Liability of Personal Representatives
Executors and Administrators of deceased estates are referred to as Personal Representatives. Personal Representatives have the responsibility of paying the deceased’s debts out of the deceased’s assets which come into the estate. They are liable for the payment of debts to the extent of the assets which come into the estate.
If the Personal Representative distributes the estate without paying the debts, then the Personal Representative may be held personally liable for the payment of such debt. The Personal Representative has a duty not to pay claims which the estate is not bound to pay and if the Personal Representative does, then again they may be held personally liable.
Not all assets will fall into the estate and thus are not to be applied towards payment of estate debts. The Succession Act can provide Legal Representatives considerable protection. It is important that the Personal Representative is provided with sound advices in these regards.
When a person dies “intestate”, this means that the person has died without leaving a valid Will. This has the effect that instead of a person’s estate being distributed pursuant to the Will, it will be distributed pursuant to the intestacy provisions of the Succession Act.
If the deceased has a spouse or children (and sometimes a person can have multiple spouses; for example if they are living in a defacto relationship and have never divorced their legal husband/wife) the estate will be divided between their spouse/s and their children.
If the children are minor children, it could end being the case that the childrens’ shares are held in trust, not by the spouse but by an institution such as the Public Trustee and the spouse will not necessarily have ready access to such monies for the payment of the necessary costs relating to the children’s upbringing. It is very important therefore to have a valid Will in place to ensure that family is cared for in the way you would want.
Grants of Representation
Often in the administration of a deceased estate, an asset holder such as a bank, a share registry or an aged care facility (who holds a nursing home bond or the like) will require a grant of representation prior to releasing the asset/paying the monies into the estate.
In such circumstances, if the deceased left a valid Will then it will be necessary to make application for a Grant of Probate. If the deceased died intestate (without a Will) then it will be necessary to make application for a Grant of Letters of Administration.
The process of obtaining a grant of representation includes advertising, making notification to the Public Trustee and filing an application in the Supreme Court. Once the grant of representation has been made then the Executor (in the case of a Grant of Probate) or the Administrator (in the case of a Grant of Letters of Administration) will then have the authority to deal with the asset/s.