Who is the executor of estate?
An executor of estate is one or more person(s) that are named by someone in a will to carry out their wishes as outlined in the will after their death. The common functions of the executor of estate include:
- Collecting and valuing all listed assets
- Arranging tax returns
- Arranging the funeral
- Claiming life insurance
- Distributing the estate as outlined in the will
- Paying off any remaining debts by selling assets if necessary
- Taking legal action on behalf of the estate
Since the role of the executor is so important, whoever is named by the deceased will need to hire qualified estate planning lawyers in Melbourne to carry out the terms stated in the will. The cost then comes out of the estate. If no executor has been appointed in the will, an administrator of a will is then appointed by the court, usually a beneficiary in the will that is meant to receive the largest portion of the estate.
In Victoria, the Supreme Court will issue a Grant of Representation that serves as proof that the executor is entitled to collect and distribute the estate, including any debts that need to be paid. However, it is important to note that the executor cannot officially collect any assets or act as a representative of the estate until the verified death certificate has been obtained, to be presented at banks and other institutions along with a copy of the will. This may take up to 6-8 weeks to arrive.
How does the executor of estate pay off debts of the deceased?
A deceased person’s debts are often included in addition to other expenses related to executing a will, including funeral arrangements and other legal costs. Once all the necessary parties have been informed of the deceased’s passing, the executor can begin drawing up assets and liabilities while waiting for the death certificate and Grant of Representation to be obtained.
Before carrying out payment of any debts, the executor needs to make sure that the estate is solvent (i.e. not bankrupt). Debts and liabilities will keep cropping up over time as the will is carried out, and the estate needs to have sufficient funds and assets available to pay them all off. If debts are paid for an estate that is insolvent, the executor risks being held liable to pay them out of their personal assets.
It is recommended that the executor consult with qualified estate planning lawyers in Melbourne to properly understand and value all available assets left in the estate and how they can be used to pay off any debts that may be accrued. This is especially important when dealing with an insolvent estate. With proper legal advice, the executor may be able to come to an agreement to waive or reduce the debt. If there is not enough money in the estate to cover funeral costs, the executor can make use of the Victorian Government’s Funeral Assistance Scheme.
Note that the Bankruptcy Act 1966 protects life insurance and superannuation funds from being used to pay off an estate’s debts; however, life insurance funds can still extend to funeral expenses.
Find the right estate planning advice with P&B Law
If you have concerns over properly executing the will of a loved one, you can benefit from the guidance of the right estate planning lawyers in Melbourne. At P&B Law, our experienced legal team can help relieve your stress over settling wills and estates by ensuring the wishes of your loved ones are carried out exactly as they intended. Contact us today to know more.