As we’ve detailed previously, every adult, particularly those in their older years, should write a comprehensive will to detail their wishes with respect to their estate. As part of the will, an executor will typically be nominated by name, however they have the option to renounce this role should they choose to, or may be removed via court order if beneficiaries are dissatisfied with their actions. The purpose of the executor is to coordinate the disbursement of the will to the parties identified throughout as beneficiaries.
An estate is generally quite broad and overarching, including the various assets under ownership of the deceased at the time of their passing. This includes assets such as cash, life insurance policies, bank accounts, equities, bonds, property (houses), superannuation, and other personal items like vehicles. The responsibility will rest with the executor to make an itemised list of all the assets held by the policy holder of the will, as well as the corresponding valuations of each item.
Following drafting of the itemised list of assets, the will is probated. This is the “judicial process where a will is ‘proved’ in a court and accepted as a valid public document that is the true last testament of the deceased”. By obtaining probate, the executor then has the legal authority to financially manage and control the estate. First however, any outstanding debt, including taxes and capital gains tax belonging to the deceased and attributed to their assets must be resolved and deducted from the estate. The net assets remaining thereafter may now be distributed accordingly.
In some instances, most notably those where surviving family may be left under financial strain, an executor may be able to access the estate in order to pay funeral expenses. Under these circumstances, probate does not yet need to be provided beforehand.
Upon resolution of debts and administrative expenses, a distribution report will be written by the executor and sent to every beneficiary. The role of the distribution report is to outline the disbursement received by each specific person, advising them of the breakdown of their inheritance. The inheritance received is not specifically taxed, but assets may be subject to capital gains taxes when sold. More specifically, this will include the debt deducted from the estate.
