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.
Executors also take on the role of Trustee of an estate. Trustees’ duties include to:
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.
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.
Intellectual property is often the most valuable asset of a business. Steps a business takes to protect its intellectual property can have a significant impact on its goodwill and its ability to fully exploit the intellectual property. If, on the sale of a business, the intellectual property is not appropriately protected:
the sale price may be adversely affected, or
the process may be more difficult, time consuming and costly.
This article outlines the types of intellectual property and answers some frequently asked questions about the exploitation and protection of intellectual property.
What is intellectual property?
The expressions “industrial property” and “intellectual property” describe the rights giving protection to creative and intellectual effort. They include copyright, designs, patents, trade marks, circuit layouts, plant varieties and confidential information.
A trade mark can be a phrase, word, number, letter, smell, sound, shape, picture, logo, aspect of packaging or a combination of these used to distinguish your goods and services from those of other traders.
The registration of trade marks and infringement of registered trade marks is governed by the Trade Marks Act 1995 (Cth). Registration of a trade mark provides the legal right to use, license or sell the mark within Australia for the goods and services for which it is registered.
The difference between trade marks, company and business names sometimes causes confusion. Registration of a business name or company name does not in itself give you any proprietary rights – only a registered trade mark can give you that kind of protection. The same words may be registered by different people as business names, company names and trade marks. However, the owner of a registered trade mark can sue the owner of a business or company name for infringing the trade mark if they use it to describe similar goods or services to those covered by the trade mark registration.
When your trade mark is registered, you do not have to prove that you have gained a reputation in any market to bring an infringement action under the Trade Marks Act for a breach of your registered mark. On registration, you gain the right to:
exclusively use or authorise another person to use the mark within Australia in relation to goods or services specified in the registration;
sell the trade mark as personal property; and
notify the Australian Customs Service of your objection to the importation of goods that infringe your rights in the trade marks.
To be registrable, a trade mark must be distinctive: it must be capable of distinguishing specified goods or services from those of other traders in the market. A trade mark application is likely to be rejected if it:
cannot be represented graphically;
is incapable of distinguishing your goods or services from those of someone else;
incorporates a prohibited sign;
is likely to deceive or confuse if used in relation to the specified goods or services;
includes scandalous matter or its use would be contrary to law;
is substantially identical with, or deceptively similar to, a registered or pending trade mark in the name of someone else describing similar goods or closely related services (unless you can establish exceptional circumstances).
The easiest trade marks to register and protect are those consisting of:
newly invented words with no meaning; or
random or arbitrary names, which have a meaning not connected to goods or services they represent (e.g. “Dr Pepper” soft drink).
Trade marks which are likely to be difficult to register include:
those descriptive of the goods they represent, or
those claiming laudatory titles such as “outstanding” or “perfect”; or
generic words which can be used for a common product or service (e.g. “lemonade”, “mobile phone”, “t-shirt”).
The initial registration period is 10 years. Registration may be renewed indefinitely for periods of 10 years. If you do not use your registered trade mark, it may be vulnerable to removal from the register for non-use.
Although it is not compulsory, trade mark registration allows maintenance of goodwill held by valuable trade marks and avoids the having to bring court action against an infringer.
The trade mark registration process typically takes eight to eighteen months.
Copyright law was formulated to protect literary endeavour. It now encompasses all manner of productions, from computer programs to films. The law of copyright is governed by the Copyright Act 1968 (Cth). Copyright constitutes personal property. Australia has no system of registration for copyright protection.
Copyright is legal protection for people who express ideas and information in forms such as writing, visual images, music and film. Copyright law is a pillar of industries such as publishing, film, music and computer software.
Copyright does not protect an idea or information itself – only the form of its expression. Copyright protection is free and automatic. A work need not be published, or to bear a copyright notice for it to be covered by copyright. However, it can not simply be copied from another work – it must be the result of its creator’s skill and effort.
Copyright can exist in materials produced by a business such as marketing brochures, procedures manuals, computer programs, databases and packaging. As copyright protects the “creator” of the work, issues regarding the true ownership of copyright and legal authority to use the work can arise when a business contracts or outsources creative functions to third parties. It is important to appropriately deal with these issues are before engaging a contractor to undertake work for your business.
The general rule is that copyright lasts for the life of the creator plus 70 years, or in some circumstances for 70 years from the date of first publication.
The Patents Act 1990 (Cth) (the Act) regulates rights in relation to patents and patent owners (“patentees”). The Act gives a patentee a monopoly for inventions which are novel and not “obvious”. A patentee’s monopoly right prevents others from selling, using, making or otherwise exploiting an invention, for the duration of the patent. A patent must be registered in each country in which protection is sought.
To be patentable, an invention must meet criteria set out in the Patents Act. The invention must be novel (i.e. new and inventive) and must relate to a field of commercial (as opposed to artistic) endeavour.
Patentable inventions include devices and industrial or technical methods or processes. However, not all inventive concepts lead to patentable inventions (e.g. the presentation of information, or the discovery of natural phenomena).
To fulfil the requirement of being “new” or “novel”, the invention must not have been published or used by anyone anywhere in the world before the “priority date” of the patent application. Accordingly, the confidentiality of information about an invention is important to a successful patent application.
In Australia the two types of patent protection are a standard patent and an innovation patent. Both types require the invention to be novel, but an innovation patent has a lower threshold of inventiveness, provides a lower level of protection and has a shorter term (8 years) than a standard patent (20 years).
The process of applying for a patent is technical requiring skill and expertise, so a specialist patent attorney is usually engaged.
In the context of intellectual property, “design” relates to the artistic element in or overall appearance of a manufactured product.
In Australia, the Designs Act 2003 (Cth) provides a system for the registration of designs. Registering a design protects a newly created appearance for an article or product from being copied by competitors for up to 10 years. Registering a design initially protects the design for five years and can be renewed for a further five years.
Registration of a design gives the owner protection for the visual appearance of the product but not its feel, what it is made from, or how it works.
To be registrable, a design must be new and distinctive. A design is generally distinctive unless it is substantially similar in overall appearance to other designs already in the public domain. Infringement of a registered design occurs when someone uses a design which is substantially similar in overall impression to the registered design.
“Confidentiality” and “trade secrets” refer to both a type of intellectual property and a strategy to protect intellectual property. Confidential information may be anything from a concept or business idea to a formula or plan to make something. As this type of confidential information may be difficult to protect under laws relating to other forms of intellectual property such as trade marks or copyright, a Confidentiality Deed may be an appropriate form of protection for confidential information.
For information to be protected under a Confidentiality Deed:-
it must have the necessary quality of confidence, that is, it cannot be information known to the public already;
whilst it need not be novel, inventive or original, it must be a product of the mind that confers a confidential nature on that information; and
it must be provided in circumstances of confidentiality.
A Confidentiality Deed is an agreement between parties (companies, individuals, or both) to keep specified information confidential. One party may disclose confidential information to another, or both parties may exchange information. Confidentiality Deeds are commonly used in:
negotiations for the sale of business, where the seller allows a potential purchaser to inspect accounts and other financial information to assist them in deciding whether to purchase the business;
a joint venture or partnership, where parties considering an alliance to benefit them both each reveal business information or secrets to the other to assist them in deciding whether to enter into a business relationship together, or having done so, to share information benefitting each other;
a new business idea or concept, where someone with a business idea or concept approaches someone as a potential partner, or for finance, for technical support or otherwise;
as part of an employment contract to prevent an employee from making unauthorised use of the employer’s information during and after their period of employment.
Of increasing importance is that your business has all relevant domain names registered with the relevant organisations.
Buying “off the plan” has advantages for the purchaser and for the developer.
A purchaser can buy a property at today’s prices which may not be completed for some time. This can be a real benefit in times of rising prices. A developer will usually be prepared to sell more cheaply where the “final product” can’t be shown to the purchaser.
Sales “off the plan” mean that purchasers are committed at an agreed price. This goes a long way towards reducing the developer’s commercial risk and is re-assuring to the developer’s financiers.
The off the plan contract
There is no standard contract for purchasing off the plan. It is important to carefully review a contract for an off the plan purchase.
What are you buying?
When you buy an existing property, there is no doubt what you are buying. When you are having a building constructed, there will usually be plans and specifications describing the property in detail.
An off the plan contract rarely has a very detailed description of the property. Usually there is just a copy of the draft strata plan or perhaps a copy of preliminary plans submitted to Council. The contract usually has brief descriptions of the type and standard of finishes to be used in the building. Make sure you are satisfied with the level of detail in the contract. The developer will usually want to retain the right to alter the plans as he thinks it desirable or necessary.
Inclusions will usually be described briefly in the contract but there will almost certainly be a clause giving the developer the right to substitute inclusions of a similar quality if the nominated products are not available.
Variations to the contract
All off the plan contracts give the developer flexibility in completing the development. For example, it may be necessary to make minor changes to the plans because of council or engineering requirements or it may be necessary to grant drainage rights or create a restriction over the whole property to comply with council requirements. There is usually a provision allowing the purchaser to pull out of the purchase if the variation significantly affects the property to their detriment. It is important to review that provision in detail to make sure you have adequate protection.
Time to complete
The contract will give the developer some flexibility regarding the time frame in which the project is to be completed. Usually, the contract provides that the developer must use reasonable or best endeavours to complete the development by a particular date, generally referred to as the ‘Sunset Date’. If the developer cannot complete by the Sunset Date (including any extensions referred to in the contract) then either party may have the right to cancel the contract. In that event, the deposit is refunded to the purchaser. It is vital to look carefully at these provisions to make sure you have adequate protection.
Entitlements of Developer over Common Property
Most off the plan contracts contain provisions designed to give the developer entitlements over the common property for a reasonable time after completion of the sale.
These clauses are often required because the developer wants to conduct selling activities on the common property or may have to do some further work on the development after settlement to comply with some statutory or contractual requirement. The Strata Schemes Management Act prohibits the developer from voting on any matter at any meeting of the Owners Corporation as your proxy or attorney regardless of whether a Contract for Sale of Land (or any ancillary document entered into by you with the developer in accordance with any Contract for Sale of Land) asserts such a right.
The contract often includes a defects liability clause. Make sure that the developer agrees to remedy any defects which appear after completion.
There is always a delay between the date of signing the contract and the completion date. Not all lenders will be prepared to give you a formal finance approval with an open ended time frame. In addition, your financial circumstances may change between the date of contract and completion. You must be satisfied that you will be able to obtain any required finance when the time comes for completion.
Normally, transfer duty (previously called stamp duty) must be paid within three months of the date of the contract. However, a transfer duty concession applies to off the plan purchases if the property will be your principal place of residence. In that event, that transfer duty can usually be paid 15 months after the date of the contract or the completion date, whichever comes first. If you are purchasing the property (including vacant land) as an investment, the transfer duty must be paid with three months of the date of the contract.
Contact us for assistance if you want to purchase an off the plan property.
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 Act2006. 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:
is signed by the legal personal representative and all the beneficiaries; and
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:
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.
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))
It is important to clarify what items are being included in the sale of a property. The Contract of Sale will normally specify what moveable items (“fittings” or “chattels”) will remain with the property and if any fixed items (“fixtures”) will be removed from the property prior to the settlement.
Unfortunately the situation commonly arises where a property settles only for the buyer to find that some features have been removed from the property which they thought would remain with the home or land.
Fixtures and Fittings – What’s the difference?
A question arising in all conveyancing transactions is whether an item in the property is a fixture (which stays with the property on sale, unless the contract says otherwise) or a fitting (which is removed from the property on sale unless the contract says it is an inclusion and therefore stays with the property).
The difference between a fixture and a chattel is if the item is affixed to the land to any great extent, it is a fixture. If it is a freestanding movable item and rests on its own weight, it is presumed to be a chattel. If the buyer wants any chattels to remain with the property, they should be noted in the Contract. Similarly, if the seller wanted to remove any fixtures, they need to agree to this with the buyer and list it in the Contract.
Typically, there is a two-step test used to determine whether an object is a fixture of not:
Consider the degree of fixation.
Consider the intention relating to the fixation.
When determining if an item is a fixture or chattel, the surrounding circumstances of item must be examined. Factors that may be considered include:-
Whether or not the item can be removed without causing substantial damage to the property to which it is attached.
Whether the intention was for it to remain in position permanently or for an indefinite or substantial period.
Whether it has been fixed with the intention that it shall remain in position only for some temporary purpose.
Whether or not it is common practice for the item to be removed.
Fixtures are considered part of the property. They consist of the house itself, other structures, and parts of the house attached to or built into the house which are considered a permanent part of it. Fixtures need not be listed on a contract for sale as they are considered part of the property. A fixture is usually an item:
which is an integral part of the structure, or
the removal of which would cause damage to the structure (e.g. the bath tub, basin and toilet).
Examples of fixtures include:
Plants buried in the earth
Hot water systems
A garden shed which has been cemented in
A basketball hoop attached to the garage wall
A water tank resting on its own weight
Built in bookshelves
Inclusions/fittings are items which are not permanently attached to, or part of, the structures on the property. Only those inclusions listed on the contract legally stay with the property. Inclusions are things which might easily be removed without causing damage to the structure.
Examples of fittings include:
Pot plants and hanging baskets
Some pool and spa equipment
TV wall mounting brackets
air conditioners (excl portable a/c)
screen or security doors
insect screens on windows
garage door openers
swimming pool filtration equipment
automatic pool cleaners
Some items fall into a ‘grey area’ and may be considered as either a fixture or an inclusion.
Examples of these include:
Curtain rods & curtains
TV wall mounting brackets
When you are purchasing a property the safest way to ensure all items you want to be left at the property is to include them in the Contract of Sale prior to signing.
A dispute between parties regarding the fixtures and chattels when they have not been clearly outlined in the Contract is a common occurrence. The potential legal costs which could be incurred would typically outweigh the actual value of the item.
The simplest way to avoid any disputes regarding fixtures and chattels is, when in doubt, list on the front page of the contract:
items that could be deemed an inclusion; and/or
items that are excluded from the sale.
It’s a good idea to remove or replace any items to be excluded from the sale (e.g. specific light fittings or curtains which match a bedspread), before the property is marketed for sale. This ensures that a prospective purchaser isn’t put off by thinking they will have to immediately buy those items (e.g. new curtains for the bedroom).
Contact us for prompt,reliable and friendly advice and assistance if you plan to buy or sell property.
The Personal Property Securities Register (PPSR) is an official government register (i.e. a public noticeboard) of registered security interests in personal property.
Personal property can include goods, vehicles, intellectual property (such as copyright, trademarks, patents and design rights), bank accounts, private commercial licences, assigned rights, shares, bonds and other financial property. It excludes land, buildings and fixtures attached to the land.
Established in 2021, the PPSR replaced many state-based registers, such as the ASIC Register of Company Charges, REVS and other vehicle registers, to form one national register.
The PPSR is managed by the Registrar of Personal Property Securities. It is within the Australian Financial Security Authority (AFSA), which is an executive agency under the Attorney General’s portfolio. The Registrar determines what interests can be registered on the PPSR, when the PPSR is not available, and investigates misuse of the PPSR.
Registering interests on the PPSR
Registering an interest on the PPSR lets the world at large know that the registered party claims to have a security interest over the particular property.
A security interest is usually created when a secured party (such as a lender) takes an interest in the personal property of a grantor (such as a borrower), as security for a loan or other obligation. Security interests only arise when there is agreement between the grantor and the secured party. The security interest permits the secured party to take the personal property (collateral) if the secured obligation is not met (e.g. if a loan is not repaid).
Other parties can search the PPSR to determine what security interests (if any) exist over particular items of personal property. It is prudent to search the PPSR when buying property or a business or when extending credit. If someone is facing bankruptcy/insolvency, typically one of the first tasks is to search the PPSR for any registered interests against their personal property. This allows the trustee-in-bankruptcy to determine the order of priority in dealing with secured creditors.
The benefits of PPSR registration in protecting business interests
Registering interests on the PPSR is optional. However, if you have a security interest, you should register that interest on the PPSR to protect your priority as a secured party. Otherwise you risk losing your goods, your interest in the goods, or being left out-of-pocket, if for example the grantor is unable to honour their secured obligation (e.g. to repay an outstanding debt).
The PPSR allows businesses to search the register and readily assess risk before offering finance or extending credit against any personal property, other than land.
If you are considering lending someone money or considering whether to buy a business, contact us to discuss registering property on the PPSR as security for the debt or undertaking a search of the PPSR.
Equal Shared Parental Responsibility vs Equal Time
The term “equal shared parental responsibility” is often used in family law matters involving children. It is often confused with the term “equal time”.
Equal shared parental responsibility is not the same as equal time
There is a presumption in the Family Law Act 1975 (Cth) (the Act) (subject to some exceptions) that it is in a child’s best interests for their parents to have equal shared parental responsibility. Parental responsibility is defined as all of the duties, powers, responsibilities and authority which parents legally have in relation to their children. Significantly, this presumption relates solely to how parents make decisions for their children: it does not mean there is a presumption that children spend equal time with their parents.
What does equal shared parental responsibility mean in practice? Parents who share parental responsibility equally must make a genuine effort to consult each other about decisions involving long-term issues concerning a child’s care, welfare and development. This includes decisions relating to a child’s health, education, cultural upbringing and living arrangements, particularly when a change to those arrangements would make it more difficult for a child to spend time with a parent.
The presumption of equal shared parental responsibility can be rebutted (meaning there are circumstances where it does not apply). For example, if:-
there are reasonable grounds to believe that a parent (or a person living with a parent) has perpetrated child abuse or family violence, or
it would otherwise not be in the child’s best interests
then the court will not apply the presumption of equal shared parental responsibility and will allocate parental responsibility between parents as it deems appropriate.
There is no presumption that children must spend equal time with each parent
The Act does not provide that a child must spend equal time with each parent after their parents separate.
Even where parents have equal shared parental responsibility, an order will only be made for equal time if the court finds that it is in the child’s best interests and reasonably practicable. If the court finds that equal time is not appropriate or practicable, it must instead consider making an order that the child spend “substantial or significant time” with both parents.
In considering how much time a child should spend with each parent, the child’s best interests are the court’s paramount consideration. When determining what arrangements are in the child’s best interest, the court will take into consideration several factors including the following:
The benefit to the child of having a meaningful relationship with both parents;
The need to protect the child from physical and psychological harm resulting from being subject to or exposed to abuse, neglect or family violence;
Any views expressed by the child;
The nature of the relationship of the child with each of the parents and their respective families; and
The practical difficulty and expense of a child spending time with and communicating with a parent.
After separation, when emotions are heightened, confusing the presumption of equal shared parental responsibility with a presumption of equal time is understandable. However, the two concepts are not the same and have different legal meanings. Contact us if you are considering separating or have separated and have questions about parenting arrangements.
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.
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.
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.
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:
the deceased’s will; or
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:
the Court determines that there is a reasonable excuse for the delay, and
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.
Death does not extinguish a deceased person’s debts. Creditors to whom the deceased is in debt can still pursue repayment from the Estate. The order in which the deceased’s assets can be used to pay debts is governed by rules. And other limitations exclude the use of certain asset types to repay debt.
Executor’s obligation to pay deceased’s debts
One responsibility of an Executor of a deceased Estate is to pay the deceased’s debts from the Estate assets before distributing the Estate assets to the beneficiaries named in the deceased’s Will, if there are sufficient assets do so. The Probate and Administration Act (NSW) (the Act) authorises an Executor to collect the deceased’s assets and use them to satisfy the Estate’s debts. Failure to fulfil that responsibility can expose the Executor to a personal liability to any unpaid creditors.
If there are insufficient assets in the Estate to meet all the Estate’s debts, the Estate is classed as insolvent. The Executor may have to advise creditors that the debts cannot be repaid and ask for the debts to be written off. However, creditors are not obliged to write off debts, and if they amount to $10,000 or more, the creditor may ask the Court to appoint a bankruptcy trustee to the Estate. The Executor is also entitled to ask the Court to appoint a bankruptcy trustee if they believe the Estate assets are insufficient to pay all the deceased’s debts.
Secured vs unsecured debts
A secured debt is fixed to one or more of the deceased’s assets (e.g. a home loan secured against the deceased’s home by a mortgage). An unsecured debt is not attached to any asset (e.g. a credit card debt). The Executor will generally pay secured debts before unsecured debts, as if a secured debt is not paid, the mortgagee will exercise their right to sell the property to recover the debt.
If a beneficiary is bequeathed an asset that secures a debt, they are receiving only the equity the deceased held in that asset. Provided there is no contrary intention expressed in the Will that the debt is to be paid from the deceased’s other assets, If the beneficiary wants to retain the asset they must take on the debt attached to the asset. They must either repay or refinance the secured debt before the asset will be transferred to them.
An Executor must use the deceased’s assets in accordance with the order prescribed by the Act when paying unsecured debts. All unsecured debts have equal standing so no unsecured debt can be paid in priority to any other unsecured debt.
Are any debts passed on to beneficiaries?
Beneficiaries are only held responsible for paying off the deceased’s debts if:
the debt was jointly incurred by the deceased and the beneficiary (i.e. the deceased and the beneficiary were co-borrowers and were both liable for the whole of the debt); or
the beneficiary personally guaranteed the deceased’s unsecured debt; or
the debt was secured against an asset owned by the beneficiary.
If the deceased’s assets are insufficient to pay out the deceased’s debts, beneficiaries will not be held liable for satisfying the debts of a deceased, including a HECS-HELP debt, credit card debts, taxes or home loans, unless one of the above situations applies.
Order in which assets are used to pay debts?
When paying the deceased’s debts the Executor must pay them in the following priority:
Secured debts from the assets securing them; then
Funeral expenses; then
Testamentary and administration expenses (e.g. legal costs in obtaining Probate); then
Where the Estate is solvent, the Act sets out the order in which assets should be applied to pay debts. If the Will contains specific gifts of money amounts, the Executor must first set that money aside from the Estate assets that have not specifically left to a beneficiary. The order of application of assets to pay debts is:
Assets undisposed of by the Will (e.g. lapsed or void gifts); then
Assets not specifically disposed of by the Will but included (by a specific or general description) in a residuary gift; then
Assets specifically appropriated for the payment of debts; then
Assets charged with, or disposed of by the Will (by a specific or general description) subject to a charge for the payment of debts; then
The fund, if any, retained to meet monetary gifts; then
Assets specifically disposed of by the Will, proportionably amongst them according to their value.
What assets can’t be used to discharge debts?
Assets that were owned by the deceased as joint tenant with another person (e.g. bank accounts, shares, real estate) will not form part of their Estate. They pass by way of survivorship to the surviving joint tenant/s.
If the deceased has Life Insurance or superannuation and has nominated a beneficiary to receive those assets on their death, they will be paid directly to the nominated beneficiary.
The above assets do not form part of the Estate and are not available to the Executor to pay the deceased’s debts.
If the deceased did not nominate anyone as the beneficiary of their life insurance or superannuation benefits, the Life Insurer or Superannuation Fund may pay the benefits to the Estate. In that event, the Executor can use the benefits to pay for the deceased’s funeral and the Estate’s testamentary and administration expenses. They cannot use them to pay any of the deceased’s other debts unless a provision of the Will specifically permits the benefits to be used for this purpose.
Contact us for assistance obtaining a grant of probate or administering a deceased estate.