WHAT IS A PROBATE REQUISITION?

When someone lodges a probate application with the Supreme Court of NSW, there are exacting requirements for it to be complete and accurate. If the application is incomplete or inaccurate, the court will issue a probate requisition seeking additional information, documentation, or that the application be corrected. The process of obtaining probate of a will is delayed until the requisition is satisfied, and may increase the fees payable to the Court to obtain probate. This article explains the purpose of a probate requisition and highlights some common mistakes made in probate applications that lead to requisitions.

What is probate?

An executor appointed by a will or administrator of a will applies to the probate registry of the Supreme Court for a grant of probate to administer a deceased estate. A grant of probate verifies that the will is the most recent, valid testamentary instructions of the deceased. The process of applying for a grant can be complicated and a necessary requirement can be easily overlooked or a small mistake made. Even solicitors occasionally receive a requisition when seeking a grant of probate.

What is a probate requisition?

If a probate application is inaccurate, there can be considerable delays. Sometimes the Supreme Court issues a requisition which notifies the applicant that they have not fulfilled at least one of the requirements of the application. A requisition forces the executor to file further documents with the court or amend existing documentation. Even if the forms are perfectly filled out, a requisition may still be issued if the Court needs further information to clarify some aspect of the application. For example, a requisition may be issued simply because a will has an unexplained mark. Even a staple mark in the corner of a will may prompt a requisition because the court is concerned that there are pages missing.

A typical requisition is a one-page notice, which notes the case number and title of the application, and asks the recipient to answer specific requisition/s. A copy of the requisition is filed with answers to the requisition/s. Fees may be payable when lodging additional documentation.

You cannot ask the Court to further explain a requisition. In the 2001 case of Re Estate of Max Frederick Dippert, the Court reprimanded the solicitors for answering a requisition from the Registrar with a four-page request for further and better particulars on the requisition. The Court made it clear that this was not the appropriate way to respond to a requisition. The Court emphasised that if an applicant or solicitor is unsure of how to respond to a requisition, they need to consult counsel, not “interrogate” the Court.

How to avoid a probate requisition

If you are unfamiliar with the process of obtaining a grant of probate, it can be difficult to correctly complete the documentation.  We highly recommend that you consult an experienced solicitor to avoid mistakes. However, if you wish to apply without obtaining legal assistance, adherence to the following steps will limit the probability of requisitions:

  1. Locate the original will and death certificate and check them for any issues which could delay probate. Originals (not copies) must be submitted for probate. If there are any issues with the original will, such as damage, provide a sworn affidavit with a detailed, formal explanation of how the damage occurred.
  2. Exactly follow the required wording of the application to avoid miscommunication.
  3. Check that the names (and aliases) and contact details of the deceased, beneficiaries and executors are correct and complete. A testator may use an anglicised version of their name on some documents and their full legal name on land titles and death certificates.
  4. Check that the dates on the application match the date of the will and of the death certificate.
  5. Consider whether there are any unusual circumstances involved in the death of the testator. For instance, if the deceased died overseas, the affidavit should detail how the body was identified, etc.

Applying for a grant of probate can be intimidating, and small mistakes and omissions can be costly and time-consuming. We can help you make a probate application so that the process is as smooth as possible. We can also help if you receive a probate requisition. If you have been appointed as an executor of a will, contact us for advice and support.

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What is a Testamentary Trust?

Testamentary Trusts are created under a Will and therefore come into effect only after the death of the person who made the Will (the testator).

The principal objective of a Testamentary Trust is to hold and manage all or some of the assets and distribute them to the beneficiaries as per the terms of the Will. A trustee must be nominated to manage the Trust assets.

Who can be a trustee?

You can choose anyone to be a trustee, including the executor of your Will or your spouse. However it should be someone you trust, as the trustee acts in your beneficiaries’ best interests.

What is the difference between a Will and a testamentary trust?

A Will is a legal declaration by which a testator enforces their wishes to distribute their assets upon their death. It also appoints an executor and identifies the beneficiaries of your Will.

A Testamentary Trust is where the assets of the Will are held and managed by the trustee.

Who can be beneficiaries of a Testamentary Trust?

The same beneficiaries that you have outlined in your Will.

What types of assets are held in a Testamentary Trust?

  1. Investments;
  2. Land or property;
  3. Cash; and
  4. Other valuable assets, including paintings, furniture and jewellery.

What are the advantages of a Testamentary Trust?

1. Flexibility for the beneficiaries

A Testamentary Trust gives you flexibility in distributing assets to the beneficiaries.

You can set up a trust to suit your own individual requirements> you can also allow your children to use it for their own benefit.

2. Asset protection

Assets held by a Testamentary Trust are protected up to a certain level because they are held by a Trust – they are not owned by the beneficiaries. Consequently, assets held by the Trust are unavailable to the creditors or spouse of the beneficiaries following the breakdown of a marriage or de facto relationship.

3. Protection from irresponsible beneficiaries

The trustee holds the assets on behalf of beneficiaries who the testator considers likely to:

  • Be unable to handle their share by themselves, or
  • to spend their share irresponsibly.

4. Income tax benefit

The principal benefit of this kind of trust is the income tax redemption.

In a normal Will, beneficiaries usually invest the funds they receive to earn an extra income, which is added to their salary, and they pay tax at the usual marginal rates.

In a Testamentary Trust, the trustee distributes the Trust income to its beneficiaries. If the beneficiaries further distribute the funds to their children who are not working, then they can receive an income tax benefit for each child.

5. No cost for transferring assets to your trust

There are tax advantages to using a Testamentary Trust. Assets can be paid into the trust without paying transfer duty or Capital Gains Tax because the transfer takes place through your Will.

6. Superannuation & life insurance

Generally, superannuation proceeds fall outside of the assets in a deceased estate, and the distribution of the proceeds are determined by the rules of the fund. However, a testator may elect to direct the trustee of the superannuation fund to pay the proceeds of the deceased’s superannuation or death proceeds to their Legal Personal Representative (i.e. the executor).

The executor would distributed the proceeds in accordance with the terms of the Will. If the Will includes a testamentary trust, the executor may direct the proceeds to the trustee of the trust rather than distribute them directly to the beneficiary. Those assets would then be held in the beneficiary’s personal capacity.

The proceeds would then be distributed to the executor, who would have the discretion to distribute the proceeds using the testamentary trust established in the Will.

7. Incapacity

Where the beneficiaries are incapacitated, the Trust allows the family of the beneficiaries to manage the assets for their benefit (rather than relying on an external agency).

Can a Testamentary Trust be contested in NSW?

Yes, as a Testamentary Trust is established by a Will, it can be challenged or contested under the usual legislative provisions.

If you are contemplating setting up a Will with a Testamentary Trust, contact us for advice and assistance.

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Mirror Wills vs Mutual Wills – what’s the difference?

A mirror will is a simple will that is, for the most part, identical to that of their partner or spouse. a mutual will is where each partner or spouse makes a will which forms a binding contract between them.

What is a Mirror Will?

Mirror Wills are usually used by couples. They are mainly identical to and reflect each other.

They may be changed or revoked at any time by either Will-maker.

Mirror Wills: Positives

A mirror will can be changed at any time, even after the death of the other will-maker. A mirror will may be useful for young couples and blended families as they may need to make changes in the future.

Mirror Wills: Negatives

Changing both mirror wills or changing or revoking only one of the mirror wills does not require notice to be given to the other will maker. For example, a surviving husband may decide that he no longer wants his step-children to inherit anything, including the assets he acquired through his first wife’s estate. The husband may revoke his mirror will and create a fresh will which excludes the step-children.

There are cases where a surviving spouse re-marries and has more children, then changes his or her Will to leave his or her estate to the new spouse and new children and cuts out the children from the first marriage.

What is a mutual Will?

Mutual wills (also known as mutual will contracts or binding wills) form a legally binding contract between two people. Both wills are drafted in terms agreed by the will-makers; and the wills prevent either will-maker from revoking or amending their will without the other’s agreement. After the death of the first will-maker, both wills become irrevocable and cannot be amended.

Mutual wills work as a contract to protect the estate interests of both will-makers’ beneficiaries.

Mutual Wills: Positives

Where both will-makers have agreed to the terms in their wills, the surviving party is bound by this agreement and can be sued for breach of the agreement.

If either will-maker changes their will contrary to the agreement, the courts may enforce the original agreement.

If the surviving party unreasonably exhausts the deceased’s assets, beneficiaries may sue for breach of contract.

Mutual Wills: Negatives

Mutual Wills do not prevent challenges to the estate.

Circumstances may change after the will makers have signed the mutual will agreement, which could disadvantage the survivor (e.g. remarriage or additional children).

The survivor may attempt to frustrate the operation of the mutual will agreement by depleting the estate assets or by changing the way these assets are owned.

What now?

Contact us for advice and assistance in establishing mirror wills or mutual wills.

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Can I include my overseas assets in my Will?

In multicultural Australia, it’s common to hold assets overseas as well as in Australia. But have you considered what happens to your overseas assets if you pass away? Does your Australian will cover them or do you need a separate will in each country in which you have assets?

If you make a will in New South Wales, it will cover assets that you own in other parts of Australia. But you can’t assume that any overseas assets you have will be included in your Australian will. Every country has its own rules and laws that apply to your assets when you die.

There are a couple of options available if you have assets in different countries.

An international will

One option is to make an international will. This is made in accordance with the Convention Providing a Uniform Law on the Form of an International Will 1973 (the Convention). A country that is a party to the Convention will recognise a will made in accordance with the requirements of the Convention. Whether an international will is appropriate depends on the country in which the assets are located and whether it is a party to the Convention.

Australians who have made an international will may find it easier to prove the validity of the will in a country which has adopted the Convention. But although the Convention provides uniformity on the formal requirements for a will, it doesn’t address:

  • the local laws which apply;
  • who can apply for probate;
  • where probate can or should be taken;
  • family provision applications (who can make a claim and in which jurisdiction);
  • inheritance rules specific to each country (who can inherit and what they can inherit);
  • tax and estate administration requirements; and
  • revocation of the will.

These things continue to be governed by:

  • where your assets (particularly immovable assets such as land) are situated;
  • the jurisdiction where you make the will;
  • where probate is granted; and
  • where you die or are domiciled.

A separate will in each country

The other option is to make a local will in each of the countries in which you hold assets. This option is usually preferable because:

  • it allows executors in different jurisdictions to apply for probate concurrently and independently of each other. If there is only one will, probate must be obtained in one jurisdiction then re-applied for in the other jurisdictions, which can cause delay;
  • if there is only one will for all property, having probate of the original will granted in one country and then in the others may cause difficulties, because the Court in each country will want to retain the original will.
  • there may also be delays caused by the translation and interpretation of   will made in another country;
  • there may be tax savings and reduced court fees where a particular country is dealing only with property within that country rather than with all of your estate’s assets;
  • administrative difficulties can occur if the original will is held in one country while there are assets in another country which have to be distributed;
  • the probate process can be significantly simplified for your family and executors because the executors have a local legal advisor to guide them through the process and the cultural differences.

When making wills in separate countries, it’s very important to advise each of your lawyers that you either intend to make, or have already made, a will in another country. This is to ensure that your wills don’t contradict each other or that one will doesn’t inadvertently revoke (cancel) another.

An international will may still be appropriate if most of your assets are in Australia with a modest asset (such as a bank account) in a signatory country where a grant of probate is likely to be necessary.

What now?

If you have assets in countries other than Australia, contact us for legal advice as to the best structure for your situation to ensure that your assets are disposed of in accordance with your wishes and that the estate administration process is as cost-effective and streamlined as possible.

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Estate Planning and Life Insurance

The purpose of life insurance is to provide a cash payment for your loved ones in the event you unexpectedly pass away. The policy may also provide a payment if you are permanently disabled or suffer a critical illness. The payment can be used to support your spouse and children or to pay down debts. It can also be used to meet your tax obligations, to give a beneficiary cash in lieu of other assets, or for a donation to charity.

You can hold your life insurance through a policy taken out personally or through your super fund.

It is important to consider who will receive the proceeds from your life insurance policy and how to minimise taxes and other claims on the cash.

Who will receive the proceeds from your policy?

There are some traps, which could mean the difference between the money going directly to your family, or being used to pay outstanding debts and obligations.

Holding the policy in your own name.

If you are the owner of the policy, the proceeds will go to your Estate and be dealt with in accordance with your Will. If you do not specify in your Will who is to receive the life insurance proceeds, they will form part of your “residual Estate” and be paid to your residual beneficiaries.

If you have outstanding debts or other claims against you when you pass away then your Estate assets (including the proceeds from the policy) may be used to pay these debts and obligations, which may result in your dependents missing out.

A person may challenge it your Will if they consider that it does not adequately provide for them. If the challenge succeeds, they may take a larger portion of the insurance proceeds than you intended.

Naming a beneficiary to receive the proceeds.

If instead you name a beneficiary under the policy, the proceeds will not be paid to your Estate: they will go directly to the named beneficiary who will receive the proceeds outright after your passing.

If a beneficiary has unsatisfied debts or liabilities, the proceeds may be used to satisfy those claims. If the beneficiary is a child, they will be entitled to the full amount of those proceeds when they reach 18, which could be too early for them to properly handle the money.

Consider using a ‘testamentary trust’ in your Will.

If you want the proceeds from life insurance paid to your Estate, you should consider including a testamentary trust in your Will to ensure that your objectives for your life insurance are met. A testamentary trust will:

  1. Ensure that the proceeds are passed to your intended beneficiaries, as and when you direct. For example, you may specify that the proceeds are to be paid to young beneficiaries over time;
  2. give your beneficiaries capital gains and income tax advantages, particularly if they are under 18; and
  3. Provide a significant level of protection for assets in the event a beneficiary becomes bankrupt or divorced.

Insurance through super

If you hold a life insurance policy through your super fund, then your options regarding who receives the proceeds are more restricted and the tax considerations are more complex than if the policy is held outside super.

If your life insurance policy is held through your super fund:

  1. You may nominate either your Estate or a person who qualifies as a “dependent” for superannuation law purposes to receive the super proceeds. If your nomination is not a valid binding nomination, the trustee of the super fund has the authority to overrule your nomination to ensure that your benefits are distributed appropriately; and
  2. if the beneficiary is not also a “dependent” for tax law purposes, (which is a slightly different definition than for superannuation law purposes) there may be an additional layer of tax on the payout to the beneficiary.

Contact us to ensure that your life insurance ties in with your estate planning and that your dependents are properly looked after as you intend.

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Life Interest vs Right to Reside

When you own a property or part of a property in your own name, your Will determines what happens to that property. You may wish to give a loved one such as your partner or spouse (“the beneficiary”) the ability to live in a property, yet ensuring that it ultimately ends up with someone else (e.g. children from a previous relationship). One way to do that is by allowing the beneficiary to reside in a property (i.e. to have a right in the property) by giving them a Right to Reside or a Life Interest.

Right to Reside

A right to reside is where you give the beneficiary the right to live in your property for the period specified in your Will. The right to reside can be for the life of the beneficiary or for a specified time (e.g. 12 months from the date of your death), or until an event happens (e.g. when they remarry or enter into a de facto relationship).

The beneficiary’s entitlement to live in the property is normally subject to conditions such as maintaining the property and paying property expenses. The beneficiary has a right to live in the property but not to any income it generates.

The beneficiary’s right in the property is relinquished once they have ceased residing in it. When their right to reside ends, the property can either be:

  1. sold and the proceeds paid to the “remainder” beneficiaries named in the Will; or
  2. transferred into the names of the beneficiaries.

Some reasons you may want to include a right to reside in your Will include:

  • If your home is in your sole name and you want it to go to your children upon your death, but also want your partner to reside in the property until his/her death; or
  • You have an adult child who you want to have the benefit of residing in the property but not the income from renting it out; or
  • You have a new partner and children from a previous relationship, and you want the property to go to those children and your new partner. However, you want to allow your new partner to live in the property so that they are not forced out.

Life Interest

Leaving your beneficiary a life interest in your property is similar to a right to reside, but it gives the beneficiary more power and rights in relation to the property. The beneficiary (“the life tenant”) retains the interest in the property for life. On their death it reverts to the estate and is paid out in accordance with your Will.

The beneficiary has no entitlement to the capital of the property but is entitled to income generated from the property during their lifetime.

A life interest is a way of giving the beneficiary the right to use the property after you have passed away without them having actual ownership. The life tenant can live in the property or lease it and live off the proceeds. They can also sell the property and either use the sale proceeds to buy and live in a replacement property or invest the sale proceeds and live off the income. The life tenant cannot be forced to move out of the home or sell it against their wishes.

Example of a life interest

Christine and Chris are in relationship. This is the second relationship for both and they each have children from a previous relationship. They buy a property together as tenants-in-common, each holding a half share. They leave each other a life interest in the property in their Will and when that ends their share in the property goes to their own children.

Chris dies first. The life interest he leaves to Christine means that she can stay in the property for the rest of her life. She continues to own her half share in the house and has a life interest in Chris’s half share.

Christine decides the home is too big for her now that she is alone. In conjunction with Chris’s executor, the home is sold and a unit is purchased for Christine to live in. The unit cost less than the sale proceeds from the property. Christine uses her own money to pay half the purchase price of the unit. The other half is owned by the estate with Christine as the life tenant. In accordance with Chris’s Will, the extra money is held in trust and the income is paid to Christine.

When Christine dies, her right in the life interest in Chris’s share in the unit is relinquished. The unit is sold with Chris’s children receiving half of the sale proceeds and Christine’s children receiving her half.

Contact us now if you would like to include a right to reside or life interest in your Will.

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Executors in NSW

An Executor is the person appointed in a Will to ensure that the wishes of the will maker (called the testator) are carried out in accordance with their Will.

An Executor’s duties include:

  • making funeral arrangements;
  • identifying any debts including any tax payable;
  • identifying the deceased’s assets and ensuring their security;
  • applying for a grant of Probate with the NSW Supreme Court (the Court)(if required);
  • paying all debts and tax from the assets; and
  • distributing the balance of the assets in accordance with the deceased’s Will.
The process in carrying out the Executor role.

The deceased’s assets are frozen until Probate has been granted. An Executor can access the deceased’s bank account only to pay funeral expenses and court fees relating to the grant of Probate.

A grant of Probate is generally required unless the estate is small (less than say $15,000.00), or if the deceased held all their assets jointly with another person(s). Jointly held assets (e.g. real estate held as a joint tenant) are not transferred in accordance with the deceased’s Will: they become the surviving joint owner’s asset.

If a grant of Probate is required, the Executor must identify the deceased’s assets and liabilities. An application for Probate, setting out the deceased’s assets and liabilities and their values and other evidence relating to the death and the Will, is prepared and filed with the Court. If the Court is satisfied that the application relates to the deceased’s last Will, and is supported by evidence, it will generally grant Probate.

After Probate is granted, the Executor(s) can administer the estate, obtaining monies from financial institutions, selling or transferring property, paying debts and tax and distributing the proceeds of the estate in accordance with the Will.

Before distributing the deceased’s assets, the Executor should also:

  • obtain expert accounting advice as to the estate’s tax liabilities, including Capital Gains Tax. The Executor could be personally liable for any unpaid tax.
  • post a notice on the Court website that he or she is going to distribute the assets of the estate and giving anyone who believes they have a claim on the estate one month to make the claim. The law protects an Executor who posts such a notice from claims by creditors and other claimants of whom the Executor is unaware at the time of distribution. However, claims may be made against the beneficiaries (including the Executor if he or she is also a beneficiary) of the estate.
The Executor’s role

Managing and administering an estate includes carrying out the deceased person’s wishes set out in the Will.

The Executor’s role is one of significant responsibility which should be approached with care and honesty. The Executor must manage and protect estate assets, ensure all estate liabilities are paid, and protect the interests of the estate and its beneficiaries.

Refusal to act as executor

An Executor can refuse to accept the position of executor. Ideally they should do so before taking any steps in relation to the administration of the estate.

If the decision to not act as Executor occurs after Probate is granted, the Executor must obtain the Court’s consent to cease acting.

Trustee duties

Executors also take on the role of Trustee of an estate. Trustees’ duties include to:

  • act personally;
  • act unanimously where there are multiple trustees;
  • act in good faith;
  • consider how distributions should be made and to who and when;
  • not be dictated to by others such as beneficiaries; and
  • avoid fettering any discretion they have.
Duty to act personally

Executors have a duty to act personally in the administration of an estate. If there are multiple Executors, they should consult with each other.

Executors can delegate some of the actions and tasks for an estate to others. Section 53 of the Trustee Act 1925 (NSW) (the Act) directs that trustees may employ appropriate ‘agents’ to carry out part of the administration of the estate, who can be paid from the estate.

Executors often employ solicitors to obtain a Grant of Probate and carry out the administration of the estate. However, delegation of tasks does not absolve an Executor of their responsibilities. The appointment of an Executor or trustee is one of trust and personal confidence by the will-maker.

Duty to not fetter discretion

If there is more than one Executor, decisions must be reached jointly, by majority or unanimously, as specified in the Will. All co-executors must co-sign and jointly consent to administrative decisions.

Payment

Sometimes an Executor can be paid for carrying out the role following an application to the Court. However, if an Executor receives a benefit under the Will, this is usually presumed to be payment.

If you have been appointed as an executor in a Will, contact us now for advice and assistance in administering the estate.

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Deeds of Family Arrangement

What is a deed of family arrangement?

The following article is restricted to the law applying in NSW.

A deed of family arrangement (DFA) legally changes the division of a deceased person’s assets between the beneficiaries. It can either change the terms of a will or change the distribution under the rules of intestacy (e.g the way assets are divided if the decease person had no will).

The Rules of Intestacy

The rules of intestacy are set out in the Succession Act 2006. They set out the way in which the assets of a deceased person no will (an intestate estate) are distributed based.

Under the formula, the deceased’s spouse is entitled to the majority of assets, including an amount of money taken from the estate and gifted to the spouse (a ‘statutory legacy’).

The spouse will be entitled to the statutory legacy ($350,000 adjusted by the CPI) regardless of how much the estate is worth. If the value of the estate is under $350,000, the spouse receives the whole estate.

A DFA can also give the legal personal representative of the estate (i.e. the executor if there is a will or the administrator if there is no will) protection against future claims.

A DFA is valid only if it:

  1. is signed by the legal personal representative and all the beneficiaries; and
  2. has the consent of all the beneficiaries (over 18 years of age) entitled under the will or the intestacy rules.

When might I need a deed of family arrangement?

A DFA allows the beneficiaries to change the distribution of assets to better suit their needs. Circumstances in which it may be used include:

  1. When the beneficiaries wish to change the terms of the Will.

Situations in which a deceased person’s Will may have to be changed to suit the circumstances of the beneficiaries include:

  • if the Will is old and so doesn’t take into account births and deaths that have occurred since it was made; and
  • if the person entitled to inherit most of the assets wants to pass their share on to other beneficiaries in the will (e.g. give their share to their children).
  • When there is no will and the beneficiaries agree to change the way in which the rules of intestacy would distribute the estate assets.

If the deceased’s adult children with their own families would benefit from a share of the estate, a DFA could ensure that all of the deceased’s immediate family are left something.

  • When someone wishes to challenge a will

If an “eligible person” (a spouse, a child, a former spouse or a dependent) is aggrieved that they have received nothing or not enough from a deceased estate, they may be able to challenge the distribution in Court (a ‘family provision’ claim). If mediation does not resolve a family provision claim, it may have to be heard by the Court. This can take years to resolve, parties to the application can become estranged from each other, and it can be very expensive.

Court proceedings can be avoided by completing a DFA. It allows the aggrieved person to come together with the other beneficiaries and design a new plan for the distribution of the assets which is acceptable to all parties.

When can a deed of family arrangement not be used?

A deed of family arrangement cannot be used to reduce the entitlement of someone under 18 years, or for a person with an intellectual disability. That requires a Court order.

Capital Gains Tax (CGT) Considerations:

Under Income Tax Assessment Act 1997 (Cth) (s. 128.20), the passing of an asset to a beneficiary of a deceased estate is exempt from capital gains tax (CGT).

A DFA may be covered by this exemption only if it is used to settle a claim to participate in the estate (such as a family provision claim). The ATO ruling ‘TR 2006/14’ provides further guidance as to this exemption. If the deed does not meet the requirements of the above ruling, CGT may apply.

Transfer Duty:

There may also be transfer duty (formerly called ‘stamp duty’) issues to consider when drafting a DFA.

Transfer duty payable on the transfer of estate assets is minimal (currently $50). Legislation governing transfer duty is State based: there is no Australia-wide set of rules. In NSW, transfer duty on the transfer of assets following a DFA is payable on the value of assets over and above what the beneficiary would have received under the will or intestacy rules. (s63 Duties Act 1997 (NSW))

Need a Deed of Family Arrangement?

Contact us to discuss the preparation of a DFA.

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Probate vs Letters of Administration

What’s the difference between Probate and Letters of Administration?

Probate and Letters of Administration are legal terms used in Wills and Estates Law to describe two situations that can occur with a deceased estate.

Probate

The executor named in the Will of the deceased applies to the Supreme Court of NSW (the Court) for Probate.

Once the Court has made a Grant of Probate, the executor can administer the estate. Administration of the estate includes gathering in the assets and paying the debts of the estate then distributing the remaining assets to the beneficiaries named in the Will. The executor also deals with any challenges to the Will, such as family provision claims or claims that the deceased’s Will is not valid.

Letters of Administration

Letters of Administration is an application made to the Court where:

  • the Will cannot be located; or
  • there is a Will but no executor named in the Will; or
  • the named executor has died or is unable to act.

When the Court grants Letters of Administration, the administrator it appoints deals with the estate in the same way as an executor (i.e. paying estate debts and administering the estate in accordance with either:

  • the Will, or
  • if there is no Will – the Laws of Intestacy.

Summary

The difference is therefore:-

  • Probate – the deceased left a valid Will with an executor who is able to act; or
  • Letters of Administration – the deceased left a valid Will with no executor, or an executor unable to act, or did not leave a Will.

The Court requires more information to determine an application for a grant of a Letter of Administration so it can take longer and be more expensive than an application for a grant of Probate.

Naming multiple Executors and/or a substitute Executor avoids the additional time and expense of applying for a grant of Letters of Administration.

Contact us now for expert legal advice on Wills and Estates Law.

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Letters of Administration in NSW

LETTERS OF ADMINISTRATION IN NSW

The Supreme Court of NSW (The Court) issues a Letter of Administration to legally appoint an applicant as the administrator of a deceased estate. This type of grant is issued where the appointed executor is unavailable to take responsibility for the estate or when the deceased died partially or wholly intestate (i.e. having no will).

What is a Letter of Administration?

The Court can issue Letters of Administration for the estates of people who resided in or owned property in New South Wales. A Letter of Administration is most commonly granted when someone dies intestate. The grant authorises the applicant to assume responsibility for the assets and liabilities of the deceased estate. Asset holders such as government departments and banks will generally release assets to the administrator only after sighting a Letter of Administration.

Where the deceased has a valid will appointing an executor, a Letter of Administration is generally not required. However, when the nominated executors are unable or unwilling to act in the role, an application for a Letter of Administration with the Will Annexed must be made to appoint an administrator.

Who is eligible to apply for a Letter of Administration?

The Probate and Administration Act 1898 lists the categories people eligible to apply. The Court will issue a Letter of Administration to a competent adult who is a potential beneficiary or creditor of the estate (usually a close relative of the deceased such as a spouse or child).

A person living outside Australia cannot apply for a Letter of Administration. If the only eligible beneficiary lives overseas, they must appoint a solicitor to apply for a Letter of Administration in their stead.

If there are several eligible parties, they can either apply jointly, or one beneficiary can apply with the endorsement (by written affidavit) of any other beneficiaries. If the parties cannot agree who should apply for the grant, the Court will assess the merits of the competing claims. In this scenario, the Court generally makes the grant to the deceased’s closest living relative (e.g. their spouse or de facto partner or an adult child).

If assessment of the competing claims is likely to delay administration of the estate, the Court can appoint a special administrator temporarily pending the choice of an actual administrator. A special administrator is not a replacement for an administrator and has limited powers over the estate.

If no relative is willing to apply, the court can appoint the Trustee & Guardian, or accept an application from another interested party (e.g. an estate creditor).

What are an Administrator’s Duties?

The administrator is authorised to manage and protect the deceased estate according to either:

  1. the deceased’s will; or
  2. if the deceased died intestate, according to the laws of intestacy in NSW.

The administrator is responsible for collecting together and valuing the estate’s assets and discharging the estate’s debts. They lodge a final tax return for the deceased and establishes any discretionary trusts according to the will. They are responsible for protecting the estate (e.g. defending it from Court challenges).

How long will an application take to process?

An application may be filed with the Court up to six months after the deceased’s death. A late application may be accepted if:

  1. the Court determines that there is a reasonable excuse for the delay, and
  2. the parties agree to the appointment of the administrator.

The administration of the estate is usually completed within a year of the date of death. However, complexities in the administration, or unreasonable delay by the administrator, may cause delays. If the Court considers that the delay is unreasonable, it may replace the administrator.

An application for a Letter of Administration may take up to 4 months to process depending on how many cases the Court has when the application is filed.

Contact us for advice and assistance in applying for a Letter of Administration.

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