As an executor, one of your responsibilities is to ensure the debts and liabilities of the estate are paid before the beneficiaries receive their share. If you distribute the assets and a valid claim emerges later, you could be held personally responsible for the shortfall out of your own pocket. What happens if you distribute the assets of a deceased estate to the beneficiaries, only to have an unknown creditor, or an estranged relative, unexpectedly surface demanding a payout?
We have guided countless executors safely through the complex probate processes in New South Wales. The law does not expect you to foresee disputes you aren’t aware of; it provides a mechanism to shield you from unknown claims. However, you need to follow the correct statutory process in order to be protected.
Protection by section 92
In NSW, Section 92 of the Probate and Administration Act 1898 provides a “safe harbour” for executors. When it operates, you are permitted to distribute assets free from the risk of being sued by claimants you knew nothing about.
To secure this legal protection, an executor must strictly follow a statutory timeline and notification process. You must ensure:
– No assets are distributed until at least six months have passed since the date of the deceased’s death.
– A ‘Notice of Intended Distribution’ is published through the registry of the Court.
The notice specifies a period, not less than 30 days from publication, during which potential creditors or claimants can present their claims. When these steps are orchestrated correctly:
– You are shielded from personal liability if an unknown claimant emerges after the notice period expires and the assets have been distributed; and
– You can progress the administration and distribute inheritances with confidence.
The Crucial Exception
Section 92, in the words of the Supreme Court is intended to “protect honest administration carried out in ignorance, not to enable representatives to get rid of demands within their knowledge.”
If you have notice of a claim – in any form – you cannot ignore it. Addressing a claim of which you have been given notice – even an informal letter, or an email or a text message asserting a (alleged) right – requires a different strategy to rule them out.
Take the Next Step
Don’t risk your own finances by attempting to navigate estate distribution without a guide. If you are an executor preparing to administer an estate or are unsure how to gain the protection we have described, contact our experienced succession law team today on contact@streeterlaw.com.au or call us on 02 8197 0105. We will help you put the right legal protections in place, manage any brewing disputes, and ensure the estate is settled safely, legally, and efficiently.
