Death and estates - Seven things to do after a loved one passes away
It is a very difficult time when a loved one passes away. Often the last thing you want to do is deal with the legal and property issues that arise. In our experience, it is best just to take one step at a time and not be afraid to ask for help. There are some things though that do need to be addressed.
1. Obtain the Death Certificate
If you are the person responsible for the loved one’s estate, you will need to obtain the death certificate. This will be provided by the funeral director two to three weeks after the funeral. Although there will be only one original certificate, you are likely to need multiple certified copies so do not be afraid to ask the funeral director for certified copies. The death certificate is formal proof that your loved one has passed away. It will be needed when dealing with banks and other financial institutions, superannuation and life insurance policies and share registries. It will also be needed if there is a need to apply for probate or letters of administration of your loved one’s estate.
2. Obtain probate or letters of administration
It may be necessary to obtain probate or letters of administration. Probate or letters of administration are formal documents sealed by a Court showing that you as executor or administrator have authority to deal with your loved one’s estate. If your loved one only had a few assets, probate or letters of administration may not be needed. It will depend on the value of the assets and which bank, share registry or other organisation you may need to deal with. If your loved one has an interest in real estate in New South Wales (other than as joint tenant) you will definitely need to obtain probate or letters of administration. You don’t need to use a lawyer to obtain probate or letters of administration, but using a lawyer will often save time and anxiety. Once probate or letters of administration is obtained, assets will need to be transferred to beneficiaries or realised and the cash distributed to beneficiaries.
3. Collect important documents and information
There will usually be several important documents that you will need to locate and secure upon the death of a loved one. These include:
- Any will, including any codicils to it
- The death certificate (when provided by the funeral director)
- Bank account and credit/debit card details and statements (if any)
- Title deeds
- Share certificates/statements
- Recent tax returns
- Superannuation policies
- Statements relating to pensions
- Life insurance policies
- Any other documents evidencing ownership of property (e.g. car registration papers These documents will help you determine whether you need to obtain probate or letters of administration, what assets need to be transferred, sold or liquidated, and who you need to notify of your loved one’s death.
4. Centrelink, pension providers, banks, share registries etc.
Certain organisations will need to be notified of your loved one’s passing:
The key ones are:
- Centrelink, financial institutions or superannuation trustees that may have been paying
your loved one a pension. Unless notified, pensions will usually continue to be paid into
a bank account of your loved one, and these amounts will most likely need to be repaid.
Other organisations to be informed include:
- Share registries
- Local councils or body corporates
- Utility companies
You do not need to let these institutions know immediately, but they will in time need to be informed. Banks and share registries are usually informed as part of the process of obtaining probate and letters of administration.
5. Cancel subscriptions and memberships
It may initially be difficult to identify all the subscriptions and memberships held by a loved one, although in due course you should be able to identify them, if only through communications sent by the relevant organisation to which loved one subscribed or was a member.
6. Pay outstanding bills
Once you have identified your loved one’s creditors and outstanding bills, you should pay them out with funds from their estate. This may take time if you need to obtain probate or letters of administration before you can access your loved one’s funds. Creditors just have to be patient and wait in such circumstances.
7. Close all on-line and social media accounts
This is not always easy to do, as you may find it difficult to find passwords or even know that some accounts exist. You may need to contact such companies as Facebook or Google directly to close such
5 Common Mistakes Made by Executors and Administrators
Executors or administrators of estate often have a lot to do. They sometimes feel overwhelmed, are not sure where to start and can find themselves under pressure from beneficiaries who want a quick winding up of the estate.
It is not surprising then that executors and administrators make mistakes. 5 common mistakes of executors and administrators to be avoided are as follows:
1. Delaying the administration of the estate
Executors and administrators have a legal duty to obtain probate or letters of administration and then administer the estate in a timely fashion (12 months is a rule of thumb, although often there are legitimate reasons for delay). However, apart from the legal obligations not to delay, delays can cause other problems. Creditors and beneficiaries can get anxious and difficult. Properties may need maintenance. Insurance policies may need to be renewed. In
other words, delays can cause more work, stress and add to estate costs.
2. Failure to locate all the major assets
Sometimes in the process of trying to get things moving, executors and administrators overlook assets that should have been included in the application for probate or letters of administration. If it is an important asset, like real estate, this may require an additional, later application to be made to the Court, costing time and money.
3. Not considering all the taxation consequences to the estate
The realisation or transfer of the assets of an estate will often have significant capital gains tax consequences, either for the estate or for beneficiaries. The estate may also receive income that will need to be assessed for tax. Executors and administrators need to make sure that they identify all the taxation ramifications for the estate before they distribute all its assets. Failure to do so can expose executors and administrators to personal liability.
4. Making unrealistic promises to beneficiaries
Beneficiaries are often keen to know how much they will receive from the estate and when they will receive it. Executors and administrators can underestimate the time it takes to administer an estate and can also overestimate the value of its net assets. This can disappoint beneficiaries’ expectations when estates take longer to administer than anticipated or when estate assets are sold for less than was anticipated, or when estate expenses are greater than first thought. Failure to manage beneficiaries’ expectations, although not usually a legal problem, can put executors and administrators under great personal pressure.
5. Failure to keep proper records
Some executors and administrators fail to keep a proper record of the expenses of the estate. If the expenses are minor or predictable, or the beneficiaries are relaxed, this may not be a problem. However, if a beneficiary wishes to query an expense, as they are entitled to do, this can become a very big problem. If there is not sufficient evidence for expenses, the executor or administrator might become personally responsible for them.