What responsibilities do I have with a deceased person’s assets while I am waiting for probate to be finalised?
Administering an estate can be an overwhelming and time-consuming process for an executor of an estate, especially when it involves selling high-value assets such as property. It is helpful for executors to understand the timeline and legal process for selling estate assets, so that they can fulfil their obligations to realise estate assets, pay any liabilities and distribute the proceeds to the beneficiaries. This can be even more overwhelming when a deceased’s will cannot be located.
What is a Grant of Probate?
A Grant of Probate of a will is a document that is produced by the Court which formally appoints the executor appointed under a deceased’s will, to deal with and administer the deceased’s assets.
What are Letters of Administration?
Letters of Administration are legal documents issued by the Court that give a deceased’s next of kin the authority to manage and distribute the estate, if the deceased died without a valid will.
Why do I need a Grant of Probate or Letters of Administration?
Prior to the executor/administrator being able to manage the deceased’s estate, most financial institutions and share registries require a Grant of Probate or Letters of Administration in order for the executor/administrator to close accounts and distribute funds.
Selling estate property and conditional sales
One of the most common assets that people own is property. In some cases, an executor/administrator may sell property before obtaining a Grant of Probate or Letters of Administration.
There are many factors which affect when the executor/administrator of the estate may wish to sell property, including:
1. A favourable property market that may increase the value of the estate;
2. CGT implications if the property is not disposed of within 2 years since the date of death of the deceased;
3. There are outstanding liabilities of the estate;
4. Delays in obtaining the Grant of Probate, while estate expenses continue to accrue; and
5. The desire to distribute entitlements to beneficiaries as soon as legally possible.
If the circumstances above resonate with you as an executor of an estate, you may be able to enter into a Contract for Sale with a purchaser, however settlement cannot occur until the Grant of Probate or Letters of Administration is issued. This is known as a ‘conditional sale’, as it is conditional upon a Grant of Probate being received.
It is important to note that estate assets should not be distributed to beneficiaries prior to 6 months after the date of death of the deceased pursuant to section 92(a) of the Probate and Administration Act 1898 (NSW). An executor/administrator should instruct their solicitor to issue a ‘Notice of Intended Distribution’ after a minimum of 6 months post the deceased’s death which provides notice to the public that they will distribute the estate assets after the 30-day notice period lapses.
How can we help?
Our experienced team can assist with all aspects of estate administration, including conditional property sales. Contact us today on (02) 8197 0105 or by email at contact@streeterlaw.com.au to discuss how we can help you fulfil your obligations as an executor.
