When a Grant of Probate is obtained, the court expects the person appointed as Executor to administer the estate properly. This means that there are certain responsibilities and duties one must fulfil if one is appointed Executor.
These duties include collecting the assets of the deceased, organising funeral arrangements, paying the debts owed by the deceased and distributing the estate in accordance with the will. The Executor is also required to obtain Probate and has a duty of care towards the beneficiaries.
If Executors do not carry out the duties properly, they can be removed by a court order. The court can revoke the Grant of Probate on sufficient grounds being established.
Recently the Supreme Court of NSW ordered an Executor to be removed due to a conflict of interest. The Executor tried to transfer shares owned by the deceased to himself instead of the named beneficiaries under the will.
The Executor knew that the deceased held the shares and the shares were to be given to the beneficiaries. However, the Executor did not record the shares in the assets and liabilities of the estate.
The beneficiaries brought a court case, seeking to have the Executor removed. At law the Executor has important duties to fulfil and failure to perform these duties, can lead to the removal of the Executor and revoking the Grant of Probate.
In this case the Executor did not locate and disclose all the assets of the estate in a timely manner. He made unauthorised transactions to pay himself substantial amounts of commission from the estate’s funds. He did not administer the estate in a timely and proper manner.
It is generally accepted that the reasonable time for an Executor to complete their obligations to the estate is, one year from the date the Grant of Probate was obtained. In this case, the Grant of Probate was obtained on the 29 March 2011, and the administration of the estate remained incomplete at the date of the hearing, five years from date of the Grant of Probate.
The Executor had also failed to keep adequate accounts of the estate and could not give an explanation as to why the accounts had been poorly managed. The Court found he did not recognise the significance of his role as an Executor.
The court was satisfied that these breaches of his duties were serious and justified the Grant of Probate being revoked and removing him the Executor.
It is essential for an Executor to properly carry out their duties entrusted to them by the Probate Court and to act honestly and fairly. The Executor has fiduciary duties and can become personally liable to the beneficiaries and creditors of the estate even if that was the result of his carelessness. Failure to properly administer the estate and placing the interests of the beneficiaries at jeopardy will likely result in the court removing the Executor, revoking the Grant of Probate and issuing a new Grant to another person.
Graeme Heckenberg is a specialist Wills and Estate Lawyer and has been looking after Sydney clients for over 20 years. Offices are centrally located in Sydney CBD, Macquarie Street and close to public transport.
Call today for an appointment on 9221 2779.