What is probate?
Probate is the process of proving the Will of a deceased person at Court. It is usually done in the form of an application and does not require the appearance of solicitors at court.
Why is probate necessary?
Probate is necessary for several reasons, the most important being that the Will becomes a matter of public record once Probate is granted. Thereafter, the Will is freely available to anyone who asks to look at it. In this way, it ensures that the wishes of the deceased are carried out properly. The Grant of Probate itself is only available for inspection by beneficiaries and executors of the deceased, therefore the value of the estate is not made known publicly.
Other reasons why Probate is an important process include the Executor publicly acknowledging and accepting the role of Executor and the responsibilities and obligations tied to that role. The Executor can be held personally accountable for failing to carry out the wishes of the deceased, so if the Executor is uncertain on how to fulfill his or her obligations, it is necessary to then consult a solicitor to assist with the process.
Finally, Probate also informs creditors and debtors of the deceased of the need for them to make contact with the Executor so that claims against and by the estate can be dealt with and closed off, thereby ending the personal liability of the Executor for any unpaid debts and other financial obligations of the deceased.
Other reasons why Probate is an important process include the Executor publicly acknowledging and accepting the role of Executor and the responsibilities and obligations tied to that role. The Executor can be held personally accountable for failing to carry out the wishes of the deceased, so if the Executor is uncertain on how to fulfill his or her obligations, it is necessary to then consult a solicitor to assist with the process.
Finally, Probate also informs creditors and debtors of the deceased of the need for them to make contact with the Executor so that claims against and by the estate can be dealt with and closed off, thereby ending the personal liability of the Executor for any unpaid debts and other financial obligations of the deceased.
Do all deceased estates need to be probated or administered?
No. It depends on the value of the assets the deceased owned at the time of death and how those assets were owned. Very small estates (less than $100,000.00 in gross value) will not generally go through the Probate process. Moreover, not all assets of the deceased will necessarily be included for proving in the Probate process. Assets that are owned in a joint tenancy with others will also not be probated, but automatically go to the other joint owner(s) on the death of the deceased person. Business assets and superannuation assets are often also not assets that are probated. Even if you are almost sure that the estate does not need to be probated or administered, it is worthwhile for appointed executors or, in the case where there is no will, for relatives to get advice from a lawyer about this because the person dealing with the estate can be held personally liable by potential beneficiaries if they do not handle a deceased estate properly and within a reasonable time.
If I don't have a Will will my property be forfeited to the government on my death?
No. It would be a very rare occurrence where assets would be forfeited to the government where you do not have a Will because (in NSW) the Succession Act 2006 (as amended) will provide that your property will be left to your nearest relatives. The person(s) that inherit will be the person(s) with closest biological or kinship ties to you. The default provisions of the Act will almost always prevent a deceased person's assets falling into the hands of the government, but they may nonetheless have unfair consequences, particularly for de facto partners and other non-familial dependents of the deceased. For this reason, it is always recommended that you have a will so that your property is given to the persons you really want to have benefit from your property on your death.
If a deceased person owns property as a joint tenant with another person, on the death of the deceased, the other person will automatically take the deceased's share in the jointly owned property and this property therefore does not fall within what is known as "the deceased's estate". It is dealt with outside of the Probate process - for example, real property is handled in NSW by way of Death Notice. This office can also assist with this process. If the property is mortgaged, mortgagee approval is also required. Typically, married couples would own their assets jointly, but this is not always the case. Therefore, even married couples should have Wills.
If a deceased person owns property as a joint tenant with another person, on the death of the deceased, the other person will automatically take the deceased's share in the jointly owned property and this property therefore does not fall within what is known as "the deceased's estate". It is dealt with outside of the Probate process - for example, real property is handled in NSW by way of Death Notice. This office can also assist with this process. If the property is mortgaged, mortgagee approval is also required. Typically, married couples would own their assets jointly, but this is not always the case. Therefore, even married couples should have Wills.
If I don't have a Will, does my estate need to go through Probate?
Again it depends on what assets own and how you own them. There is a process akin to Probate that larger estates will go through where there is no Will. The process is called the Administration of the Estate and it is discussed above. It may be more expensive than the Probate process (for example because kinship ties may need to be proved and to do this may require extensive and professional genealogical research) and this is another good reason to have a Will as the burden of cost for both Probate and Administration processes is borne by the estate of the deceased, thus reducing the assets for distribution to beneficiaries. Wills are relatively inexpensive legal documents when compared with costs of court applications needed to deal with problems caused by having no will or a badly drafted will.
What fees, taxes and other costs are associated with Probate or Administration of Estates?
Probate Costs
The costs that need to be paid by the Estate for Probate are solicitor's fees, court filing fees, notice fees and any other expenses that need to be paid by the Executor (or the Executor's legal representative) on behalf of the deceased's estate - for example, amounts spent on valuations of the deceased's property and chattels or genealogical investigations.
Solicitors fees are strictly controlled by regulation, as are the court filing fees, which means that as soon as the value of the estate is more or less ascertained, it is possible to give clients a good indication of the costs involved. Most Executors will have a fair idea of the value of the estate early on in the process so will be able to be given an expected fee estimate quite early on in the process by the estate lawyer. Lawyer fees are always negotiable and where the estate is relatively uncomplicated and can be dealt with quickly, your lawyer may be more willing to negotiate overall cost.
Taxes
In New South Wales, there are no death duties. Nonetheless, if the deceased was liable to pay other taxes at the time of his or her death, these need to be paid when they fall due. Where the deceased was employed at the time of their death, for example, a final income tax return needs to be filed by the Executor on behalf of the deceased person. If property is sold as part of the process of finalising the estate, and that property attracts Capital Gains Tax or GST or Land Tax on the sale, that would also need to be paid - either by the beneficiaries of the Will or the deceased estate itself, depending on the terms of the Will. While the sale of a deceased's primary residence after their death does not tend to attract a tax liability, to avoid Capital Gains Tax liability on the sale of the property, it is necessary to finalise the sale within 2 years of the death of the deceased.
Taxes are also payable on non-estate assets such as superannuation death benefits paid to a beneficiary who was not a dependent of the deceased or where the superannuation is paid into the estate (the estate rather than a person then being the nominated beneficiary). It may therefore make sense for a will-maker to nominate their spouse or long term partner as the beneficiary. If the will-maker has no spouse or dependent partner, dependent children are probably the next-best people to appoint as beneficiaries. Your solicitor can provide more advice here depending on your particular circumstances.
The costs that need to be paid by the Estate for Probate are solicitor's fees, court filing fees, notice fees and any other expenses that need to be paid by the Executor (or the Executor's legal representative) on behalf of the deceased's estate - for example, amounts spent on valuations of the deceased's property and chattels or genealogical investigations.
Solicitors fees are strictly controlled by regulation, as are the court filing fees, which means that as soon as the value of the estate is more or less ascertained, it is possible to give clients a good indication of the costs involved. Most Executors will have a fair idea of the value of the estate early on in the process so will be able to be given an expected fee estimate quite early on in the process by the estate lawyer. Lawyer fees are always negotiable and where the estate is relatively uncomplicated and can be dealt with quickly, your lawyer may be more willing to negotiate overall cost.
Taxes
In New South Wales, there are no death duties. Nonetheless, if the deceased was liable to pay other taxes at the time of his or her death, these need to be paid when they fall due. Where the deceased was employed at the time of their death, for example, a final income tax return needs to be filed by the Executor on behalf of the deceased person. If property is sold as part of the process of finalising the estate, and that property attracts Capital Gains Tax or GST or Land Tax on the sale, that would also need to be paid - either by the beneficiaries of the Will or the deceased estate itself, depending on the terms of the Will. While the sale of a deceased's primary residence after their death does not tend to attract a tax liability, to avoid Capital Gains Tax liability on the sale of the property, it is necessary to finalise the sale within 2 years of the death of the deceased.
Taxes are also payable on non-estate assets such as superannuation death benefits paid to a beneficiary who was not a dependent of the deceased or where the superannuation is paid into the estate (the estate rather than a person then being the nominated beneficiary). It may therefore make sense for a will-maker to nominate their spouse or long term partner as the beneficiary. If the will-maker has no spouse or dependent partner, dependent children are probably the next-best people to appoint as beneficiaries. Your solicitor can provide more advice here depending on your particular circumstances.