Being appointed as the executor of an estate is a significant responsibility that requires careful consideration.
While it may be an honour to be entrusted with this important role by a loved one, the reality is that estates can be quite complex.
Acting as an executor can often be stressful, time-consuming, and physically taxing. It can even harm family relations and friendships when expectations are not met.
Complications executors may face
Executors may be required to deal with various third parties, such as banks, real estate agents, utility providers, the deceased person’s superannuation fund, the taxation office and impatient beneficiaries.
They also need to carry out a million tasks — from making funeral arrangements, applying for the death certificate, informing family, friends and other loved ones of the deceased person’s passing, to locating the will and beneficiaries, sourcing hundreds of documents, paying off estate liabilities, taking an inventory of estate assets, claiming insurance and superannuation benefits and so on.
While carrying out their responsibilities, executors may also face the following problems:
- Exposure to personal financial risk and liability if they make any mistakes in the estate administration process.
- Challenges and delays in receiving superannuation death benefits and dealing with the fund trustee.
- Personal responsibility for losses resulting from the mismanagement of estate assets, including their failure to locate, secure and prudently invest estate assets, give proper notice to creditors, identify and pay all legitimate debts of the deceased, collect all debts owed to the deceased, etc.
- Financial penalties for taking too long to administer an estate or for distributing an estate too quickly.
Ensure a smoother estate administration process
If you’re the one leaving a will and appointing an executor, there are things you can do to help ensure your estate is administered properly.
- Write your will with the help of a probate lawyer or solicitor experienced in or who specialises in wills and estate administration. It’ll also help if they’re familiar with family and inheritance laws in your state or territory.
- Relationships and circumstances may change, so make sure you update your will, insurance policies and superannuation death benefit details.
- Note that your superannuation is not part of your estate, so you cannot include it in your will. However, you may reaffirm your intentions and whatever arrangements you’ve made in your super death benefit nominations in your will.
- Talk to your financial adviser and super fund about making death nominations that’ll make it easier for your beneficiaries to get the benefits allocated to them.
- Consider withdrawing your entire death benefit from the super fund while you’re still around, so you can distribute it yourself or put it away in a bank account that your executor can access faster should you pass away.
If you’ve been tasked to act as executor by a living relative or loved one, you would do well to discuss the above with the testator (the one who has appointed you as executor) and their solicitor (and financial adviser if they have one) to go over the above details.
By covering the legal bases, you can avoid costly mistakes and shield your loved ones from any potential liability and complications that may come with settling the estate and claiming death benefits.
If this article has inspired you to think about your own unique situation and, more importantly, what you and your family are going through right now, please contact your advice professional.
This information does not take into account the objectives, financial situation or needs of any person.
Before making a decision, you should consider whether it is appropriate in light of your particular objectives, financial situation or needs.