The information on this page is relevant to Victoria, Australia
Probate is the process of obtaining official (legal) recognition, from the Supreme Court of Victoria, of:
- the last Will of the deceased, and
- the executor/s named in the Will
Once a probate order is made by the court, those persons or organisations holding estate assets can safely deal with the executor. The executor becomes the official personal legal representative of the deceased.
It is not always necessary to obtain probate – it is only needed if an asset holder requires it to release the asset to the estate/executor.
However, where there is real estate owned by the deceased (not “jointly” owned in the legal sense), probate is always required.
There is a very loose rule of thumb that a bank will not require probate if the account has a balance of less than about $15,000. But this should always be checked.
Aged care accommodation bond holders always require probate to release the bond moneys to the executor.
Obtaining a grant of probate
Probate is obtained by making an application to the Supreme Court.
These applications are most often dealt with administratively – no court appearances are required.
Once the death certificate is available an application will often be granted within a few days of its filing.
All the documentation is now filed electronically, except the original Will, which must be delivered to the court. The court will hold the original Will indefinitely.
One of the main application documents is the inventory of assets and liabilities. Assets and liabilities (if any) have to be listed in this document, with values as at date of death. The inventory is an exhibit to an affidavit.
Assets are divided between those in Victoria and those located everywhere else.
Formal valuations of assets are rarely required. For example, the market value of real estate can be taken from the capital improved value found on the most recent municipal rates certificate.
The probate application can be made fourteen days after the probate advertisement is placed on the Supreme Court website.
Letters of Administration
This is a very similar application to the probate application, but is made where there is no Will.
The principal beneficiary (under the intestacy laws) usually makes the application.
The role of the executor
In simple terms the executor is responsible for dealing with funeral arrangements, identifying and protecting the assets of the estate, paying any estate debts (including any taxation liabilities), and distributing the net estate according to the terms of the Will (or according to the intestacy laws where there is no Will).
The law imposes very strict obligations on executors to act with propriety. Executors often employ the services of solicitors to assist them, especially with more complex estates. But executors can often handle simple estates without legal assistance.
In more simple estates, the solicitor will often assist with obtaining the grant of probate, with the executors acting alone in the administration/distribution of the estate.
Executors should act as quickly as practicable to finalise an estate, as beneficiaries have rights to distribution of their bequests in a timely manner.
The six month rule and Will challenges
It is very often considered unwise for an executor to distribute the net estate assets to beneficiaries within six months of the date of the grant of probate.
This is because a challenge to the Will can be made within six months of that date.
If an executor distributes estate assets within the six month period and a successful challenge is made, the executor can be personally liable to the successful challenger.
With some exceptions the only people who can challenge a Will, in relation to distribution of estate assets to them, are spouses/partners, children and step-children.
It is irrelevant that a beneficiary receives a bequest in a Will – such a person can still challenge. The law is concerned about the adequacy of the gift to the beneficiary.
Avoiding challenges to Wills (granny flat agreements)
There is no substitute for good legal advice in this complex area.
If you leave any important person out of your Will, you leave open the door for a challenge.
Statistically most Will challenge cases (unless completely meritless) are settled before trial at compulsory court ordered mediations, with the challenger succeeding to some extent . Executors are usually advised that it is not worth proceeding to trial with all of the costs and risks that would involve.
The only foolproof way to avoid a challenge is for the estate to have no assets or minimal assets. An estate with no assets can’t practically be challenged. A challenger can only seek a distribution or further distribution from the net assets held in the estate.
We have a particular interest in this area in relation to granny flat agreements.
Granny flat agreements are increasingly being used as an estate planning tool to avoid challenges. The typical arrangement is that parents transfer their home to a favoured child or children in a granny flat arrangement – that is, for the right to continue to live there for the rest of their lives. The parents will often be motivated to do this if they want to avoid a Will challenge from a children who they don’t want to benefit in their Wills. Such a child might be estranged for some reason or may have already received substantial gifts or benefits during his or her life.
As the home will often be the major asset owned by the parents, their deceased estates will hold very little.
Click on this link for more information – Granny flat agreements.