29/04/2010

A grant of probate is strictly speaking only necessary where the executor has to prove to a third party who currently controls the asset that the executor is entitled to deal with the asset.

A person who has no authority to act as a personal representative of a deceased person, but who nevertheless performs those acts is referred to as an executor de son tort.  In common law, such a person is regarded as having held himself or herself out as the duly appointed representative and is held liable as if he or she were so appointed.

However, third parties such as banks, share registries, land registries and insurance companies will not allow individuals to deal with a deceased’s assets without a proper grant of probate of the Will or letters of administration if the deceased died intestate.  The party releasing money or other property is willing to release it only to a person who is authorised to give a valid discharge.

Where the value of the estate is relatively small (usually under $30,000) or uncomplicated, some banks are willing to bend this rule where there are no other reasons to obtain a grant of probate.  The executor must however give a personal indemnity to the bank.  This degree of flexibility in informal administration does not extend to an estate consisting of real property or shares. 

A grant of probate is not necessary where the deceased’s only real estate is held as a joint tenant.  In such cases, the rule of survivorship applies and the land titles office will not require a grant of probate because the survivor automatically “inherits” the property on the death of the other joint tenant.  All that is required is the filing of the Certificate of Title together with a Transmission Application.

In all other circumstances when you want to transfer a deceased’s property to a third party or a beneficiary, Notice of Death is required along with a grant of probate or letters of administration.

Despite the obvious advantages in avoiding a probate such as ease of administration, saving in professional fees, speedier administration and not having to pay the hefty filing fee, it should be noted that an executor de son tort is protected from liability only to the extent that he or she administers an estate correctly. 

A personal representative who has obtained a grant is given more protection from liability for acts done in administration of the estate under the legislation and this should be borne in mind before taking up the role as an executor de son tort.

For further information regarding Estate Planning, please contact Peter Townsend of TOWNSENDS BUSINESS & CORPORATE LAWYERS on (02) 8296 6222.