Essential Guide to Deceased Estate Administration: Key Steps Explained
Losing a loved one is an emotional time, and managing the legal complexities of administering their estate can add an additional layer of stress. As the Executor of a will, you are responsible for ensuring the estate is handled according to the deceased's wishes and in compliance with the law. While this process can be overwhelming, understanding the necessary steps can help you manage the estate efficiently and effectively. This guide outlines the essential steps involved in administering an estate under Queensland law, ensuring that all obligations are met, and the estate is distributed fairly and lawfully.
Here are some general steps involved in estate administration under Queensland law:
1. Locate the Will and establish who is the Executor
Action: When a person dies, find the most recent version of their will, as this determines who is their Executor and how their estate will be distributed.
After someone passes away, their Executor has the legal authority to manage their estate. The Will usually appoints the Executor so the first task is to locate the will. The will may be among the deceased person’s personal papers, with the legal practice that prepared it, the Executor, Next of Kin, in a bank safe deposit box, or with the Public Trustee.
Confirm the Executor's willingness to take on the responsibility if a will exists. If they decline, a signed renunciation is required. If there's no will, the closest relative can apply to be the Administrator, and the estate will be distributed according to state laws. If multiple wills are found, professional guidance should be sought to determine the valid one.
The will may express wishes about cremation or burial and about the funeral. If not, it is the Executor who makes those decisions.
2. Obtain the Death Certificate
Action: Obtain a death certificate from the state or territory's births, deaths, and marriages registry. This is often organised by the funeral directors. You can also obtain the death certificate online or in person at the registry office. You may need to provide relevant details, such as the deceased's full name, date of birth, and place of death.
The death certificate is a critical document for administering the estate. It serves as official proof of the deceased's passing and is required for several steps in the estate administration process, including applying for probate, accessing the deceased's assets, and notifying institutions such as banks, insurance companies, and superannuation funds. Without it, the estate cannot be legally managed or distributed.
It's also important to inform relevant parties, such as family members, employers, and carers, of the death as soon as possible. Centrelink should also be informed as soon as possible if the deceased person was in receipt of Centrelink benefits. While the death certificate is essential for formal processes, advising these parties can be done before it is obtained, to allow them to make necessary arrangements or provide support.
3. Gather Important Documents
Action: Gather all the essential documents. These documents will vary depending on the circumstances of the deceased, but generally, as the Executor, Administrator, or Next of Kin, you will need to obtain certain legal, financial, and personal documents to begin the process of estate administration.
Here's an overview of the key documents you may need to collect:
Insurance Policies
Gather any relevant insurance documents, including life insurance, health insurance, home and contents, funeral insurance, and even things like pet insurance. These may play a role in settling the estate, either by providing payout funds or ensuring the deceased's outstanding obligations are met.
Banking and Financial Documents
Collect bank statements, credit card statements, loan agreements, and any other financial documents that could impact the estate, including statements for joint bank accounts even though these will often pass directly to the surviving account holder.
Superanuation Documents
If the deceased had superannuation, you should collect all statements, copies of any beneficiary nominations and copies of trusts deeds and financial statements if the superannuation was in a self-managed fund.
Property Documents
If the deceased owned or rented property, gather mortgage papers, rental agreements, rates notices and land tax statements. You'll need to understand whether there are any outstanding payments and how to transfer ownership or manage rental properties.
Tax and Income Records
Look for pay slips, tax returns, Centrelink statements, and any other documents related to the deceased's income. These will help ensure all debts, taxes, and obligations are properly handled – more on this later.
Asset and Liability Documents
Seek out records related to any investments, such as listed company shares, managed investments, and bonds.
If the deceased owned a business or was a partner in a partnership, you'll need partnership agreements, trust deeds and financial statements.
It's important to have a record of all outstanding debts, including things like mortgage statements, phone, utility, and even HECS/HELP debt.
4. Secure the Estate
Action: The Executor must secure the deceased's assets, such as property, vehicles, and bank accounts, to prevent unauthorised access or loss.
Notify financial institutions, utility providers, and other relevant entities to freeze accounts and prevent any misuse. This helps maintain control over the estate until probate is granted.
5. Grant of Probate or Letters of Administration
Action: Determine whether a Grant of Probate or Letters of Administration are required.
If the deceased had a valid will, a Grant of Probate may be needed to validate it and authorise you to administer the estate. If there was no will, Letters of Administration will be required to grant you the authority to manage the estate. These legal documents are crucial before distributing assets and accessing financial accounts.
To obtain probate in Queensland, the Executor must file legal documents with the Supreme Court, advertise the application, and notify the Public Trustee. The process includes publishing a notice in the QLD Law Reporter, waiting for objections, preparing probate documents, and filing them in court, usually with the help of a solicitor. An application for probate typically takes 4-6 weeks from the publication of the notice, after which the Executor can begin distributing the estate, though it's advised to wait six months before final distribution to account for any will contests.
Do I Need Probate?
In Queensland, probate may not be needed for small estates, property transfers, or real estate sales, as covered by the Land Titles Act. However, it's generally recommended to obtain probate to ensure smooth estate administration. Probate grants the executor legal authority, protecting them from personal liability. Financial institutions and others often require it to process liabilities and distribute assets.
6. Tax Considerations for Estate Executors
Action: As an executor, there are various tax obligations that must be undertaken to ensure the deceased's tax affairs are finalised properly. Here are key points to keep in mind:
Notify the ATO
Inform the Australian Tax Office (ATO) of the death to stop further correspondence. Officially notify the ATO by completing the relevant form, which also notifies them of your role as Executor.
To officially notify the ATO, you must provide a death certificate or grant of probate/letters of administration, with additional documents as required. If you don't have these yet, you can call them to notify unofficially.
Lodge the Final Tax Return
You may need to lodge a final tax return for the deceased person covering the period up to their date of death. This includes income from employment, bank interest, dividends, etc.
Taxable Income of the Deceased Person's Estate
Income earned by the estate after the death (such as salary, interest, and dividends) and capital gains on sale of estate assets may need to be reported. The tax responsibility typically falls on the Executor in the early stages, but as the estate progresses, the beneficiaries may become liable for tax on their share of the estate's income. You'll need to apply for a separate tax file number (TFN) for the estate to lodge tax returns on its behalf.
Tax Losses and HECS/HELP Debts
Any accumulated capital losses can be used in the final tax return but cannot be carried forward by the estate. Additionally, outstanding HECS/HELP debts determined by the final tax return must be paid from the estate. It's important to note that the entire HECS/HELP debt does not need to be repaid, only the amount due based on the income earned in the financial year the person passed away.
Beneficiary Tax Liabilities
If beneficiaries are entitled to estate income, they may be taxed based on their individual rates. Executors must report income distributions, and in some cases, pay tax on behalf of beneficiaries under legal disability or non-residents. There also may be tax payable in respect of superannuation death benefits.
You should seek professional advice from a financial adviser or accountant.
How Much Tax is Paid on a Deceased Estate?
The amount of tax payable on a deceased estate in Australia depends on the assets within the estate and the method of distribution. While there is no inheritance or estate tax, taxes like Capital Gains Tax, stamp duty and superannuation tax may apply depending on how the assets are managed and distributed. The exact tax liability will vary based on factors such as asset types, sale of property, any income liability based on earnings, and the beneficiaries involved.
7. Pay Debts and Liabilities
Action: The Executor must use the estate's funds to pay off any outstanding debts, taxes, funeral expenses, and other liabilities. This may include paying creditors, settling utility bills, and covering any remaining legal fees. It's essential to ensure that all obligations are met before moving forward with asset distribution.
Executors have a legal responsibility to settle all estate debts and liabilities before distributing assets to beneficiaries. Failing to do so could lead to personal liability for the Executor if any debts go unpaid. Executors should work closely with legal and financial advisors to ensure all payments are properly documented, and the estate is not mismanaged.
8. Distribute the Estate
Action: Distribute the remaining assets to beneficiaries according to the will. If necessary, liquidate assets (e.g., sell property) to ensure equitable distribution.
It's important to obtain written confirmation from beneficiaries upon receiving their share. Ensure all instructions in the will are followed, like making sure beneficiaries meet any age requirements or receive the correct assets, before distributing the estate.
You should be careful to ensure none of the beneficiaries was in bankruptcy at the date of death or goes into bankruptcy after the date of death because in those circumstances you must pay their entitlement to their trustee in bankruptcy not to the person named in the will.
Finalise the estate by closing all accounts, transferring property titles, and providing beneficiaries with a summary of the administration, while ensuring detailed records are kept for all transactions to protect against potential disputes.
Professionals Are Available to Help
Administering a deceased estate can be a complex and emotional process, with legal requirements and potential disputes along the way. Using a solicitor ensures that all steps are handled correctly, minimising the risk of mistakes and protecting the interests of both the estate and beneficiaries.
At Bradley and Bray, we have the expertise to guide you through every stage of estate administration. Get in touch with us today to ensure everything is managed with care and compliance. We can be reached on (07) 5441-1400 or via email on info@bradleybray.com.au.
Disclaimer: This article is general in nature and does not constitute legal advice. If you require legal advice in relation to your personal circumstances, you must formally engage our firm, or another firm to provide legal advice in relation to your matter. Bradley & Bray lawyers take no responsibility for any use of the information provided in this article.
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