NSW Executor of Will - Wait 6 Months for Distribution?

[Shimon]

An FAQ on the Law Society's website says:

How is an executor or trustee protected against further claims before the estate or trust can be safely distributed?
A Notice of Intention to Distribute the Estate (or Trust) should be advertised, in the prescribed form, giving at least thirty (30) days for claimants to notify the legal personal representative of their claims. Distribution should not take place until at least six months after the date of death or, if the legal personal representative has received notice of an intention to make a family provision claim which has not been commenced, at least 12 months after the date of death.
​

If no notice of claims against the estate have been received within 30 days of publication of the notice to distribute, should a (non beneficial) executor of will still wait six months to distribute the deceased estate? If the executor of will withheld enough of the estate to easily cater for predictable liabilities such as tax return, what are the examples of claims or liabilities that might he be exposing himself to by distributing before the 6 months has expired?

 

[Therese]

Hi Shimon,

I would suggest that an executor of a will should wait the entirety of the 6 months to follow procedure and protect themselves from liability.

Examples of claims from the estate are tax return, funeral costs and other payments or debts owed by the estate.

My understanding is that if someone comes forward to claim a debt and there is not enough money left in the estate to pay it, then the executor would be liable if the estate was distributed prior to the 6 months. However if someone comes forward after 6 months then the executor has followed procedure and cannot be held liable.

I would suggest getting personalised advice from a solicitor in regards to your situation if required. See Get Connected with the Right Lawyer for You

 

[Shimon]

Thanks for your reply Therese.

Personalised paid legal advice has been fruitless - an estate lawyer with 40 years experience couldn't explain to me why the Form 114 Notice to Distribute says claims must be received within 30 days from publication, yet also says the executor will distribute according to the claims he has at the the time of distribution (not those he received within 30 days).

If Form 114 instead said particulars of claims must be received by 30 days from publication or 6 months from the date of death, whichever occurs later, I would logically understand it. But it doesn't - it strictly says claims must be received within 30 days.

It's nice and safe to say don't distribute for 6 months, but in practice this can cause additional pain for an executor, like an additional tax return and having to maintain an empty house in the estate for another 5 months. The insurers won't insure the empty house and renting it out for 5 months carries opens up another can of worms. The executor of the particular will in question is also a closet gambler who I can see also wants to distribute early to remove any temptation he has to gamble the estate.

It's just simple risk management, finding out at which point substantial claims can no longer be made while reserving a much smaller portion of the estate to cater for the typically predictable liabilities.

Form 114 - http://www.ucprforms.justice.nsw.gov.au/Documents/ucpr_form_114_v4.pdf

 

[winston wolf]

I see your problem!

You want the legal system to make sense and operate in a predictable way!
Sorry, that's not how it is.
As the executor, you may choose to take the risk, but lawyers are risk averse. As they advise with the term should wait 6 months not must wait.
A Family provision claim can be made 12 months after death, that's still a claim.

Perhaps if we knew your interest in the estate it would help. If you are a beneficiary and the executor wants to distribute early what's the issue?
Or could I read that you have an interest in the executor and wish to protect them?

Cheers

 

[Tim W]

Are you this executor?
Or are you a beneficiary?

 

[Therese]

Hi Shimon,

I can understand that having an empty house for so long can cause some insurance problems - I believe there are ways around that, such as going to stay there a night a month. Check the insurance policy, but I think if you can demonstrate that the house is being used on a regular basis then insurance will cover it.

 

[Shimon]

I see you problem!

You want the legal system to make sense and operate in a predictable way!
Sorry that's not how it is.
As the executor you may choose to take the risk, but lawyers are risk averse. As they advise with the term should wait 6 months not must wait.
A Family provision claim can be made 12 months after death, that's still a claim.

Perhaps if we knew you interest in the estate it would help. If you are a beneficiary and the executor wants to distribute early what's the issue?
Or could I read that you have an interest in the executor and wish to protect them?

Cheers

The appropriate sections, 58 and 93, of the Succession Act, are fine and make total sense.

This part of Form 114 however:

Any person having any claim upon the estate of xxxxx must send particulars of the claim to the legal representative for the estate care of yyyyy, within 30 days from publication of this notice.

In my searched opinion is not faithfully representing the requirements of Sections 58 given claimants have at least a year to claim. Maybe it's just designed to get rid of petty, uninformed claimants who think they only have 30 days to claim? I see no point of the 30 days beyond giving at least 30 days to claim should the Notice to Distribute be me made in the 12th month after death.

 

[Shimon]

I see your problem!
Perhaps if we knew your interest in the estate it would help. If you are a beneficiary and the executor wants to distribute early what's the issue?
Or could I read that you have an interest in the executor and wish to protect them?

Are you this executor?
Or are you a beneficiary?

My father is executor, mother the residuary beneficiary (where residue = 95% of the estate). I receive no benefit and apart from the executor asking me to handle the transfer of shares, my interest is just to make sure things go safely for mum and dad (who are separated). My father is not capable of such a duty and has employed a solicitor but wants to ignore the solicitor's 6 month advice as he might be tempted to gamble some of the estate and he is desperate for the money mum has promised him some when everything has gone through. My father won't admit the gambling problem so acts like he is doing my mother a favour by distributing early.

 

[Shimon]

Hi Shimon,

I can understand that having an empty house for so long can cause some insurance problems - I believe there are ways around that, such as going to stay there a night a month. Check the insurance policy, but I think if you can demonstrate that the house is being used on a regular basis then insurance will cover it.

The current policy required a bit more than that - the main issue I guess is the estate owns the house, the executor won' t stay or rent the place because of the extra work and 90 minute trip, and won't want the soon-to-be-owner, my mother, staying there out of spite.

 

[winston wolf]

Well it sounds like you are just trying for the best outcome.
If your father is willing to take the risk if a creditor or other claimant comes looking just distribute after 30 days.
Otherwise he risks being responsible if an insurance claim is rejected because of his actions/in actions.

Don't know any body willing to house sit? (nephews nieces?)