The Brief for Accountants & Financial Planners
September, 2018

Probate information

Two minute scenarios...

We thought it was time to talk about probate...


Scenario One... John and Trish

Scenario: When John died his wife Trish was nominated as executor of his estate. John had money in superannuation, they jointly owned their home, some shares, and had a joint cheque account. John also had a term deposit with a balance of $20,000.

What's the issue? Trish wants to know whether she needs to apply for probate.

Solution: Possibly not. The superannuation death benefits are not considered estate assets and will be paid out to Trish (in line with John's binding death benefit nomination). Similarly, jointly held assets are not considered estate assets so the house, shares and cheque account can be transferred to Trish without probate being obtained. The only issue will be whether the bank will release the term deposit (solely in John's name) to Trish without probate. We have in the past provided a letter confirming the beneficiaries in the Will and the Bank has released cash funds. However, this may vary depending on the bank and the sums involved.

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Scenario Two... Maria and her executor

Scenario: Maria died four months ago and left her estate to three of her four adult children. She appointed her brother Robert, as executor 

What's the issue? Robert has distributed Maria's assets to her three daughters in accordance with her Will. Her son Marco, who was estranged and was not left anything in the Will, has now submitted a claim on the estate. Robert had not realised the need to wait six months from the date of grant of probate before distributing all of the estate assets in case a claim is made. If Marco succeeds, Robert is personally liable for any monies owed and will need to try and recover it from Maria's other children. They will be under no legal obligation to do so.

Solution: Getting advice when managing an estate can provide awareness of these potential pitfalls. 

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Scenario Three... Robert the executor

Scenario: Robert had submitted a tax return for Maria's income up to the date of her death.  

What's the issue? Robert didn't realise he also had to submit a tax return for the estate. He now has a tax bill to pay. Once again he has to ask his nieces if they will pay it. 

Solution: As above, getting advice from the deceased's lawyer and financial adviser can help avoid these problems. Not every estate needs a tax return submitted but in this case it did. Fortunately, his nieces were happy to pay but they were under no legal obligation to do so. 

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