When an Executor Distributes Estate Assets Prematurely
Typically, during the creation of their will, a testator will explicitly nominate a particular individual to act as their executor.
For many, the prospect of acting as the executor of a will is daunting, especially given that they may not have performed such role before. However, by becoming familiar with what this task involves, as well as the terms with which they must comply, an executor can alleviate uncertainty and, respectively, be confident in their position.
It’s important to note that, in the event of the testator’s passing, it isn’t mandatory for the appointed executor to take on this responsibility. If the executor selected by the deceased decides to forfeit this position, for whatever reason, they will renounce their duty. In such instances, either a substituted executor or court assigned administrator will see out the management of estate matters.
The Executor’s Role & Responsibilities
For the executor or administrator of the estate, this can, of course, be a demanding role to accept, depending on the extent and complexity of the estate.
They’re required to action the deceased’s testamentary wishes, acting with their best interest in mind and, when necessary, defending the estate against claims. This means that, if an eligible person decides to challenge or contest the will, seeking greater provision, the executor will be responsible for opposing such action and representing the estate.
When fulfilling their role, the executor of an estate may also be required to:
- Organise the deceased’s funeral;
- Locate the will and any beneficiaries;
- Apply for a Grant of Probate or Letters of Administration, which gives them the authority to administer the estate as required;
- Protect and collect the assets that comprise the deceased’s estate;
- Provide the Court with a comprehensive inventory of the estate’s assets;
- Ensure that, before the estate is administered, any outstanding estate debts are paid;
- See to the distribution of estate assets and funds as per the testator’s wishes, which have been detailed in their will.
While there’s no guarantee that the appointed executor will act in accordance with the testator’s wishes, those who fail to perform their role as necessary can, in many cases, be held legally accountable for their misconduct.
The Premature Administration of an Estate
In some instances, an executor may fail to satisfy the legislative requirements of their role, being that they don’t follow the appropriate process for managing estate matters.
An example of this is if the executor prematurely distributes certain estate assets or funds, an action for which they can be held personally liable.
In Victoria, before an estate’s assets can be administered, it’s prudent that the executor must wait six months from the time probate is granted. This, ultimately, gives eligible people the opportunity to contest or challenge the deceased’s final testament and will, should they wish to do so.
If the executor distributes some or all of the estate’s assets prior to this time elapsing, they may be held legally accountable for their actions.
Case Study: McLean v Rykers (VSC)
The following case involved one the deceased’s children, the plaintiff, contesting the estate’s proposed distribution, as detailed in the testator’s will. The defendant, who was also a child of the deceased, was appointed as the sole executor and sole beneficiary of the estate.
In addition to this, the plaintiff argued that, when performing their role as the will’s executor, the defendant had breached their moral duty by prematurely distributing estate assets. They contended that, because of this, the defendant ought to be personally liable for any losses subsequently suffered by the plaintiff.
During the case’s proceedings, it was determined that the defendant had likely withdrawn approximately $119,000 of estate funds to fund their gambling habit. The plaintiff proposed that this, along with the $526,000 in proceeds from the sale of the deceased’s property, ought to be included in the estate.
In addition to this, the plaintiff argued that, at the time the testator wrote and validated their will, they were suffering from dementia and that, knowing this; the defendant took advantage of them.
Given these circumstances, as per the Administration and Probate Act 1958 (Vic), the defendant was ordered to pay a total of $470,000 to the plaintiff.
This judgement was made on the grounds that the defendant had prematurely distributed estate assets, accessing them within six months of probate being granted. The plaintiff was also successful in their claim for greater provision, which was included in the sum referenced above.
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