Wills & Estate Planning Lawyers in Melbourne

An estate is all the property and liabilities of a person in existence on death.
Some assets are not part of the will maker’s estate. The most common examples are:

• Property owned jointly with another person (not as tenants in common). In this case, the will maker’s share of the property automatically passes to the other owner on the will maker’s death.
• Superannuation and life insurance proceeds that are paid directly from the fund to a superannuation/life insurance beneficiary (and not to the estate)
• Undistributed assets of a family trust.

A beneficiary is any person or entity (e.g., a company or charity) that receives a gift or benefit from a person’s estate.

The role of the executor is to carry out the will maker's wishes as specified in the Will. This is a position of great trust and must be carried out with care and honesty.

The executor must act in the best interests of the estate and all the beneficiaries and cannot act in their own interests. The executor’s role is often called a trustee or fiduciary role. If, for example, the executor wanted to buy something from the estate, the executor would need to ensure valuation is obtained as well as the consent from all the adult beneficiaries.

The executor is responsible for managing and protecting all the estate's assets until they are distributed to the beneficiaries. The executor is also responsible for paying all the estate's liabilities.

Executors should keep complete and accurate records of how the estate has been managed and provide a summary of the financial transactions for the estate to the beneficiaries.

If a conflict arises, an executor cannot take sides with one or more beneficiaries. The executor should try to mediate a resolution to the conflict. Communicating regularly with the beneficiaries about what is happening with the estate is a good way of minimising misunderstandings and conflict.

An executor can refuse to accept the position of executor, but this should preferably be done before probate is granted. Where an executor seeks to step down from that position after Probate is granted, and they must obtain the consent of the Court.

Executors can delegate some of the actions and responsibilities to others, for example, funeral directors, lawyers, accountants, and real estate agents. However, the executor will ultimately be responsible for those people's actions.

The executor is responsible for making the funeral arrangements if the will maker has not already made those arrangements. The executor should follow any directions the will maker leaves regarding the funeral arrangements but is not bound to do so. Things to consider include:

• Whether the body is to be buried or cremated.
• If the body is to be buried, where.
• If the body is to be cremated, whether the ashes will be scattered or retained.
• The nature and format of the funeral service; and
• Who they should notify about the service.

If the executor is not an immediate family member. Then, the executor should consult with the family about the funeral arrangements.

The reasonable cost of the funeral is an expense of the estate. The executor should be careful to avoid incurring expenses beyond the available funds in the estate.

The executor may be asked whether organs can be donated. This usually occurs where the will maker has registered with the organ donation register or there is a request by the hospital or the next of kin. The decision is usually left to the next of kin.

It is not common to have a formal reading of the Will. Usually, the beneficiaries are notified of their interest by the executor or the firm of solicitors appointed by the executor.

In Victoria, various categories of people are entitled to request a copy of a Will. Such as:

• a person named or referred to in the Will, whether as beneficiary or not.
• a person named or referred to in any earlier Will as a beneficiary.
• a spouse of the will maker at the date of the will maker's death.
• a domestic partner of the will maker.
• a parent, guardian, or children of the will maker.
• Any person who would be entitled to a share of the estate if the will maker had died without leaving a will.
• any parent or guardian of a minor referred to in the Will or who would be entitled to a share of the estate of the will maker if the will maker had died without leaving a will; and
• any creditor or other person who has a claim at law or in equity against the estate of the will maker and who produces evidence of that claim.

A beneficiary has no legal right to see a deceased person's Will made before 20 July 1998. However, once probate is granted, a copy may be obtained from the Supreme Court.

It is good practice for the executor, or the firm of lawyers appointed by the executor, to write to the beneficiaries and tell them they are beneficiaries under the Will as soon as possible.

There is no legal obligation for beneficiaries to be told they are beneficiaries before the gifts in the Will are given to them.

An executor may instruct their lawyers to notify the beneficiaries of their entitlement and where necessary, communicate with beneficiaries as to the progress of the administration of the estate. Alternatively, they may choose to do so themselves.

As executor, you are responsible for the safekeeping of the estate's assets. You should:

• Make an itemised list of all the assets as soon as possible.
• Ensure that property such as houses, buildings, boats, and cars have current and adequate insurance. Consider whether the insurer needs to be notified because of any change i.e., the house is vacant, or the vehicle is housed elsewhere.
• Ensure that items of dollar or sentimental value such as jewellery, photographs, paintings etc are adequately secured.
• Consider whether the locks to houses and buildings need to be changed.
• Consider obtaining valuations of personal chattels (where appropriate).
• Consideration should be given to what to do with all household items. Some items may be given to the beneficiaries in part satisfaction of their interest in the estate, some may be sold to second-hand dealers or given to charities or otherwise disposed of. Care must be taken in making these choices. Many executors consult with the family of the deceased before making these decisions.

If money is collected from the sale of assets and is not to be distributed straight away, it must be invested. If real property is to be held for some time, whether it should be rented should be considered.

Professional valuations will sometimes be needed if beneficiaries are given items. Alternatively, the value may be agreed upon by the executors and beneficiaries.

The executor should also ensure that all estate liabilities are accounted for. This may include the usual household accounts such as telephone accounts, credit card bills, and other liabilities, such as income tax.

Probate is a document given by the Supreme Court of Victoria (where there is property in Victoria) that confirms the validity of the Will and the appointment of the executor to look after the estate of the deceased will maker.

There is an application fee to file for probate.

Before applying for probate, the executor (or his/her solicitor) must advertise that an application for probate is to be made. This advertisement is posted on the Supreme Court’s website. It must be placed at least 14 days before the probate application is lodged with the court.

An application for probate requires the preparation and filing of various documents with the Court, including:

a statement of assets and liabilities with appropriate valuations. This often takes some time to prepare as information needs to be obtained from the banks, companies in which the will maker held shares, superannuation funds (etc.). It can take up to six weeks to receive a response from all these institutions. Formal valuations of real estate or antique items may be necessary.

• A certified copy of the death certificate.
• The original Will.
• An affidavit from the executor setting out background information about the deceased, the Will and financial position of the estate. An affidavit is signed in the presence of an authorised witness and has the same importance as evidence given under oath in court; and

Probate is necessary to give the executor the right to deal with certain assets such as real estate and money in bank accounts. Real estate cannot be transferred unless probate is obtained (except to a surviving joint proprietor). Most banks will not allow the executor to deal with money in the will maker’s bank account(s) where the balance is above a certain amount unless probate has been granted.

With small estates, probate may not be required.

If there is no Will the next of kin of the deceased usually has to apply to the Supreme Court for a document called “Letters of Administration”. This document is the court’s formal approval for someone to administer the deceased's estate, effectively acting in the same role as an executor, but called an administrator. Approval is usually granted in favour of the closest next of Kin.

The executor is responsible for lodging any outstanding income tax returns on behalf of the will maker where necessary. The last tax return should also contain a statement of assets and liabilities of the will maker at the date of his or her death.

The estate is also subject to income tax if it earns income, such as rent on real estate or interest on investments, and a tax return may need to be lodged on behalf of the estate. The estate should not be fully distributed until all income tax liabilities are known and accounted for.

There are no inheritance taxes or death duties in Victoria.

If property is given to beneficiaries under the Will, for most transfers there will be no capital gains tax or stamp duty payable by the estate or beneficiaries at the time. However, the beneficiaries may pay capital gains tax when they dispose of the property later.

If assets are sold by the estate, then capital gains tax may be charged to the estate. There will be no capital gains tax on the sale of the will maker’s main residence if it is sold and the sale settles within 2 years of his or her death.

The time it takes to finalise an estate depends on what must be done and how long each step takes. Often third parties such as banks and companies in which the estate has shares are required to supply information, which can take some time to receive.

It is prudent for all the estate’s liabilities to be paid before the estate is finalised.

The law in Victoria says that executors do not have to distribute the estate within 12 months of the will maker's death. It is prudent for estates not to be distributed fully within six months from the time of probate.

Some Wills may require gifts to be held on ‘trust’ until a specific event occurs (i.e., until a minor beneficiary reaches a certain age). In many instances the executor will become the ‘trustee’ of that money and must look after it until the specified event occurs.

In other cases, a Will gift may be left in a trust for a person’s benefit, rather than being left to them. Protective Trusts and Special Disability Trusts are examples of such ongoing trusts.

Where property is the subject of ongoing trust obligations, the executor should discuss them with their lawyer.

Some gifts may be left as life interests only, so the beneficiary is entitled to use the assets but is not free to dispose of them. For example:

• The beneficiary who is given a life interest in a house may live in the property but cannot sell the property except in certain limited circumstances; and
• The beneficiary given a life interest in shares may have the income from a share portfolio but cannot sell the shares and take the sale proceeds.

When that beneficiary dies, the asset that was the subject of the life interest (i.e., the house or shares etc) then passes to the beneficiary who was left the ‘remainder’ interest in the Will.

If the estate has more liabilities than assets, then the estate is insolvent. In this situation, the estate should be declared bankrupt, and the remaining assets used by the trustee in bankruptcy to pay out the liabilities. The executor and beneficiaries would only be liable for the shortfall if they had already taken assets from the estate.

An executor is entitled to be reimbursed by the estate for any amounts they have paid on behalf of the estate, provided they were appropriate amounts.

The executor’s role is often described as a trustee or fiduciary role. In most circumstances, where the executor is a person known to the will maker, they will not receive any financial benefit or payment for taking on the role. However, the executor may receive some compensation for their work in the following circumstances:

• If the will maker sets out in the Will that the executor is entitled to be paid for his or her efforts. Usually, the Will states the payment rate in terms of a percentage of the estate's total assets and/or income.
• Where a gift to the executor is included in the Will instead of the right to apply to the court for remuneration.
• If all beneficiaries agree on an amount the executor should be paid from the estate. Beneficiaries should be encouraged to obtain independent legal advice before agreeing to such a request; and
• If the Supreme Court orders that the executor is entitled to be paid.

The payment to the executor is called a ‘commission’; in Victoria, it cannot exceed 5% of the total value of the estate assets. When a court considers whether an executor should be paid a commission, it considers the work done by the executor and the responsibility and time involved, often referred to as ‘the pains and troubles. The maximum rate of 5% is generally reserved for very complicated and time-consuming estates. Generally the commission rate awarded would not exceed 3% of the total assets.

Executors wishing to receive a commission should keep extensive records of all they have done in their executorial role to justify the commission.

Yes, beneficiaries under the Will may claim a larger share of the assets and others not mentioned in the Will can make a claim for a share.

The court may order that there be a distribution of assets other than as set out in the Will if the court is satisfied that the will maker has responsibility to provide for the maintenance and support of the person claiming further provision from the estate. The will maker has failed to meet this responsibility.

In Victoria, the applicant need not be a relative of the will maker. However, the applicant must show that the will maker had an obligation or duty to make adequate provision for them and that this was not done. There are many factors that the court will consider when considering these types of applications. In general, the courts will look carefully at situations where children or spouses of the will maker have been left out of the Will or been unfairly treated. Consideration will be given to the financial circumstances of the people claiming and their relationship with the will maker.

With more distant relatives or non-relatives, the courts will look at whether there was any special relationship with the will maker and what contribution they made to the building up of the estate or the welfare of the will maker. It is a complicated area of law, and each matter is judged on its own facts.

Anyone wishing to make an application is entitled to do so within six months of the date that probate was granted. If they try to apply after that time, special permission from the court is required.

It is prudent for the executor to hold on to some or all the estate assets for six months from the date probate is granted. If the executor distributes the estate within six months of the date the probate was granted, and a claim is made for further provision from the estate within six months. The executor may be personally liable for any amounts the court requires the estate to pay. The exception to this rule is that the executor may make a distribution to the spouse or partner or children of the will maker of all or part of their entitlement under the Will to provide for their ‘maintenance, support or education’ without any personal liability in the event of a claim by others for provision from the estate.

An executor should not distribute an estate if they have received written notification that someone intends to apply to a court for further provision from the estate.