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  • Ben Dickens

What is Calling in the Estate?

The role of the executor of a deceased estate includes multiple responsibilities and duties. These can include:

1. Organising the funeral and other practicalities such as obtaining the death certificate and searching for an original Will.

2. Obtaining a Grant of Probate (the process of certification by the Supreme Court of the Will.)

3. Calling in the Estate. That is identifying and valuing the assets of the estate.

4. Paying any debts of the estate.

5. If applicable dealing with any potential claimants (hopefully this is not the case!)

6. Distributing the estate.

As well as this there are several other practicalities and responsibilities that may come your way as an appointed executor.

For this article we will go through one of the stages in greater detail and this is what we call in law “Calling in the Estate”.

Essentially this process involves identifying the estate, or said in another way, the Assets and Liabilities of the deceased person. This can become an obvious job at the start of your executorship as it is a requirement of the Supreme Court that you produce a Statement of Assets and Liabilities (Court Rule 9b Statement) when you draft your Affidavit or Oath of Executor when you file for an application for a Grant of Probate.

Once you have received a Grant of Probate it may then become appropriate to deal with the assets of the estate. When in doubt you should consult a lawyer and accountant to assist you in this process.

Some of the major items for consideration are gathering documents relevant to each item of the estate. Undertaking searches in the name of the deceased or legal entities associated with the deceased. Identifying whether a particular asset is technically part of the estate.

For example, if a home is owned between a husband and wife as joint tenants and one of them dies then this will probably be dealt with under the laws of survivorship, and will be able to be transferred directly to the surviving spouse without the need for a Grant of Probate. In this case, the real estate does not form part of the estate.

This can also be the case for assets such as superannuation in instances where there is a binding death nomination to a specified beneficiary. In this case the superannuation payment may bypass the estate and therefore will not be dealt with according to the terms of the Will but rather in accordance with the nomination that the deceased gave to the trustee of the superannuation fund.

Following the gathering and identification of the assets there is then the need to manage the estate. This can include making sure that any short-term payments and expenses are organised. This may include making enquiries with a relevant third party and letting them know that the deceased has passed away and to seek a period of grace in which payments will not be made. It may also include protecting any business interests such as making sure that a business of the deceased carries on in some capacity whilst the estate is being organised. You must remember to keep receipts for expenses paid by the estate.

It can include investing and taking control of any income that is produced from the capital of the estate. For example, there may be an investment property in the estate which is gathering rental income.

Valuables should be safe guarded and in particular where there are specific gifts left to specific beneficiaries. For example, we often see clients who wish to leave a particular gift in their Will such as leaving a favourite piece of jewellery to a granddaughter or an elderly gentleman leaving his watch to his grandson.

It is also a duty of the executor to make sure insurances are up to date for any assets of the estate and making sure that they are maintained. This is particularly important for real estate.

As well as managing the estate it is also important to value the estate. Of course, the time will come where the estate is to be divided up between the beneficiaries. This can include having to obtain valuations so that the beneficiaries are happy that there has been a fair distribution of the estate. Further, there may be the requirement from a third party such as the Officer of State Revenue for the example of a house being sold so that any taxes applicable can be calculated.

With regards to debts, it is important to make enquiries to see if any debts are owed by the estate and to work out the valuation of those debts. It may also be appropriate at this stage to seek legal advice to see whether or not a debt is actually owed by the estate and whether it should legitimately be paid from the estate.

As the saying goes there is nothing sure in life other than death and taxes and there may be taxes applicable to an estate matter. In these circumstances it is important to get accounting advice and potentially complete an income tax return for the estate. This may include holding back certain cash funds to be able to pay any tax office invoices that may become payable. For example, in the case of a sale of property in certain circumstances there may be stamp duty or capital gains tax to be paid.

Executors must keep a record of all of the assets and liabilities in the estate, and it is also sensible to keep a record of any outgoings and incomings throughout the period of time of looking after the estate. It may be prudent in some circumstances to prepare a statement of distribution for the cash and assets before it is given to beneficiaries.

As can be seen there are many tasks for an executor and calling in the estate is certainly one of the most important tasks. We do recommend seeking one off advice for your role as Executor. For example, we recently gave advice to a client to conduct searches on ASIC as there had been some suggestion that the deceased had owned businesses and trust assets in other legal entities other than their own name. After making those enquiries we discovered that the deceased had interests in shareholdings and real estate property that the executors were not aware of when they first sought advice.

Hopefully this post will guide you with regards to what as an executor should be seeking to undertake when organising the assets and liabilities of the estate. However, we do recommend that you seek specialised legal advice before commencing the important work you have nominated for as an executor.

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