Estates

Contributed by MelissaYates and current to 1 May 2016

The law relating to estates is primarily governed by the Administration & Probate Act (NT) (the APA). This section provides basic information on the procedures involved in administering a deceased person's estate. In the majority of cases legal advice will be necessary in relation to the administration of a deceased estate.

The Public Trustee has information to assist with administration of an estate at: https://nt.gov.au/law/bdm/what-to-do-if-someone-dies/administer-the-estate.

It is the responsibility of the executor or administrator to protect the assets of the estate, take care of unfinished business and distribute the estate in accordance with the will or the rules of intestacy. The executor or administrator should notify government agencies and other institutions of the death, to ensure that liabilities do not continue and income such as the pension is stopped. The executor or administrator will need to confirm all assets and liabilities of the estate which involves writing to financial institutions, government agencies, relevant companies, searching records such as the Land Titles Office and preparing an inventory of household furniture and personal effects. Once this information is obtained, it is prudent for the executor and administrator to apply to the court for a grant of representation.

Step One: Is there a will?

If a deceased person's family is not aware if the deceased made a will or where it might be, it is vital that a thorough search is conducted of the deceased's belongings (especially their personal papers) to ascertain whether a will exists. Enquiries should also be made of the deceased's solicitor, accountant or financial planner or the Public Trustee to ascertain whether they were aware of the location of a will. Sometimes, family members who know a will might exist will also advertise in the NT News to see if anyone knows the whereabouts of a will or they will ask for an advertisement to be placed in to the Law Society of the Northern Territory's regular email publication to it's practitioners to see if a solicitor is aware of the whereabouts of a will.

If an original will can be located, care must be taken to keep the will in the exact condition in which it was found (i.e. do not fold, paper clip, staple, take apart pages or sticky-tape a will). This is necessary to assist in obtaining a grant of probate. The Executor or Executors named in the will must then undertake the task of administering the estate in accordance with its' terms.

If an original will cannot be located then the deceased is said to have died intestate and the deceased's affairs are to be administered in accordance with the provisions of the APA.

Step Two: Obtain a grant of representation

A grant of representation is the legal authorisation of the court to a person who applies to administer and deal with a deceased person's estate. If a person attempts to deal or interfere with the estate of a deceased person without obtaining a grant of representation, they may be held liable later on for any loss suffered by beneficiaries or creditors of the deceased as a result of their interference. In order to receive the protection offered by the law, it is recommended that an executor appointed by a will of a deceased, or an appropriate family member in an intestate estate, apply for the Supreme Court for a grant of representation.

There are three main types of grants:

1. Grant of Probate - a grant of probate of a will is official recognition that an executor has the right to administer the deceased's estate according to the will in question;

2. Grant of Letters of Administration - a grant of letters of administration is made in circumstances where a will does not exist and a deceased's next of kin (as defined in section 22 the APA) has applied for authority to administer the deceased's estate according to the provisions of the APA;

3. Grant of Letters of Administration (with the will annexed) - made in circumstances where the deceased died with a will but there is a problem of some kind with the will. Some examples include only a copy of the will being located (as the original has been lost), the will does not comprehensively deal with all matters it should and there is a partial intestacy, or the will does not satisfy the formal requirements of the Wills Act (NT) in relation to its execution (refer to Wills).

Technically, prior to any grant of representation being made, the property of the deceased vests in the Public Trustee of the Northern Territory and is only able to be dealt with by an Executor or family member once a grant is obtained (see sections 49 - 52 of the APA).

A grant of probate or letters of administration is also required in the following circumstances:

• Where any money held by a deceased with a bank is more than about $20,000;
• Where the deceased held a superannuation interest and the executor wants the member death benefit to be paid to the estate of the deceased;
• Where the deceased owned real property (i.e. land) in the Northern Territory; or
• Where the deceased had managed investments worth more than about $20,000 or shares worth more than about $10,000.

If a deceased's estate is fairly valuable or if it involves real estate, then a grant of representation is mandatory. It is possible, however, in instances where a deceased's estate is very small in value (i.e. less than $20,000 in total) for that deceased's spouse or child to administer the estate informally. However, this should be done with great caution to avoid being held personally liable for any loss.

Obtaining a grant of probate

The process of applying to the Supreme Court for a grant of probate is usually done with the assistance of a lawyer. However, the Supreme Court Probates Registry has published a number of helpful kits to assist executors who want to apply for probate without such assistance. The procedural requirements making an application for a grant of probate are set out in Order 88 Probate and administration rules contained in the Supreme Court Rules (NT). In particular, for applications for grants of probate where the matter is not contentious and 'straight forward' - Part 3 of Order 88 of the Supreme Court Rules sets out the various procedural requirements in order to obtain the grant.

First, a notice of intended application must be published in the Legal Notices section of a Darwin daily newspaper (usually the NT News) on a day which is not a Sunday. The wording of the notice is provided in Form 88B set out at the end of the Supreme Court Rules (NT). If the deceased was resident in the Northern Territory at the time of his death but at a place more than 200 kms from the General Post Office in Darwin, then a notice must also be published in a newspaper which circulates in the district where the deceased resided (Rule 88.09 Supreme Court Rules (NT)).

The following documents should then be prepared and after 14 days from the date the notice of intention to apply was published, filed in the Supreme Court Registry, along with payment of the relevant filing fee (and search fee):

Application (Form 88A);

• The original will (the executor and witness to the affidavits must also sign in the margin of each page of the will);
• Affidavit of death (along with the original death certificate and a certified copy of the death certificate) (Form 88G);
• Affidavit of Executor (one for each executor applying for the grant of probate) (Form 88H);
• Affidavit of Assets and Liabilities (Form 88T);
• Oath of Office (Form 88J);
• Affidavit of Publication and Search - plus the whole page of the NT News showing the advertisement and the date it was published (Form 88I);
• The Grant of Probate document annexing a copy of the will (this must be provided in triplicate);
• If the deceased died more than 6 months ago, then an affidavit of delay should also be filed.

The Supreme Court Registry has excellent information sheets and precedent documents to assist in the drafting of the required application and supporting material. They can be found at: http://www.supremecourt.nt.gov.au/about/registry/probate.htm.

The current filing fee and search fee for obtaining a grant of probate can best be found by telephoning the Supreme Court Registry on (08) 8999 6562 as they are updated every 6 months or so.

It should also be noted that a person who is named as an Executor in a will is able to renounce their role without penalty if you are unwilling or unable to do it. You must renounce your role in writing by utilising the correct Supreme Court Form (Form 88E), which can be located at the link provided above.

Obtaining a grant of letters of administration

Where a person dies intestate, the court may grant administration of the estate of an intestate person to either a spouse or de-facto partner of the deceased and/or one or more of the next-of-kin, or such other person as the court thinks fit. Next-of-kin is defined by section 6(1) of the APA by reference to Schedule 6 Distribution of intestate estate upon intestacy of the APA.

An additional disadvantage of intestacy is the confusion that sometimes arises over who should apply for administration of the estate. The court has wide discretion in this regard, but will usually grant administration to whoever is either (a) resident in the Northern Territory, and if more than one person is resident in the Northern Territory then (b) entitled to the larger share in the estate. If a family jointly decide that one particular member of the family is to apply for the grant of letters of administration, then each other person who would have been entitled to apply for the grant and is resident in the Northern Territory must complete a written consent which is filed in the Supreme Court as evidence of their consent to the application. Family members who are not residents in the Northern Territory do not need to provide their written consent.

As with probate an intention to apply for letters of administration must be advertised in a daily newspaper at least 14 days before lodging the following documents with the Registrar of the Supreme Court:

1. Application (Form 88A);
2. Affidavit in support of the application sworn by the person applying for administration (Form 88K);
3. Affidavit of death (along with the original death certificate and a certified copy of same) (Form 88G);
4. Affidavit of assets and liabilities (Form 88T);
5. Affidavit of publication and searches for other applications and wills (Form 88I);
6. Oath of Office (Form 88J);
7. Consent of people entitled to apply for a grant of administration who are resident in the Northern Territory (Form 88L) along with an affidavit verifying the consent (Form 88M);
8. Draft grant letters of administration in triplicate.

As a condition of granting letters of administration to an applicant, the court or the Registrar of Probates may require the applicant to enter into a bond with a surety. The bond guarantees that the applicant will properly administer the estate. A bond is not required where administration is granted to the Public Trustee or a person on behalf of the Crown. It is unusual for such a bond to be required, however.

Again, the Probates Registry of the Supreme Court provide useful information, factsheets and precedent documents to assist people in making an application. They can be found at: http://www.supremecourt.nt.gov.au/about/registry/probate.htm.

Obtaining a grant of letters of administration (with the will annexed)

In the event that a grant of this nature is required, legal assistance should be sought as further evidence relating to the circumstances of the document annexed to the application, will need to be put before the Supreme Court in order to obtain the grant.

After the grant is obtained

Once probate or letters of administration is granted, it is recommended that a further advertisement be placed in the legal notices of a local daily newspaper to avoid any late claims being made against the estate. This notice is called a Notice of Intended Distribution of Estate and can be found at Form 88ZF in the Supreme Court Rules (NT) or on the Supreme Court Probates Registry website (above).

Creditors to the estate may have to wait until the notice to claimants has expired before they can receive payment. The notice doesn't prevent creditors who have a legal claim against the estate from coming forward after the date in the notice. However, if the estate has already been fully distributed and the representative has acted in good faith, neither they nor the beneficiaries are personally liable for the debt (see section 96 of the APA).

Step Three: Distributing the estate

Once a grant is obtained, the authorised person should ensure all assets are brought under their control and the amount of all debts owing should be ascertained. The estate is then able to be distributed in accordance with the terms of any will or in accordance with the provisions of the APA.

Distributing the estate pursuant to a will

After probate, the representative must pay any debts and carry out the terms of the will, distributing the estate to the beneficiaries. Specific bequests, such as furniture, jewellery and pictures, are to be handed to the beneficiaries. The sale of assets and subsequent cash distribution should be arranged.

The representative can complete the transfer of any property, including the conveyance of any real estate. If necessary, the representative should seek legal assistance for this function.

Where a beneficiary is a minor, the bequest must be held in trust until they reach 18 years of age. However, in certain circumstances, and depending upon the wording of the will, amounts can be paid to parents or guardians for the minor's maintenance, education and general benefit.

Distribution of estate on intestacy

The statutory order for the distribution of an intestate estate is fixed and no special account can be taken of particular wishes of the deceased in the absence of a will. For details about distribution see Section 66 and Schedule 6 of the APA. It should be noted that:

• a de facto partner is included in the statutory order on intestacy
• 'issue' means child, children, grandchildren and the like
• children includes children born as a result of artificial insemination (see Section 60H(1) of the Family Law Act 1975 (Cth)), adopted children (see sections 35 & 36 of the Adoption of Children Act (NT)) and illegitimate children where a person dies after the commencement of the Status of Children Act 1978, provided that paternity has been admitted or established in the lifetime of the father or the parents of the child were married to each other at the time of its conception or some time later. It does not include step-children.

See Schedule 6 of the Northern Territory Administration and Probate Act.

Insolvent estates

If the deceased died with more debts than assets, the estate will be insolvent. If the estate is administered by a trustee in bankruptcy (see *Bankruptcy*), the representative or person granted letters of administration does not participate in the administration of the estate. Life insurance policies are exempted from the bankruptcy (see section 205 of the Life Insurance Act 1945 (Cth)).

Powers and Duties of Executors and Administrators

Part 3, Division 6 of the APA sets out a number of specific rights, powers, duties and liabilities of executors and administrators once a grant of representation is obtained. These can include:

• Sale, mortgage or lease of real estate (subject to the spouses right of appropriation contained in Part 3, Division 5 of the APA); and
• Appropriate a part of the estate in satisfaction of a legacy or gift under a will or under the rules of intestacy.

Duties of executors or administrators

The principal duty of a personal representative is to collect the assets of the deceased and distribute the proceeds according to the directions contained in the will or the statutory order on intestacy. Prior to any grant of representation being obtained, the executor or administrator of an estate may also have the following duties:

• organising the funeral (see Organising the funeral )
• determining the deceased's debts and paying them before distributing the estate
• advertising the Supreme Court application for probate (letters of administration) in the daily papers, including in the advertisement an address to which creditors can send particulars of their claims against the estate
• keeping accounts of the administration of the estate
• protecting the deceased's assets, including making sure that all assets are insured and all valuables are secured
• preparing a list of the assets and liabilities of the estate
• making sure that a final tax return is prepared if necessary and obtaining advice concerning capital gains tax and GST issues.

Powers of executors or administrators

While awaiting the grant of probate, a representative can choose to pay funeral expenses at an early date if funds permit, and to pay creditors to avoid additional interest charges.

Before a grant of representation is obtained, the representative is allowed to release and pay debts, receive money owing to the deceased and take possession of land, provided they are eventually able to satisfy the court that they have the power to do so. The legal right to do these things is only made certain by the grant of representation. A representative can't sell or distribute property until probate has been granted.

Entitlement to commission

An administrator or executor is entitled to be reimbursed for expenses properly incurred in administering the estate of the deceased. Proper records and accounts should be maintained in the event that an administrator or executor is called to account before the court for those expenses.

In addition to reimbursement of proper expenses, an executor or administrator or trustee may also apply to the court for commission for their 'pains and troubles' provided such a claim is not more than 5% of the gross assets of the estate (see Section 102 APA).

Executors distinguished from trustees

Normally a person is appointed both as representative and trustee. These are two different jobs. The representative's role comes to an end when they have realised the assets of the estate, paid any debts and distributed the balance to the beneficiaries. Where the terms of the will create a continuing duty, such as the support and maintenance of young children, the role is performed by a trustee.

When acting as a trustee, the trustee should be mindful of their obligations and powers set out in the Trustee Act (NT) and it is recommended that they seek appropriate financial and legal advice if taking on such a role.

Small estates

Many people die leaving only small estates. In such cases the APA makes special provision for the simplification of procedures for probate and intestate estates.

The Supreme Court can help a person applying for the administration of a small estate (see Contact points ). The Supreme Court Registry supplies guidelines to help applicants prepare the necessary documentation.

What is a small estate?

A small estate is one where the gross value (the value before any debts are deducted) of solely owned assets does not exceed $20,000 or another prescribed amount. The value of jointly owned assets, such as a house and bank account, are not relevant because jointly owned assets do not form part of the estate.