Probate in NSW

When a loved one passes away leaving a significant estate, an application must generally be made to the Supreme Court of NSW before the holders of the estate assets will release them to the executor to pay the estate’s debts and distribute the balance to the beneficiaries according to the will

If the deceased made a Will appointing you as an executor, you may have to apply for a grant of probate. 

 

Need help administering a deceased estate?

With extensive experience in probate and estate administration, we advise, support and guide you through the process of administering the estate.

We can help ease your stress by:

  1. advising organisations including asset holders of the person’s passing; 
  2. obtaining a grant of probate; 
  3. providing asset holders with copies of the Will, death certificate, probate, executor’s identification and other documents and engrossing forms required by asset holders;   
  4. gathering in the estate assets, paying debts, and distributing the balance in accordance with the Will.

Probate in NSW

What is a grant of probate?

A deceased estate’s executor must collect the estate’s assets, pay it’s debts, then distribute the assets to the beneficiaries named in the Will. In NSW, a grant of probate is a legal document issued by the Supreme Court of New South Wales (the Court) authorising an executor to follow the provisions of the Will in managing a deceased estate.

Once the executor gives a certified copy of the grant of probate to the estate’s asset holders (e.g. banks, share registries, retirement villages holding a bond), they must transfer the assets to the executor or to beneficiaries named in the Will. 

The Court can grant probate only for assets in New South Wales. An application for probate may have to be made for assets located in another state or country to that State or country’s Court. In some instances, only a reseal of the NSW grant may be required for assets located outside NSW.

Must I obtain a grant of probate?

Some deceased estates do not have to obtain probate. For example, if estate assets are of minimal value, an asset holder may release assets without the requiring a grant of probate.

Assets held by the deceased as a joint tenant with a surviving beneficiary do not require a grant of probate. Where the deceased had joint ownership of an asset (i.e. where the co-owners [joint tenants] did not own distinct shares of the property), the property automatically passes to the surviving joint tenant/s. 

Probate is required if the deceased owned real estate in their sole name or as a tenant in common (i.e. as a distinct share) with a surviving beneficiary/s.  

What are the asset holder’s requirements to release assets?

Asset holders differ in their requirements for releasing assets. An asset holder may agree to transfer the assets without a grant of probate if the executor gives them documents such as:

  • a certified copy of the death certificate; and
  • a certified copy of the will;
  • a declaration by the beneficiary/s as to their entitlement, and/or;
  • an indemnity by the executor/s (in case there is a later claim on the estate).

Proceeds of a life insurance policy may not be considered part of the estate. Superannuation is not part of the estate.  A superannuation fund or life insurer may nonetheless require probate before they will determine who is entitled to superannuation or insurance proceeds.

What’s the time frame for lodging an application?

An application for probate should be filed within 6 months after the death of the deceased.

Who can apply?

Probate can only be applied for if the will-maker (testator) has nominated an executor/s in the will. In an executor has not been nominated, a beneficiary named in the will can apply for Letters of Administration with the will annexed.

A testator may nominate an executor as their first choice (the instituted executor/s) and an alternate executor (the substitute executor/s) if the instituted executor predeceases them or is unable or unwilling to act. 

Marriage or divorce after executing a will

Unless a will says it was made “in contemplation of marriage”, a Will may be revoked by a testator marrying or remarrying after making it. 

Divorce also normally revokes the former spouse’s entitlement under the will and their rights to be the executor.

Renouncing or resigning as executor

If an executor appointed under a will is unwilling to take on the role, they can renounce probate and the remaining executor/s can apply. 

An executor/s cannot renounce probate after a grant has been made unless the Court revokes the grant.

An executor may delegate their duties only to the NSW Trustee and Guardian or a trustee company.

Applying for Probate on a copy of a will

If the original will cannot be found but there is a copy believed to be the deceased’s  last will, the executor named in the copy may apply for probate.

The executor named in the copy must undertake extensive searches for and make enquiries about the will. Evidence indicating that the deceased did not intend to revoke the will may also be required.

Applying for probate of an informal will

A will must be signed by the testator and two witnesses who saw the testator sign. Nevertheless the Court may grant probate if a will fails to meet these requirements if it is satisfied that the deceased intended it to be their will.

Caveats and contested proceedings

A person with an interest in a deceased estate can file a caveat which prevents the Court issuing a grant of probate for 6 months. 

An applicant for a grant of probate seeking removal of a caveat can assert that the caveator has no standing or there is no real dispute as to the will’s validity.

Reseal of Probate

What is a reseal of probate?

A grant of probate is state-based and probate laws can differ between states and countries.  Assets not located in NSW cannot be dealt with under a NSW grant of probate.

A reseal of probate is an application to another state’s Supreme Court to have probate granted in one state recognised in another state. 

Obtaining a Reseal of Probate in NSW

A reseal of a grant of probate issued in NSW allows the executor to also deal with estate assets located in other states. An executor applies to the Supreme Court of NSW (the Court) for it to recognise the original grant by resealing the original grant with it’s seal.

The Court will only recognise grants made in one of ‘Her Majesty’s Dominions’ (being certain Commonwealth countries and other Australian States and Territories. 

Why do I need to obtain a Reseal?

The Grant of Probate is proof that the named executor or administrator is authorised to deal with the estate’s assets. The asset holder may require the grant before releasing the asset. If the grant has been obtained outside NSW, the asset holder may require the Court to approve the grant.

What is the effect of a Reseal?

An asset holder must accept a resealed foreign grant as if it had been made by the Court. The executor can then gain access to and distribute the deceased’s assets located in NSW to beneficiaries.

Must I obtain a Reseal?

Depending on the type, size and value of the asset(s) located in another state, you may be able to avoid having to obtain a reseal in that state by signing a declaration and/or indemnity as required by the asset holder. Each asset holder will have their own requirements, generally including proof of the original grant and death certificate.

Shares may be released or transferred without the need for the grant to be resealed in another state if the grant has been obtained in Australia and a section 1071B statement (which may be downloaded from the share registry) is completed.

How can I obtain a Reseal?

An application for reseal of probate must be made using the Court form accompanied by the information required by the legislation and rules of court. The process involves filing Court documents and advertising requirements.

Superannuation and Estate Administration

Administration of an estate may require superannuation to be dealt with.

How do I give my superannuation away when I die?

Superannuation does not normally form part of your estate and can’t be included in your Will. It usually goes directly to the person that you nominate to receive the benefit from your superannuation.

Your superannuation isn’t considered one of your assets and cannot be included in your estate and or left to someone in your Will. If you erroneously include it in your Will it can cause problems.

Why can’t I leave Superannuation in my Will?

Due to the way in which Superannuation schemes are set up, the money in your Superannuation Account is not owned by you personally. It is owned and managed by the trustee of your Superannuation Fund who holds it on Trust on your behalf. Only the trustee can distribute the money in your account to your beneficiaries, but not as part of your Will.

How can I bequeath my superannuation?

Superannuation does not automatically form part of your Estate. You should ensure that you contact your Super Fund with information about your beneficiary or Estate.

What is a death benefit nomination?

A death benefit nomination is a non-binding nomination made by you in which you express your wishes to the trustee of your superannuation fund about who you would like to receive your death benefit on your death.

A binding death benefit nomination is a binding nomination made by you directing the trustee of your superannuation fund who to pay your death benefit to on your death.

A traditional binding death benefit nomination lapse after three years, so you need to update it before it expires. However some funds now allow for non-lapsing binding nominations which need not be renewed. A binding death benefit nomination specifies that the trustee must distribute superannuation in your account to the beneficiaries you nominate.

How do I ensure that my super is distributed according to my wishes?

Notify your superannuation fund with your binding nomination and insert a superannuation will clause in your Will. In your Will you can stipulate who is to receive the benefits of your superannuation account. You nominate through your superannuation fund your legal representative as the beneficiary of your superannuation, who can then distribute it according to your Will. For this to work, your Will must include a superannuation clause and you must keep the binding nomination and the beneficiaries in your Will up to date.

A simpler option is to make a binding death benefit nomination with your superannuation fund and the money will be distributed to the named beneficiaries on your death.

You can only nominate certain types of people under a binding death benefit nomination. These include a spouse, a de facto, children (in some circumstances including step children), dependents, inter-dependents, and your estate.

How do I make a Binding Nomination with my super fund?

You nominate someone using your super fund’s death benefit nomination form or binding death benefit nomination form.

What happens if I don’t make a Binding Nomination?

If you don’t make a binding nomination or it has expired at the time of your death, the trustee of the super fund has the ultimate discretion about who will receive that benefit. They can either pay the money directly to your estate or decide which of your beneficiaries should receive it.

Life Insurance and Estate Administration

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 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.
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