When someone dies, they may leave a Will appointing one or more executors to manage their affairs. The executor’s duties typically include:
- making funeral arrangements
- identifying, collecting and valuing the deceased’s assets
- notifying account providers and government authorities of the death
- paying any outstanding debts and taxes
- transferring property and distributing assets according to the Will
In many cases, the executor may need to apply for a grant of probate. Probate is the legal process. It involves requesting the Supreme Court of New South Wales to validate the Will. It also authorises the executor to manage and administer the deceased’s estate.
While probate is often a necessary step after someone dies, there are circumstances when it may not be required. Understanding these situations can help save time, money, and additional work for the deceased’s family.
This is general information only. You should obtain professional advice relevant to your circumstances.
Situations When Probate May Not Be Needed
There is no statutory requirement to obtain a grant of probate after a person dies. Whether probate is needed depends on the type and value of the deceased’s assets. It also depends on how they are held and the policies of the asset holders for the release of those assets.
As a general guide, probate is required in New South Wales if the deceased person owns significant assets and/or real estate in their sole name. The following examples provide guidance. However, each case should be individually assessed. An experienced probate and estate lawyer can assist with this process.
Small Estates – No Real Estate / No Significant Assets
If the deceased person did not own real estate, probate may not be necessary. This applies where assets are minor and easily transferable. Examples include a modest bank balance and personal belongings.
Typically, the institution holding the asset determines whether probate is required. The criteria may differ between asset holders. Most financial institutions have policies regarding the release of funds to beneficiaries.
For example, if the value is below a specific threshold (say, $50,000), a bank may release funds. This usually requires a death certificate and other relevant documents, such as a copy of the Will.
In such cases, the asset holder will usually require an indemnity. This releases them from liability from claims of others.
Jointly Owned Assets
If most of the significant estate assets are owned jointly with another person, probate may not be required. In these cases, the assets pass to the surviving owner or owners. They do not form part of the deceased’s estate.
For example, when real estate is owned as joint tenants between spouses or partners, the surviving owner is automatically entitled to the deceased owner’s share. This is known as the “right of survivorship”.
To transfer ownership, documents and evidence of death are lodged with the relevant state titling authority.
On the other hand, if real estate is held solely in the deceased’s name or as a tenant in common, a grant of probate will be required. This is needed to deal with the asset.
A title search of the relevant property will identify how it is held between co-owners.
Assets with Designated Beneficiaries
Some assets allow the deceased person to nominate a beneficiary. This includes life insurance policies and superannuation funds.
These proceeds do not generally form part of the deceased’s estate. In many cases, they can be paid directly to the nominated beneficiary without a grant of probate.
However, each case is assessed individually. A trustee may sometimes require a grant of probate before determining entitlements to a superannuation fund or insurance policy.
Trusts
Assets held in a trust generally do not form part of the deceased’s estate. Probate is not usually required.
The trustee of the trust will distribute the assets according to the terms of the trust deed.
How to Determine if Probate is Needed or Recommended
If you are unsure whether probate is required, you can contact the entities holding the deceased’s assets. It is advisable to seek legal advice from a qualified lawyer.
A lawyer can assess the specific circumstances of the estate. They can also advise you on the best course of action.
Executors have a legal duty to comply with the terms of the deceased’s Will and relevant legislation. They must ensure estate liabilities are met before distributing assets.
They should also confirm there are no outstanding claims on the estate. An estate lawyer can explain your obligations and help protect you from potential liability.
Checklist and Guidance for Executors
- Review the Will: Check if the Will names an executor and provides clear instructions on distribution.
- Identify the assets: Make a list of the deceased’s assets and their estimated values.
- Check ownership: Determine how the assets are owned (e.g., sole ownership, joint ownership, trust).
- Consult with institutions: Contact banks, financial institutions, and other organisations holding assets to confirm requirements for release.
- Seek legal advice: If you are unsure about administering an estate or applying for probate, consult an experienced estate lawyer.
Conclusion
Determining whether probate is needed requires consideration of the deceased’s assets and circumstances. Probate is often required when administering an estate. However, there are situations where it may not be required.
Understanding these exceptions can help streamline the process and reduce the burden on loved ones.
If you are unsure whether probate is needed, seek professional legal advice to ensure you take the appropriate steps.
If you or someone you know wants more information or needs help or advice, please call 02 6621 2481 or email [email protected].