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Test Your Knowledge as Executor

Taking this 'fitness test' might help you decide if you have what it takes to be an executor.

The scene:

A good friend has died leaving a spouse, two adult male children, and a daughter 16 years of age.

Some years earlier you had consented to be named as executor. Your friend's spouse telephones you with the news that the Will has been located and that indeed you are the named executor. You arrange a meeting for the following day to discuss what needs to be done. That night you start to think about things and whether you can do the job properly. You know you will need to make a decision very soon.

What is one of the first things you do as executor?

If your answer included 'notify the beneficiaries' you did well. If you were not quite sure, things are off to a bad start.

You want to apply for probate of the Will as soon as possible. There is something you should check first - What is it?

If you answered 'check to see if there is a later Will' or writing that may constitute a Will under Part X of the Wills Act (informal Wills) - you did well. If you didn't check for a later Will, you may have just wasted a lot of time rushing around for nothing. You may not be executor of a later Will!

You decide to look through the deceased's personal papers to see if there is anything of importance. What are you looking for?

If you answered ‘possible later Will’, or ‘writing that may constitute a Will under Part X of the Wills Act (informal Wills) ’ or 'codicils, title deeds and bank account details' you did well.

But don't forget health insurance details and medicare card, superannuation or pension statements, receipts for medical expenses, other income tax deductions, income tax stamps or certificates of deduction, local authority, water and land tax assessments, contracts of sale, mortgages or leases, cheque butts, interest bearing deposit receipts, bonds, life assurance policies, motor vehicle licenses, debentures, share certificates or transaction statements, hire purchase agreements and receipts, house, contents and vehicle insurance policies and current premium receipts.

These items are important in the proper administration of the estate.

The deceased has real estate and shares. You want to transfer them to the beneficiaries as soon as possible. What do you need to do to satisfy capital gains taxation legislation?

If you answered 'take into consideration the special concessions for a deceased estate" you did well. If you haven't already planned gathering information regarding such things as the value of the asset, its original purchase price, the purchase date, ongoing acquisition details etc then you might be risking legislative non compliance, not to mention financial loss to the estate.

The widow asks if she can have all the jewellery that formerly belonged to her late husband's mother. What do you say?

The best answer is to say nothing without first checking what the Will says about jewellery. If you answered 'Yes' without checking, you could have been in for a big surprise later on. It may be that the deceased gave his mother's engagement ring to his sister! Establishing ownership and referring to the Will is most important if you are to distribute the estate properly.

You realise after a few days that you will have several months work on your plate. You have holidays coming up. What could go wrong when you are away?

It is possible that nothing will go wrong. Then again, events might happen which require urgent action. You can't ask your neighbour to 'keep an eye on the estate administration'. What things could happen that might require your urgent attention? Investments may mature. The court might ask you to provide evidence regarding the validity of the Will. The opportunity to sell the property might be lost. Creditors might be upset about delayed payments. Car registration or insurance might fall due. An offer might be received to take up a rights issue on shares and the time to take up the offer lapses. Taking a break might be a question of risking the proper attention to the fine detail of administration of the estate. The worry of things going wrong might even spoil your holiday. Oh, and it would be extremely difficult for the estate administration if you were to fall ill or have a family emergency of your own.

You have an opportunity to collect proceeds from a bank account before probate is granted. The bank asks you to sign an indemnity. Do you?

If you answered 'No' you probably made a good choice. Signing the indemnity will only protect the bank if things go wrong. That's not a cost you can pass on to the beneficiaries. If someone asks you to sign an indemnity, you can be sure someone is trying to transfer the risk to you. If you answered 'Yes', you have just accepted personal risk.

You have placed the deceased's investment property in the hands of a real estate agent. The agent has received an offer and has called around one night to present it to you. What are you on the lookout for?

A good answer would include making sure the details of the land being sold match the title details, making sure the duplicate title deed will be readily available at settlement; Checking that the sale price shown in the contract is acceptable; Making sure there are no clauses or special conditions added which you don't understand or which could let the purchaser get out of the contract; Is the settlement date reasonable? Is the offer subject to finance? If you are giving vacant possession, have you given notice to the existing tenant to vacate the premises? Most importantly, have you made sure you have a Grant of Probate before you sign the contract?

Negotiating the sale and settlement of property can be stressful and demanding of your time.

Six months later you have finally sorted everything out and are ready to sign the cheque paying the daughter of the deceased her share. Do you sign the cheque?

I hope you answered 'No'. The deceased's daughter has not yet turned 18 years of age. What you should be doing is setting up a trust fund for her and investing the funds prudently. It's only another 18 months to go!

By the way, if you do find yourself in this situation, and you don't want to take on the responsibility of trustee for a minor, (which can mean taking care of investments and paying monies for maintenance education and welfare) the Public Trustee can take over from you as substitute trustee.

How did you go in the fitness test? There are so many things that an executor has to do. Nothing has been mentioned here about estate income and trust taxation or the distress that can be caused through family disputes. These and a number of the really tricky problems - like proving that the Will is valid or defending an Inheritance Act claim - can make an executor's job a thankless task.

There is a myriad of laws that an executor must comply with. The Trustees Act, Administration Act, and Wills Act are central to an executor's body of knowledge.

The Public Trustee has identified more than 90 Acts of the State and Federal Parliaments that need to be complied with in performing its duties as Public Trustee. Many of those Acts place compliance obligations on executors.

Administering an estate requires an understanding of complex legal and financial practices and the executor swears on oath that he or she will administer the estate according to law. The executor must also maintain the assets while the estate is being administered, which often takes months and sometimes, years. The experience of being an executor is one that many of those who have accepted the task would not wish to repeat. The choice is yours. Like investment and retirement planning, estate administration requires the advice of dedicated experienced professionals. It is a complex, time consuming, and demanding job.

The Public Trustee provides professional estate administration services at a fee that represents value for money.

To make obligation-free enquiries about the Public Trustee's deceased estate administration service, phone 1300 746 116.

Last updated: 11-Feb-2016

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