Guide for Executors & Beneficiaries
Frequently asked questions about being an executor & a beneficiary
Who is a beneficiary?
A beneficiary is any person or entity (e.g. a charity) that receives a gift or benefit from a person’s estate.
Who is an executor?
An executor is a person who has been appointed in a will to manage the will-maker’s estate.
Do all beneficiaries have to agree with the executor's decisions?
Not all beneficiaries are required to agree with the executor's decisions if the executor is carrying out the wishes of the will maker as outlined in the will.
If there is a proposal to distribute the assets differently from as specified in the will, the alternative arrangements may create new and different tax and duty consequences.
Before consenting to a change in the distribution, beneficiaries should obtain their own legal and financial advice. The lawyer acting for the estate is unable to provide the beneficiaries with independent legal advice because they are acting in a fiduciary capacity for the estate, and there may be a conflict of interest in also advising the beneficiaries.
Must the executor take on the responsibility?
An executor can refuse to accept the position of executor, but this should preferably be done before probate is granted. If the executor seeks to step down from that position after probate is granted, they must obtain the consent of the Supreme Court.
Executors can delegate some of their actions and responsibilities to others, such as funeral directors, lawyers, accountants, and real estate agents. The executor will ultimately be responsible for the actions of those individuals.
An executor should refuse to accept the position of executor if their personal interests conflict with the role of the executor. For example:
if they behaved inappropriately as an attorney when the will maker was alive and caused a loss, as executor, they should seek to recover from themselves
if they want to purchase major estate assets personally
If they want to claim a further share of the estate, the family provision laws allow an executor to proceed with a personal claim by naming another executor or beneficiaries as defendants to their claim. However, all conflicts should ideally be considered and advice taken.
Who arranges the funeral?
The executor is responsible for making the funeral arrangements if the will maker has not already made those arrangements. The executor should follow any directions left by the will maker as to the funeral arrangements, but is not bound to do so. Things to consider include:
whether the body is to be buried or cremated
if the body is to be buried, where
if the body is to be cremated, whether the ashes are to be scattered or retained
the nature and format of the funeral service
who they should notify about the service.
If the executor is not an immediate family member, they should consult with the family about the funeral arrangements. The reasonable cost of the funeral is an expense of the estate, but the executor should be careful not to incur expenses beyond the available funds in the estate.
What happens to the bodily remains?
The executor may be asked whether organs can be donated. This usually occurs where the will maker has registered with the organ donation register, or there is a request by the hospital or the next of kin. The decision is usually left to the next of kin.
This page provides a guide, in question-and-answer format, for executors and beneficiaries about what it means to be a beneficiary, what is required of them and what is involved in managing and finalising an estate in Victoria.
The information is general in nature and not specific legal advice. For more information, beneficiaries should contact one of our team members to discuss their personal circumstances
What is an estate?
An estate is all of the property and liabilities of a person in existence after their death.
What is the role of the executor?
The role of the executor is to carry out the wishes of the will-maker as specified in the will. This is a position of great trust and must be carried out with care and honesty. The executor must:
Act in the best interests of the estate and all of the beneficiaries, and cannot act in their own interests if they are not the same as the interests of the estate and the beneficiaries
Do what is specified in the will unless there is an alternate agreement made with the informed consent of all beneficiaries. This may not be possible (without the consent of the Supreme Court) if some beneficiaries are infants or don’t have legal capacity.
Protect all of the assets of the estate until they are distributed
Keep good records of everything they have done for the estate
Obtain advice from professionals, such as lawyers, accountants, and real estate agents, as needed.
The executor is entitled to seek compensation on behalf of the estate against any attorney appointed by the will maker under an enduring power of attorney. The attorney must have caused a loss by not acting in accordance with the requirements of the Powers of Attorney Act 2014 (Vic). Generally, the executor only has six months from the date of the death of the will-maker to apply to the Victorian Civil Administrative Tribunal (VCAT) for compensation. Executors should promptly obtain expert legal advice before making such a claim.
An executor may be ordered by a court to act properly and promptly if the beneficiaries believe that the executor is not fulfilling their duties.
Who pays the executor?
An executor is entitled to be reimbursed by the estate for any amounts they have paid on behalf of the estate, provided they were appropriate amounts.
The executor’s role is often described as a trustee or fiduciary role. In most circumstances, where the executor is a person known to the will maker, they will not receive any financial benefit or payment for taking on the role. However, the executor may receive some payment for their work in the following circumstances:
if the will maker sets out in the will that the executor is entitled to be paid for their efforts. Usually, the will states the rate of payment in terms of a percentage of the total assets and/or income of the estate
where a gift to the executor is included in the will instead of the right to apply to the court for remuneration
if all the beneficiaries agree on an amount the executor should be paid from the estate. Beneficiaries should be given details of all the work undertaken by the executor and should obtain independent legal advice before agreeing to such a request
if the Supreme Court orders that the executor is entitled to be paid.
The payment to the executor is referred to as a commission, and in Victoria, it cannot exceed 5% of the total value of the estate's assets. When a court considers whether an executor should be paid a commission, it takes into account the work done by the executor as well as the responsibility and time involved, often referred to as ‘the pains and troubles’.
A court would rarely order a commission of 5 per cent. The maximum rate of 5 per cent is generally reserved for very complicated and time-consuming estates.
Executors wishing to receive a commission should keep extensive records of all they have done in their executorial role to justify the commission.
Should there be a reading of the Will?
It is not usual to have a formal reading of the will. Usually, the beneficiaries are notified of their interest by the executor or the firm of solicitors appointed by the executor. In Victoria, various categories of people are entitled to request a copy of a will if it was made on or after 20 July 1998:
any person named or referred to in the will, whether as beneficiary or not;
any person named or referred to in any earlier will as a beneficiary;
any spouse of the testator at the date of the testator’s death;
any domestic partner of the testator;
any parent, guardian or children of the deceased person;
any person who would be entitled to a share of the estate if the deceased person had died intestate;
any parent or guardian of a minor referred to in the will or who would be entitled to a share of the estate of the testator if the testator had died intestate;
any creditor or other person who has a claim at law or in equity against the estate of the deceased person and who produces evidence of that claim.
A beneficiary has no legal right to see the will of a deceased person made before 20 July 1998. However, once probate is granted, a copy may be obtained from the Supreme Court.
It is usually appropriate and good practice for the executor, or the firm of lawyers appointed by the executor, to write to the beneficiaries and tell them they are beneficiaries under the will, soon after probate is obtained and even beforehand in some circumstances.
What if there is no will?
If there is no will, the next of kin of the deceased usually has to apply to the Supreme Court for a document called “Letters of Administration”. This document is the court’s formal approval for someone to administer the estate of the deceased, effectively acting in the same role as an executor, but referred to as an administrator. Approval is usually granted in favour of a family member or another person who has the most substantial interest in the estate.
If there is no will, the Administration and Probate Act 1958 (Vic) sets out a scheme of distribution favouring the closest next of kin, commencing with spouses, then children, then surviving parents, and extending as far as first cousins. State Trustees Ltd often act as “Administrator of last resort” and has particular expertise (including genealogical experts) relating to the estates of persons without immediate family.
What should the beneficiaries be told?
There is no legal obligation for beneficiaries to be informed that they are beneficiaries before the gifts in the will are distributed to them. A beneficiary is entitled to receive a copy of the will upon request, as set out in the section “Should there be a reading of the will?”
Executors are usually encouraged by solicitors for the estate to be open, honest and in regular communication with beneficiaries. The solicitors for the estate will usually discuss with the executor, who should provide information on the estate's progress to the beneficiaries. The solicitors for the estate can only provide information to the beneficiaries if permitted to do so by the executor. There may be instances where solicitors have to inform any beneficiary who asks about the estate's progress that they should speak directly with the executor.
Executors should provide a residuary beneficiary with a statement summarising the financial aspects of the estate for approval before making final distributions. Beneficiaries are entitled to a proper account of the administration, but Executors have no right to insist on a formal Release either prior to or upon Distribution.
What is probate, and is it necessary?
Probate is a document given by a Supreme Court (usually the Supreme Court of Victoria, where there is property in Victoria) that confirms the validity of the will and the appointment of the executor to look after the estate of the deceased will-maker.
Before applying for probate, the executor (or their solicitor) must advertise the fact that an application for probate is being made. This advertisement is usually posted on the Supreme Court’s website and must be placed at least 14 days before the probate application is lodged with the court.
An application for probate requires the preparation and filing of various documents with the court, including:
a statement of assets and liabilities with appropriate valuations. This often takes some time to prepare as information needs to be obtained from the banks, companies in which the will maker held shares, superannuation funds (etc). It can take up to six weeks to receive a response from all of these institutions. Formal valuations of real estate or antique items may be necessary
a certified copy of the death certificate
the original will
an affidavit from the executor setting out background information about the deceased, the will and financial position of the estate. An affidavit is signed in the presence of an authorised witness and has the same importance as evidence given under oath in court.
Probate is necessary to grant the executor the authority to manage certain assets, such as real estate and bank accounts. Real estate cannot be transferred unless probate is obtained (except to a surviving joint proprietor).
Most banks will not allow the will maker’s nominated representative in the will to deal with accounts that have a balance above a certain amount unless probate has been granted. However, banks will usually allow access to funds for the payment of funeral expenses.
It can sometimes take a considerable amount of time to receive confirmation from banks and share registries about the date of death, balances, and share values. This can delay the probate application.
Some estates are small and do not contain real estate, as the real estate is transferred to a surviving joint proprietor. In these cases, probate may not be required for transfer purposes, but it may still be important for other reasons, such as confirming an inheritance by allowing claim periods to run and be exhausted.
What should be done with the assets of the estate?
As executor, you are responsible for the safekeeping of the assets of the estate. You should:
make an itemised list of all of the assets as soon as possible, including a description of their condition and where they are stored (if necessary). Using a video recorder or camera may be a good method of recording what household items exist
digital assets should also be considered, such as photographs and documents stored digitally
ensure that property such as houses, buildings, boats and cars have current and adequate insurance. Consider whether the insurer needs to be notified because of any change, i.e. the house is vacant or the vehicle is housed elsewhere
ensure that items of dollar or sentimental value, such as jewellery, photographs, paintings etc, are adequately secured
consider whether the locks to houses and buildings need to be changed
consider obtaining valuations of personal chattels (where appropriate).
Consideration should be given to what to do with all household items. Some items may be given to the beneficiaries in part satisfaction of their interest in the estate; others may be sold to second-hand dealers, given to charities, or otherwise disposed of. Care must be taken in making these choices. Many executors consult with the deceased's family before making these decisions.
Executors have an obligation to ensure that assets are not wasted and do not diminish in value. If money is collected from the sale of assets and is not to be distributed straight away, it needs to be invested. If real property is to be held for an extended period, consideration should be given to whether it should be rented out.
In some instances, professional valuations will be needed if beneficiaries are given items. Alternatively, the value may be agreed upon by the executors and beneficiaries.
The executor should also ensure that all liabilities of the estate are accounted for. This may include the usual household accounts, such as telephone bills and credit card bills, but will also encompass other liabilities, including income tax.
How long do estates take to finalise?
The time it takes to finalise an estate depends on what must be done and how long it takes for each step to be completed. Often, third parties such as banks and companies in which the estate has shares are required to supply information, and this can take some time to receive. See What is probate, and is it necessary?
It is prudent for all of the estate’s liabilities to be paid before the estate is finalised. See, is there tax to be paid?
The law in Victoria says that executors do not have to distribute the estate within 12 months of the death of the will-maker. After 12 months, some beneficiaries may be eligible to receive interest on the value of their gifts if certain conditions are met. It is prudent for estates not to be distributed fully within six months from the time of probate – for further information, see the discussion under the heading Can dependents claim more?
Some wills may require gifts to be held on trust until a certain event occurs (i.e. until a minor beneficiary reaches a certain age). In many instances, the executor will become the trustee of the money and will be responsible for managing it until the specified event occurs.
In other cases, a gift may be left in a trust for a person’s benefit, rather than being left to them outright. Protective Trusts and Special Disability Trusts are examples of such ongoing trusts.
Where property is the subject of ongoing trust obligations, the executor should discuss these obligations with their lawyer.
Some gifts may be left as life interests only, so that the beneficiary is entitled to use the assets but is not free to dispose of them. For example:
the beneficiary who is given a life interest in a house may live in the property but cannot sell the property except in certain limited circumstances; and
the beneficiary who is given a life interest in shares may have the income from a share portfolio but cannot sell the shares and take the sale proceeds.
When that beneficiary dies, the asset that was the subject of the life interest then passes to the beneficiary who was left the remainder interest in the will.
What happens to children’s inheritance held in trust?
Children cannot have formal and unsupervised access to their inheritance until they reach 18 years of age, and some wills extend the age for inheritance to later ages. The assets, usually money, are held in trust for the child beneficiary until that time, usually by the executors or administrator. They are typically invested and earn income during that time.
The will may provide that while in trust, the capital or income may be used for the ‘maintenance, education, benefit or advancement’ of the beneficiary (or similar wording). This allows the funds in trust to be applied for things like school fees and other educational requirements.
The trustees of the trust are obligated to consider the welfare of each beneficiary, but will usually require a written request for specific items and an accounting of how the money was spent, either from a child’s guardian or from any capable beneficiary over the age of 18.
Can beneficiaries reject a gift?
Beneficiaries can refuse to accept a gift from a will. The executor will usually require the beneficiary to give written confirmation that they refuse to accept the gift. Before rejecting a gift, beneficiaries should obtain legal advice, as there may be tax, duty, and other implications that they should consider when making the decision.
What happens to household goods and personal items?
The executor should create an itemised list of all assets as soon as possible, including a description of their condition and the location where they are stored (if necessary). The executor may also use a video recorder or camera to record what household items exist.
It is common practice for executors to offer the beneficiaries who are to receive a share of the estate (other than specified items) an opportunity to choose household items in part satisfaction of their share of the estate. These items would need to be valued, either by agreement of the beneficiaries or professionally, and then offset against the beneficiaries’ shares of the estate.
In practice, household goods and personal effects are now rarely of significant value (although Executors should search for “hidden gems”), so formal valuation will not always be prudent. It should be understood that disputes over personal effects typically cannot be resolved without incurring burdensome and uneconomic legal fees.
What if the estate liabilities exceed the estate assets?
If there are more liabilities in the estate than assets, then the estate is insolvent. In this situation, the estate should be declared bankrupt, and the remaining assets should be used by the trustee in bankruptcy to pay out the liabilities. The executor and beneficiaries would not be liable for the shortfall provided that they had not already taken any assets from the estate.
Is there tax to be paid?
The executor is responsible for lodging any outstanding income tax returns on behalf of the will maker where necessary.
The estate is also subject to income tax if it earns income, such as rent on real estate or interest on investments, and a tax return may need to be lodged on behalf of the estate.
The sale of assets may result in capital gains tax, and the estate should not be fully distributed until all income tax liabilities have been determined and accounted for.
There are no inheritance taxes or death duties in the state of Victoria.
Suppose property is given to beneficiaries in accordance with the will. In that case, there may be a rollover of capital gains tax (subject to tax rules), and capital gains tax may be payable by the beneficiaries when they dispose of the property at a later date or if the beneficiaries agree to the distribution of real property other than as stated in the will. In that case, stamp duty may be payable on the transfer of the property, and other taxation liabilities may be triggered. In short, professional taxation advice should be obtained and taken into account before the sale of assets, distribution of assets and finalisation of the estate. Expert tax advice should be taken when the beneficiaries include any tax-exempt charity, a non-resident or a complying superannuation fund.
Planning for your inheritance
Beneficiaries should take the time to plan how they will use their inheritance. Once the approximate amount of the inheritance is known, it would be prudent to obtain accounting and/or financial advice.
Can dependents claim more?
Yes, in some circumstances, an eligible person (see below) may make a claim to a court for a distribution of assets other than as set out in the will. These claims can be complex, and the executor should obtain legal advice.
Eligible person
In Victoria, the applicant must fall within the definition of an eligible person as set out in the Administration and Probate Act 1958 (Vic). An eligible person is a:
Spouse or domestic partner
Child, adopted child, stepchild or someone who thought they were a child
Former spouse or domestic partner who would have been entitled to bring a family law claim but had not or was partway through proceedings
Registered caring partner
Grandchild
Spouse or domestic partner of a deceased child, adopted child, stepchild, or someone who thought they were a child, if they died within one year of the deceased
A person who is a member of the deceased’s household (or had been and was likely to be again in the near future).
What factors
The applicant must show that the will maker had an obligation or duty to make adequate provision for them and that this was not done. The court will consider several factors when evaluating these types of applications. In general, the courts will carefully examine situations where spouses, children, or other dependents of the will maker have been left out of the will or have been unfairly treated. All claimants must demonstrate relative financial need, and particular consideration will be given to the financial circumstances of adult children when they submit a claim. In relation to an eligible person other than the spouse or children, the courts will look at whether there was a dependent relationship with the will maker and what contribution they made to the building up of the estate or the welfare of the will maker. The courts will consider any written reasons given by the will maker as to why the eligible person was left out or left less than others.
It is a complicated area of law, and each matter is judged on its own facts. You should discuss the matter with a lawyer if you want to bring a claim on this basis.
Time frame
Anyone wishing to make an application is entitled to do so within six months of the date that probate was granted. If they try to make an application after that time, special permission from the court is required.
It is prudent for the executor to hold on to the estate assets for six months from the date probate is granted. Suppose the executor distributes the estate within six months of the date probate was granted, and a claim is made for further provision from the estate within the six-month period. In that case, the executor may be personally liable for any amounts the court requires the estate to pay. The exception to this rule is that the executor may make a distribution to the spouse or partner or children of the will maker of all or part of their entitlement under the will for the purpose of providing for their ‘maintenance, support or education’ without any personal liability in the event of a claim by others for provision from the estate.
Notice of a claim
An executor should not make any distribution of an estate if they have received written notification that someone intends to make an application to a court for further provision from the estate.
The executor must wait three months from receiving the notice before a distribution can be made, and the distribution can only be made if the executor has received no further notice that the application has actually been made. It would be prudent for an executor who has received notice of a claim to conduct litigation searches in the Supreme Court and county court before deciding to distribute the estate assets.