Understanding the terms used when administering an estate

Will

A will is a document that is signed by a person during their lifetime, specifying what will happen to their estate after they have died.

Testator/Testatrix

This is the person who has made and signed the will.  A testator is a man, and a testatrix is a woman.  This person is often called the will-maker.

Estate

The word “estate” is used to describe all of the assets that a person owned at their death.  This could include things such as land, shares, insurance policies, vehicles, household and personal items.

Trustees and Executors

“Trustees” and “executors” are often used interchangeably.  However, they are different roles, even though they are often undertaken by the same person(s).

The executors have the responsibility for ensuring that the will-maker’s instructions in the will are carried out.  For example, the executors may arrange the funeral, apply for probate, call in any debts, distribute chattels to beneficiaries and sell the assets of the estate.

Once the debts have been paid and the assets distributed, the executors’ role ends.

However, sometimes the will is more complex and a trust is created under the will.  When this happens, the executor’s role moves from executorship, to trusteeship.  The trustee is obliged to administer the trusts created by the will and this role can, in some cases, last for years.

Probate

If a will-maker owns land in their own name, or if any asset in their estate is worth more than $15,000.00, the executors will need to apply for a grant of probate for the will.

Obtaining a grant of probate is the process of obtaining the High Court’s confirmation that the will is authentic and can be used to divide the will-maker’s estate.  This process formally authorizes the appointment of the executors to administer the will-maker’s estate.

To obtain probate, the executors named in the will make an application to the High Court and, in the application, they must prove that the will-maker has died, that the will was properly signed and that the will was the last will of the will-maker.

If the High Court registrar is satisfied with the application, a grant of probate will be produced.

Chattels

When we refer to “chattels,” we are referring to moveable things that a person owns and uses.  “Household chattels” are things such as sofas, pots, pans, vacuum cleaners and linen.  Personal chattels are things such as clothing and jewellery.  The terms are often used somewhat interchangeably and often called “household and personal chattels.”

Intestate

This means that a person has died without a will.

Letters of administration

If a person dies intestate (without a will), or without a will that can be proven by a grant of probate, then an application must be made to the High Court for Letters of Administration appointing an administrator to deal with the deceased’s estate.  The administrator is appointed by the Court and is then entitled to deal with the estate of the deceased person.

Administrator

An administrator is appointed by Letters of Administration and is usually a person who has a beneficial interest in the deceased person’s estate.  Once appointed, the administrator’s role is similar to that of an executor except that, rather than distributing the estate in accordance with a will, they must distribute the estate in accordance with the Administration Act 1969.

Transmission by survivorship

If a testator/testatrix owns property with another person in a “joint tenancy” then, on the death of the testator, that property will automatically become the property of the survivor.  For land owned in a joint tenancy, the certificate of title to the property must be updated to show that the survivor is now the sole owner of the property.  The process of transferring the legal title of the property to the survivor is called “transmission by survivorship.”

Life interest

Some wills give a specified person, referred to as the “life tenant”, the right to use or benefit from an asset of the estate for a specified period after the will-maker has died.  That period could be for the rest of the life tenant’s life but could also be for a shorter period.  The asset involved is still owned by the estate but the life tenant is able to use and benefit from that asset in accordance with the terms of the will.

Timeframes

One common concern is the amount of time it takes for beneficiaries to receive their inheritance.  It can be helpful to understand how long the process will take so that expectations can be managed.

In a situation where the executor needs to obtain probate, we would normally expect to have made the application to the High Court within 4 weeks of the death.  The Court will take approximately 4 weeks to process the application.  The time it takes for the executors to then gather in the assets and pay the debts varies significantly.  Selling land will obviously take longer than closing a bank account.

When all the assets have been gathered in and the liabilities paid, the executors will need to decide if they want to distribute the estate.  If they reach this point within 6 months of the grant of probate, they may be advised to wait.  This is because if the will is successfully challenged, they will be personally liable to meet the claim if the estate has already been distributed.  So, if the executors are in any doubt about whether a claim might be made against the estate, they should wait at least 6 months from the grant of probate before distributing the estate’s assets to protect themselves from potential claims.  Any assets subject to a life interest will need to be retained by the estate until the life tenancy arrangement has ended.

As a rough guide, a beneficiary should not expect to receive his or her inheritance until 7-8 months after the death of the will-maker.  This timeframe could be considerably longer if the will created a life interest.

This article is current as at the date of publication and is only intended to provide general comments about the law. Harkness Henry accepts no responsibility for reliance by any person or organisation on the content of the article. Please contact the author of the article if you require specific advice about how the law applies to you.