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Steps in the Administration of a Deceased Estate
The time following the death of a loved one is always emotionally difficult for family and friends.
For those left behind, there is often also the added burden of administering the deceased person’s estate.
Because every person’s circumstances are unique, the administration of every deceased estate is also unique in terms of the work that needs to be done and the issues that may arise.
However, there are certain common elements to every estate administration. The purpose of this article is to provide a summary of the steps that are generally involved in the administration of a deceased estate.
Steps involved in the administration of a deceased estate
The administration of a deceased estate can be roughly divided into four steps:
locating the deceased person’s will (if any), identifying and locating the persons named as executors and beneficiaries, and determining the assets and liabilities of the estate;
complying with the requirements of government departments and other entities;
collecting the assets and paying the liabilities of the estate; and
distributing the estate in accordance with the terms of the will.
Step 1 – locating the will, the executors and beneficiaries, and the assets and liabilities of the estate
The first step involved in the administration of the deceased person’s estate is to locate their will, if they have made one.
This usually involves contacting the deceased person’s lawyer, who usually keeps the original will in safe custody. Most people keep a copy of their will among their personal papers, and you should check those papers carefully as the copy of the will generally have the name and contact details of the relevant law firm written on it.
If the deceased person has not made a will, then he or she has died intestate, and a different procedure will apply.
Assuming the deceased person has made a will, then the terms of the will set out the executors and the beneficiaries of the deceased person’s estate.
The executors are the persons appointed to administer the estate, and it will be those persons who are responsible for carrying out the steps set out below. In many cases, the executors will retain a lawyer to assist them in administering the estate.
The beneficiaries are the persons who are entitled to the deceased person’s estate. They commonly include family members, friends, and charitable organisations.
The initial task of the executors is to identify the assets and liabilities of the deceased person’s estate. This is generally done by examining the deceased’s personal papers to identify any real estate, bank accounts, shares, superannuation, insurance policies, loans, credit cards, and any other assets owned or liabilities owed by the deceased person.
Step 2 - complying with the requirements of government departments and other entities
The second step involves writing to various government departments and other entities to advise them of the death of the deceased person and to comply with their requirements for finalizing the deceased person’s affairs.
Some of the organisations commonly involved include the following, although this list is by no means exhaustive:
- share registries;
- superannuation funds;
- insurance companies;
- the deceased’s employer;
- the Australian Taxation Office;
- the Australian Electoral Commission;
- the Department of Veterans Affairs;
- Queensland Transport;
- electricity and gas service providers;
- telephone companies and internet service providers; and
- the local council.
Step 3 – collecting the assets and paying the liabilities of the estate
The third step in the administration of the estate involves the collection of the estate assets and the payment of the debts of the estate.
In many cases, particularly where the estate contains assets of more than nominal value, it will be necessary for the executors to obtain a grant of probate of the deceased’s will in order to administer the estate. More information about what is involved in obtaining a grant of probate is contained in the article ‘Probate and letters of administration’.
Where the assets of the estate include real property, it will be necessary to arrange for the title to that property to either be transmitted:
(a) into the names of the executors of the estate if the property is to be sold; or
(b) into the names of the beneficiaries who are entitled to the property if they wish to receive the physical property, rather than the net proceeds of sale.
This requires an application for the transmission of the title to the property to be lodged with the Land Titles Office.
Where the deceased has bank accounts, it will be necessary to comply with the requirements of the relevant bank in order to collect the funds contained in those accounts, and to pay the balances owing on any loans or credit card accounts.
If the deceased person owned shares, it will be necessary to liaise with the relevant share registry and/or the Australian Securities and Investments Commission, and stockbrokers in order to either sell the shares or arrange for them to be transferred to the beneficiaries entitled to them pursuant to the will.
The deceased’s motor vehicle can either be sold or transferred to an entitled beneficiary, which generally requires documents to be lodged with Queensland Transport.
If the deceased person had superannuation, it will be necessary to liaise with the relevant superannuation fund in order to obtain the release of the superannuation entitlements. Depending on the circumstances of the deceased, the superannuation entitlements might be released directly to the deceased’s dependants, or to the estate.
Where the deceased held life insurance, it will be necessary to provide the information required by the relevant insurance company in order to collect the proceeds of the policy.
If the deceased had private medical insurance, it may be possible to obtain a refund of any unused portion of the premium.
It may be necessary to prepare a tax return for deceased up to the date of death, and for any prior financial years for which he or she did not lodge a tax return.
It may also be necessary to prepare an estate tax return for the period of administration of the estate.
Family members or friends often pay any bills which are or become owed by the estate, such as funeral, medical, electricity, telephone, gas, rates and water accounts.
Details of any accounts paid by friends or relatives should be kept so that they can be reimbursed once sufficient funds have been collected.
Step 4 – distribution of the estate to the beneficiaries
Once all assets have been collected and all liabilities of the estate have been paid or at least adequately provided for, the estate can be distributed to the beneficiaries.
Depending on how quickly the administration of the estate progresses, it might be appropriate to make an interim distribution of part of the entitlements of the beneficiaries, with the balance to be paid once the administration of the estate is completed.
Estate administration accounts
Towards the completion of the administration of the estate, a set of estate administration accounts is prepared, showing all assets and liabilities of the estate, and how the estate has been distributed to the beneficiaries.
For assistance in the administration of a deceased estate, please contact Glenn Atkinson of our office on 07 3009 8406 or firstname.lastname@example.orgGavin McInnes