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Acting as an Executor can be tricky. Why you need proper legal advice

General, Wills & Probate

When someone dies, an executor is the person appointed by the willmaker to administer the estate in accordance with the will. The main duties of an executor are to collect the assets of a deceased estate, pay debts, pay legacies under the will, and distribute the assets to the beneficiaries.

It might sound straight forward, but did you know that you can be held personally liable if you get it wrong? It is best to seek legal advice before you even begin the process of administering an estate, to make sure you minimise any personal risk.

You might be wondering, where might an executor become unstuck?

Some areas of concern include:

  • Being held liable as an executor for any damage to estate property which has not been secured or insured.
  • Beneficiaries may have a right to pursue a claim against an executor personally to recover the shortfall if assets are not sold for a fair price.
  • An executor can be personally liable for the payment of money to the tax office if all the assets of the estate have already been distributed to the beneficiaries.
  • If it can be shown that an executor caused any unnecessary delays in the administration of an estate which resulted in a financial loss, the executor can be personally liable for this loss.
  • An executor should be careful to prevent any conflict occurring between their duty as an executor and the interests of beneficiaries. It’s important to note that if a beneficiary is unhappy with how an executor is administering an estate, the beneficiary may apply to the Court to have that executor removed.

In a recent Victorian case Denby v Power & Anor [2016], the wife of the deceased was the sole beneficiary of his estate and sought the removal of the executors. The executors were the brother and sister of the deceased, and the Court found that they acted against the interests of the wife on a number of grounds and that their actions justified their removal.

One of the issues raised was that the executors had challenged the deceased’s superannuation binding death benefit nomination in favour of the wife and sought to have the funds paid directly to the estate. They were unable to show that this action (amongst others) fulfilled their executorial duty to the wife as beneficiary. In fact their actions were found to be in direct conflict with their duties to the beneficiary and caused unnecessary delay and costs. The executors were removed and the wife was appointed as administrator of the estate. The executors may face further liabilities personally in relation to the large amount of costs incurred for their administration of the estate.

It’s important to carefully consider your actions as executor to avoid personal liability, so please contact our Estates team if you would like further advice.