Property transfers following a deceased estate
Executors and administrators, referred to as the Legal Personal Representative (LPR), of a deceased estate hold a position of considerable trust and must act with care and diligence in handling estate assets.
The role of the LPR includes the identification, protection and preservation of estate assets, ascertaining liabilities, paying debts and then distributing net assets to those entitled.
The LPR is accountable to the beneficiaries and may be held liable for losses sustained through negligence. They must ensure that the terms of the Will or rules for distribution of an intestate estate, are strictly followed. The transfer of property forms a large part of this role.
When can property be transferred?
Unless all estate assets are held jointly or the estate is very small, and it is unlikely that a claim will be made on the estate, a grant of probate or letters of administration (in the case of an intestate estate) is generally required.
A grant gives the executor or administrator Court approval to commence dealing with the assets of the estate.
Although the estate should be administered without undue delay, the LPR must also ensure that all liabilities are met and there are no claims on the estate before transferring assets.
To protect an LPR from liability, a notice of intended distribution of the estate is published. This gives potential claimants and creditors an opportunity to make a claim. If no claim is received within the timeframe applicable for the respective state / territory in which the grant was made, the estate can be administered and property transferred.
Where to start
It is important that a full list of assets and liabilities is held – if a grant of probate or letters of administration has been made then the list would already have been prepared.
The LPR will need to read the Will carefully to ensure that property is distributed in accordance with the wishes of the deceased. This is generally straight-forward however sometimes Wills are ambiguous or contain complex formulae for working out the respective amounts or assets that the beneficiaries are to receive. The Will may also establish one or more trusts which will require ongoing management and administration.
If there is uncertainty regarding the terms of the Will, or in calculating the beneficiaries’ respective shares, then appropriate advice should be obtained. Assistance may also be required to establish and maintain trusts.
The LPR should open an account in the name of the estate to receive funds from the closure of the deceased’s bank or building society accounts, the cashing of investments, or the sale of assets. The account may be used to pay estate expenses and, finally, to distribute surplus funds to beneficiaries.
Transferring personal property
The transfer of personal items is generally straight-forward. The Will may identify and provide specific gifts of certain pieces of artwork, jewellery or antiques to named beneficiaries. Alternatively, it may provide for the general distribution of personal items between all beneficiaries.
A common-sense approach generally works when transferring personal property.
The transfer of motor vehicles will be in accordance with the respective state / territory legislative requirements. The authorities will generally require proof of death and proof of entitlement of the transferee (a copy of the grant or Will).
Transferring Real Estate
Real estate is generally the most considerable asset to be transferred from a deceased estate. A grant of probate or letters of administration is required to transfer property owned outright by the deceased or a share in real estate held in his or her sole name.
Property that was held by the deceased with another party or parties as joint tenants does not form part of the estate. It is simply transferred to the surviving co-owner/s in accordance with the processes required in each state or territory. This generally requires completion of the appropriate transmission and sales notices, and lodgement with the title document and proof of death with the relevant authority.
The sale or transfer of real estate forming part of the estate may have significant capital gains tax and stamp duty implications. Executors, administrators and beneficiaries should ensure they obtain appropriate financial or legal advice on such matters. For example, the timing of a beneficiary receiving a high-value asset may need to be carefully considered – it may be financially beneficial to retain an asset in trust for a certain period of time, rather than transferring it immediately.
The LPR may need to arrange valuations prior to the sale or transfer of real estate. These costs generally come out of the estate funds. The LPR will also need to ensure that insurance is maintained for real estate (and other considerable assets) and that beneficiaries are advised to obtain their own insurance. Once the property is transferred and before current insurance policies are cancelled.
To transfer real estate held New South Wales, the executor or administrator completes a transmission application which is lodged with the Land and Property Office with a notice of sale and certified copy of the grant of probate or letters of administration.
Real estate can be transferred directly to a beneficiary named in the Will or alternatively, to the executor who may then sell or otherwise deal with the property. Nominal stamp duty (currently $50) is payable on the transfer from the executor to a beneficiary. Your lawyer can advise on the process required to transfer real estate in other states or territories.
Executors and administrators have a duty to act with care and diligence and should understand the requirements for accessing and dealing with estate assets. It is important to obtain legal or financial advice to ensure that stamp duty and taxation implications are considered.