Executor Duties and Responsibilities

An executor's duties are owed to the estate and to the beneficiaries. They include:

• preserving the assets of the estate;
• obtaining probate where required;
• calling in the assets — closing bank accounts, transferring or selling real estate, claiming superannuation and insurance payable to the estate;
• paying the deceased's liabilities, including funeral and testamentary expenses, tax debts and creditors, in the statutory order of priority;
• lodging the deceased's final personal tax return and any estate tax returns;
• distributing the residue to beneficiaries in accordance with the will;
• keeping accurate records and being prepared to account to beneficiaries.

Underlying all of these is the fiduciary duty: the executor must act in the best interests of the estate, must not profit from the office (beyond properly authorised commission or reimbursement), and must not place themselves in a position of conflict.

Preservation is the first duty. The executor must secure the deceased's home and vehicles, redirect mail, maintain insurance on real estate and valuable chattels, and ensure that perishable or rapidly depreciating assets are dealt with promptly. Where the estate includes a business, the executor must consider whether to continue trading pending sale or to wind down; either decision involves risk and should be documented.

Estate funds must be kept separate from the executor's own money. The standard practice is to open a dedicated estate account in the name of the executor as executor of the deceased estate; all receipts go in, and all payments come out. Mixing funds — even briefly — is one of the most common ways executors expose themselves personally, because it makes accounting impossible and invites allegations of misuse.

The executor must identify and pay the deceased's debts in the correct order. Secured creditors are paid out of the charged asset; funeral and testamentary expenses and tax debts rank ahead of unsecured creditors. Where the estate may be insolvent, the executor must not prefer one unsecured creditor over another and may need to consider a deceased estate insolvency administration.

On the tax side, the executor must lodge the deceased's final personal income tax return (the date of death return) and, if the estate generates income during administration, separate estate tax returns under the estate's own tax file number. Capital gains tax issues arise on the sale of inherited assets and on transfers in specie to beneficiaries — these require specific advice because errors are expensive and often irreversible.

Most executor-beneficiary disputes are about communication, not money. Residuary beneficiaries are entitled to information about the administration and a copy of the will. Specific gift beneficiaries are entitled to information about their gift. Regular, plain-English updates — even brief ones — head off most complaints. An executor who refuses to communicate, or who appears to be acting in their own interests rather than the estate's, will frequently end up the subject of an application for removal or for orders to pass accounts.

Distribution should not occur within six months of the date of the grant if a family provision (TFM) claim is possible — and for most estates it is. An executor who distributes earlier and is then served with a claim may be personally liable to pay the provision ordered, because the estate is no longer available to fund it. The six-month rule applies whether or not the executor is on notice of an actual or threatened claim.

If an executor falls behind, makes a mistake or finds the role overwhelming, the right response is to seek advice early. Solutions range from engaging a solicitor to assist with specific tasks, to applying to the Court for directions on a difficult question, to applying for the executor to be discharged and an administrator de bonis non appointed. None of these is a failure; what is a failure is hoping the problem will go away while the estate sits unadministered or partially distributed.