Executor Responsibility
If you are an Executor under a Will you are not only dealing with the grief of losing a loved one, but you now have the added responsibility of Estate administration. The first thing to be aware of, is that Powers of Attorney cease to have effect. They cannot be relied upon to access bank accounts or pay expenses. Executors need to obtain legal authority to manage the Estate. In many cases, this will require an application for probate.
It is the Executors role to carry out the terms of the Will, arrange for the burial or cremation the deceased, make a list of assets and liabilities, call in the assets, pay testamentary expenses and debts, pay legacies/bequests, distribute the residue of the estate to the persons entitled to benefit, hold assets on trust for the beneficiary, keep accurate accounts etc. Other considerations that may add to the complexity of managing an Estate are blended families, Occupation Rights Agreements (ORA’s), debts, contracting out agreements, trusts, businesses, foreign assets or claims against the estate. You should not act as Executor if you intend to personally challenge the Estate
Executors must deal with the Estate assets with the utmost honesty and carry out their duty to act even-handedly between the beneficiaries. In doing so Executors must call in and realise all assets within a reasonable time frame - generally within one year (the “executor’s year”). Although it may take longer in some circumstances.
The Executor should also ascertain what debts were owed by the deceased (including personal and Estate taxes) and arrange for their payment from Estate funds. The Executors may need to open a bank account for the Estate and obtain an IRD number. The titles to property will also need to be changed into the Executors names until they are dealt with in accordance with the Will. Executors may also need to hold and manage assets for the benefit of a beneficiary who has not yet satisfied the requirements for receiving their inheritance such as attaining a certain age or entering into a Contracting Out Agreement before receiving their inheritance.
Many people are also not aware that there is a six month non-distribution period following a grant of probate. This means the Estate should not be distributed prior to the passing of this time to enable any potential claims against the Estate to come to light. Distribution prior to the six months may render the Executor personally liable in the event that a successful claim is made against the Estate. While it is not desirable, in limited circumstances, distribution may be made earlier, but only upon written agreement between the Executor(s) and beneficiaries.
While some Estates are reasonably straight forward, life has become increasingly more complex and it is up to the Executor to deal with these important matters with the utmost care and skill. Having a legal advisor to guide you through this process can help alleviate the stress of the unknown. The team at Schnauer and Co are available if you would like to discuss this further.