Wills, Intestacies, Estates and Funerals

Administration of Estates

Insolvent Estates

If the deceased had more debts than assets (in other words, the estate is insolvent), the estate is usually made bankrupt (in much the same way as is done in the case of a living person who is insolvent) and is administered by a trustee in bankruptcy. If the estate is administered by a trustee in bankruptcy the executor named in the will or the administrator if there is no executor, plays no part in the administration of the estate.

The proceeds of life insurance policies are protected by statute from the insolvency and normally do not form part of the insolvent estate: Life Insurance Act 1995 (Cth) s 205(1).

Solvent Estates -- How Much will Administering an Estate Cost?

Size of the estate

To some extent the cost of getting a grant and administration is proportional to the gross value of the estate (that is, the value of the assets, not counting the debts). Some assets held by the deceased do not form part of the deceased's estate. In particular, the interest held by a joint tenant held does not become part of the estate but automatically on the death of the first dying becomes the sole property of the survivor or survivors: see Glossary of Legal Words Used, under "joint tenancy".

Solicitors

Solicitors' fees are payable out of the estate.

For work done in obtaining a grant of representation and for administering the estate after grant, a solicitor is entitled to charge in the normal way. The solicitor may choose to charge a lump sum amount, or at an hourly rate.

It is unusual for a solicitor be appointed executor in a will. A solicitor who is appointed executor in a will is normally entitled to payment out of the estate in accordance with a specific provision called a charging clause which he or she will usually require to be inserted into the will. This charging clause will entitle the solicitor to substantially greater payments than the solicitor would be entitled to if he or she were merely doing the legal work of administration and carrying out the instructions of a lay executor appointed by the testator. For this and other reasons, it is not usually advisable to appoint a solicitor as your executor.

Public Trustee

The Administration and Probate Act empowers the Public Trustee to wind up deceased estates: see, too, the Public Trustee Act 1985 (ACT).

The Public Trustee's charges are competitive, and may well end up lower than those a solicitor would charge.

If, as is usual, the testator appoints beneficiaries as executors, they then have the choice whether to go to the Public Trustee or a solicitor to have the legal work done, or appoint the Public Trustee. The Public Trustee is experienced and impartial, and this is important if the estate is complex or conflicts between beneficiaries are likely. The Public Trustee in the ACT has a high reputation.

Trustee companies

Trustee companies are permitted by statute to administer estates. Like the Public Trustee their charges are calculated as a percentage of the estate -- usually, somewhere between 4.25 per cent and 5 per cent of gross assets -- that is, before deduction of debts. A trustee company may charge more for the administration of an estate than the Public Trustee or a solicitor would.