or benefits from the deceased’s estate.
4.The role of an executor of a will
The role of an executor of a will is one of immense trust and responsibility. Executors must adhere to the following principles:
- Execute the will according to the wishes of the deceased, acting with care and integrity.
- Prioritise the best interests of both the estate and its beneficiaries, refraining from actions that serve their personal interests.
- Fulfill a trustee or fiduciary role, which means making impartial decisions that benefit all parties.
- Seek consent from all adult beneficiaries when necessary, especially concerning estate transactions.
- Manage and protect estate assets until distribution while settling any outstanding estate liabilities.
- Pursue compensation on the estate’s behalf if an attorney appointed by the deceased under an enduring power of attorney caused financial loss due to non-compliance with the Power of Attorney Act 2014. The executor has six months from the date of the deceased’s passing to apply for compensation to the Victorian Civil Administrative Tribunal (VCAT).
5.Collaboration among executors
When multiple executors are involved, it is essential to foster cooperation and reach agreements on how to proceed collectively.
6.Record-keeping and communication
The executor of a will must maintain meticulous records of estate management and distributions. They should also provide beneficiaries with summaries of financial transactions. Communication with beneficiaries throughout the process can minimise misunderstandings and conflicts, especially during a period when emotions are running high.
7.Alterations to asset distribution
In some cases, assets may be distributed differently from what is stipulated in the will. In such instances, executors must notify and obtain consent from all adult beneficiaries, ideally in writing and after they have had the opportunity to seek independent legal advice.
8.Declining the role of executor of a will
Executors have the option to decline their appointment. It is advisable to do so before probate is granted. If an executor wishes to step down after probate has been granted, they must obtain the consent of the Supreme Court.
Executors can delegate specific tasks and responsibilities to professionals like funeral directors, lawyers, accountants and real estate agents, but they remain ultimately responsible for the actions of these individuals.
If the deceased did not make prior funeral arrangements, the executor of a will is responsible for these preparations. The executor of a will should consider the deceased’s wishes and consult with family members when appropriate. The cost of the funeral is an estate expense, so it must be managed within the estate’s available funds.
11. Organ donation
Questions regarding organ donation may arise. Typically, these decisions are left to the next of kin or are in line with the deceased’s prior registrations or hospital requests.
12. Reading of the will
Contrary to popular belief, there is usually no formal reading of the will. Beneficiaries are typically notified by the executor or a legal firm appointed by the executor. In Victoria, specific categories of people can request a copy of the will if it was made on or after July 20, 1998.
13. Informing beneficiaries
While there is no legal obligation to inform beneficiaries of their entitlements before gifts are distributed, open and honest communication with beneficiaries is vital. This transparency helps prevent conflicts and fosters trust among the involved parties.
14. Managing estate assets and liabilities
As an executor of a will, safeguarding estate assets is paramount. Executors should:
- Create an itemised list of all assets promptly, including their condition and storage location.
- Address digital assets such as photographs and digital documents.
- Ensure adequate insurance coverage for properties like houses, boats, and cars.
- Secure valuable items like jewelry, photographs, and paintings.
- Assess the need to change locks on properties.
- Consider valuations of personal chattels when necessary.
- Make informed decisions about the distribution of household items, often consulting with the deceased’s family.
- Prevent asset wastage and ensure proper investment of collected funds.
- Manage estate liabilities, including routine expenses like phone bills and credit card payments, as well as potential income tax liabilities.
Being the executor of a will is a significant responsibility, requiring careful adherence to the deceased’s wishes and diligent estate management. Executors must act with integrity, communicate openly with beneficiaries, and navigate complex legal and financial matters. By understanding the role of an executor, individuals can better prepare for this vital position when the time comes.