What is a Deceased Estate? Assets, Debts, and Responsibilities
Key Takeaways:
- What is a Deceased Estate?: A deceased estate is all the assets and debts a person leaves on death, including real estate, bank accounts, vehicles, shares, and liabilities.
- What Isn’t Part of a Deceased Estate? Superannuation death benefits are excluded unless they’re paid into the estate.
- Who is Responsible for Administering the Estate?: The executor handles the estate if there’s a Will. If not, intestacy rules determine the administrator: spouse, children, or other relatives.
- What is Needed to Administer an Estate?: A Death Certificate and a Will may suffice for small estates. A Grant of Representation is often otherwise required, especially for real estate.
- How do you Administer an Estate?: initial notifications & information gathering, lodging the application, gathering the assets and paying any debts, finalising the estate.
What is a deceased estate?
The term ‘deceased estate’ simply refers to all the assets and liabilities a person leaves behind when they die. A person’s estate can include things like real estate or bank accounts that aren’t jointly held accounts, as well as their vehicles, shares, belongings, pets, unpaid entitlements from employment, life insurance policy rights, contractual rights, rights to royalties, and intellectual properties.
The liabilities a person holds during their life often continue. These costs must be paid from the estate. These liabilities include the deceased’s bank accounts with negative balances, credit cards or mortgages, tax liabilities, council fees, debts, and rental or lease obligations.
If you need more capital to pay these estate costs before probate is completed, see how our estate loans can help.
What isn’t part of a deceased estate?
Superannuation death benefits don’t factor into a person’s estate unless they pay into the estate rather than directly to a beneficiary.
Who is responsible for administering the estate?
When someone dies, their executor manages and distributes the estate in accordance with their Will. However, if they don’t have a Will, the person who is responsible for administering the estate will be the person entitled to most of the estate by the rules of intestacy. These people are:
- The person’s spouse or partner.
- Their biological or adopted children.
- Other relatives: parents, siblings, grandparents, aunts and uncles, and cousins.
- The State, if there are no relatives.
What is needed to administer a deceased estate?
Sometimes, when an estate is either relatively small or it doesn’t contain any real estate, all you may need to administer the estate are the Death Certificate and the Will. For people with significant assets, large estates, or property that isn’t held jointly, you will probably need a Grant of Representation too.
You need a Grant of Representation to administer the estate when the deceased person owned real estate either in their sole name or as a tenant in common. Financial institutions holding the deceased’s assets may also demand it before releasing them. Each institution has its own unique criteria for when a Grant is necessary. This is usually based on the asset’s value.
You may not need a Grant for jointly owned assets. You might only need to present the relevant institution with the Death Certificate to initiate the transfer of accounts to the surviving joint holder. And for jointly owned real estate, the surviving owner must lodge an Application by the Surviving Proprietor to remove the deceased’s name.
It can be difficult to get access to the funds you need when probate is ongoing. A loan from us can make this easier – simply repay when probate is over.
How do you administer an estate?
Initial notifications and information gathering
You are required to look for the Will (if there is one) and identify the deceased’s assets. You must also look for further documentation, such as property titles, insurance policies, bank statements, bills, and any other relevant documents. Then, when you’ve identified the assets, you’ll be able to determine whether a Grant of Probate or Letters of Administration (a “Grant of Representation”, collectively) is needed to deal with the estate.
Lodging the application
Getting a Grant of Representation involves preparing and submitting documents to the Supreme Court, such as the Will (if the person has made one), a death certificate, and an inventory of assets. The Court will review all these to make sure they meet legal requirements before it grants authority to the Executor or Administrator – collectively, the Legal Personal Representative (LPR) – to administer the estate.
Find out more about these costs as an executor with our article on the costs of administering a deceased estate.
Gathering assets and paying debts
With the Grant of Representation now received, the LPR can begin to deal with the deceased’s assets. The LPR is also responsible for paying outstanding debts and liabilities from the estate’s assets, such as mortgages, loans, and taxes. Certain assets, such as property, may take time to transfer or convert into cash. If you need to sell a property within the estate, for example, settlement may only occur 30-60 days after the date of sale. Term deposits also need to mature before you can access them, further extending the time required to gather the assets.
Finalising the estate
Now that all the tax obligations and liabilities have been addressed, the estate is most likely ready to be finalised. This means the assets or cash can be transferred to the beneficiaries. Every estate is unique, but the LPR should always consider these two things before finalising the estate.
Has the Creditors’ Notice period elapsed, if applicable? And is there any risk of claims against the estate? There is a 6-month period from lodging the Grant of Representation during which any eligible individuals can make a claim against the estate.
If an LPR opts to distribute the estate before these timeframes expire, they may need to pay these claims from their personal funds. Due to personal liability and complexity, however, it’s always best to seek legal advice before you make this decision. JustFund partners with over 1,000 law firms nationwide so we can assist with finding a suitable lawyer if you need one.
Apply for funding now if necessary. It’s generally best for LPRs to finalise and distribute the estate within 12 months of the date of death. This is sometimes called the ‘executor’s year’.
Conclusion
Visit us at JustFund.com.au for more information and to find out what you are eligible for. Contact us today to learn how we can help you and find out more about our estate services.
