As we have discussed previously the property and assets belonging to a person who has died is called their deceased estate; this may include real estate, money in bank accounts, shares, and personal possessions.
I am revisiting this today because a friend asked about a situation that occurred with a resident of her building who died suddenly and whose personal possessions were sold and the flat on the rental market within a fortnight. Whilst this is uncommon and reasonably hasty, it can happen in some cases.
The deceased estate is administered by an executor appointed in the person’s will, or an administrator appointed by the Supreme Court.
The deceased estate is held in trust from the death of the person until the transfer of the property and assets to the beneficiaries – the administrator or executor, is the trustee of the deceased person’s estate.
The executor collects the assets of the estate, pays the debts and distributes the balance to the beneficiaries. If the deceased has made certain provisions for the support and maintenance of children a trustee will be appointed. If the executor has also been appointed as trustee they must manage money or assets for the benefit of those beneficiaries.
The duties and responsibilities of trustees are set out both in the will and in legislation imposing strict rules on the conduct of trustees. When carrying out their duties a trustee must act honestly and in good faith and, (in the vast majority of cases) in the best interests of the beneficiary of the trust at all times.
We have discussed the assets that are excluded from an estate such as some superannuation and life insurance payments may or may not form part of the deceased estate. Similarly assets that are owned as joint tenants pass to the surviving owner – commonly the family home is held in joint tenancy.
The personal property of the deceased may be left as specific gifts to named beneficiaries or as part of the ‘residue’ of the estate. If there is no will, the personal property is dealt with according to the rules of intestacy.
The ‘residue’ of the estate is the remaining property not specifically given to a beneficiary. The residuary clause in a Will states which beneficiary is entitled to the remainder. If there is no such clause, the remainder of the estate is distributed according to the rules intestacy.
If you have obtained a grant of probate or administration, or if a grant is not needed, each item of personal property of the deceased can be dealt with after paying the debts of the deceased.
Therefore the executor has broad powers to administer an estate. The process of administration looks something like this :
- Date of death
- Funeral arrangements.
- Executor appointed by will, or administrator appointed by the court.
- Probate applied for and granted by the court.
- Assets vested in executor who administers estate
- Administration of estate is complete
Administration could take a very brief period of time if the estate is small and there are few beneficiaries.