Do you really need to get Probate?

Obtaining a Grant of Probate from the Supreme Court is one of the main tasks that an executor of an estate can undertake. However, it is not just time consuming, it can also be a costly exercise as well. By the time advertising fees are paid for and solicitor’s fees and Supreme Court filing fees are paid, the estate can usually expect to lose a few thousand dollars.

However, sometimes it is not necessary to apply for a Grant of Probate when you are dealing with a deceased estate. That being the case, it is important to discuss the assets and liabilities of the estate with your solicitor to work out whether or not it is needed.

Why is Probate needed?

 The main reason why Probate is needed is that some entities that hold the deceased’s assets or maintain registers that record title to such assets, will not release these assets or record a transfer to the executor for distribution to the beneficiaries unless they have obtained a certified copy of the grant of probate from the Supreme Court. These can include but are not limited to financiers, super funds, insurance companies, the local council and utilities companies and the like. Retirement villages will almost always require a Grant of Probate to release the deceased’s exit entitlement.

We can help you to quickly identify whether you need to spend the time and cost to get a Grant of Probate, or whether the estate can be administered without going to the effort and expense.

When is Probate Unnecessary?

Whilst Probate is more often than not required when administering an estate, there are circumstances where it will not be needed, which we will outline below:

Property held as Joint Tenants

 Probate will not be required for any of the deceased’s assets that are held as ‘joint tenants’ with another person, (as opposed to ‘tenants in common’).  For example, it is common for people to own their family home as joint tenants with their spouse.  The deceased’s interest in the jointly held asset will technically not form part of the deceased’s estate and will instead pass to the ‘surviving joint tenant’, without probate being required.

For example, if a wife dies (and is survived by her husband), and her bank accounts, motor vehicles and family home are all held in joint names (as joint tenants), probate will not be required.

It is important to note that if property is held as tenants-in-common, the deceased’s share in that property will form part of their estate and probate will be required. This is because the deceased’s interest does not naturally pass to the other registered owner (which is the rule of survivorship). Real property owned other than as joint tenants will always require probate, no matter what the proportion of ownership may be.

Low value assets

An Executor of an estate can also generally avoid the need to obtain probate when the only assets of the deceased are of a low value, such as small share parcels or bank accounts.

Whilst every financial institution will have a different threshold as to the amount they will accept before Probate is required to release the funds, the general amount is usually a balance of somewhere in the vicinity of $20,000.00 – $50,000.00.

Each financial institution and share registry has its own low-value “cap” being the value that the asset must reach before it considers that probate or letters of administration are required to transfer ownership of the asset. Usually the calculation of the “cap” will exclude the value deceased’s principal place of residence.

From our experience, we are aware of the following thresholds for each major bank (which are subject to change at the discretion of the bank):

Suncorp Bank – $50,000;

Commonwealth Bank – $50,000;

ANZ Bank – $80,000; NAB – $50,000;

Westpac – $50,000; BOQ  – up to $75,000 on conditional circumstances;

Bendigo Bank – $50,000; and

CUA – $15,000

In order to transfer low-value assets it is generally necessary to establish that you would be the person administering the estate if probate were granted (e.g. by providing a certified copy of the Will), and that the owner has died (by means of producing the Death Certificate).

Financial institutions will usually require the executor named in the deceased’s last Will to sign an indemnity and release form which indemnifies that institution against any claims on the estate.

It is also important to note that even if an executor is successful with having estate funds released without obtaining a Grant of Probate, a cheque may issue in the name of the estate, eg “Estate of A Smith”. Unfortunately many banks will not allow the deposit of such cheques until a bank account is opened in the name of the estate and the opening of this account will usually require a Grant of Probate.

Intestacy

‘Probate’ is the process by which the Supreme Court gives the executors of an estate the power to distribute assets to beneficiaries.

However, in cases of intestacy if the deceased does not have a Will (also referred to as having died “intestate”), you do not need a grant of Probate.  You will instead need to apply to the Supreme Court for ‘Letters of Administration’. This is essentially the same process as obtaining a Grant of Probate, and with the same advertising process and similar forms to be completed, but it is slightly more onerous.

Letters of Administration will also be required where the deceased has left a Will, but the executors named in the last will have already passed away or unable or unwilling to act as the executor’s of the deceased’s estate.

In this case, another person (known as the ‘administrator’) , will apply to the Supreme Court for Letters of Administration to be given the legal authority to administer the deceased person’s estate in lieu of the executors named in the Will. Again, it is a very similar process to obtaining a Grant of Probate, but slightly more onerous.

If your loved one has died intestate, please contact us and we would be happy to assist you with obtaining a grant of Letters of Administration.

How can I work out if Probate is needed? 

In order to decide whether a grant of Probate or Letters of Administration are required, we recommend following the steps outlined below:

1. Compiling a list of Assets and Liabilities

 Firstly, it is necessary to identify all the assets owned in the deceased’s name and all liabilities of the estate, and record: 

  • How they are held (e.g. solely, jointly, as tenants in common, etc);
  • Where they are held (e.g. the name of the bank, the share register, the relevant Lands Titles Office, etc);
  • *The current market value of each asset; and
  • Whether there are any associated liabilities.

*Depending on how the assets are to later be dealt with, it may be necessary to obtain a formal valuation. For example, if the deceased has left their property to their two children in equal shares, but one child wants to buy the other out, a valuation will be required.

2. Transfer property held as Joint Tenants

 If assets are held as joint tenants, it may be necessary to lodge a ‘Request to Record Death’ with the Land Titles Office or various registries to record the passing of the joint interest to the surviving owner. In the case of real property, this will only require a certified copy of the death certificate to be provided.

3. Contact institutions where property held solely or as Tenants in Common

 If some assets are held in the sole name of the deceased, or as tenants in common (as opposed to joint tenants), then each organisation where those assets are held should be contacted to determine their ‘deceased estate transfer policy’.

If the value of the assets held with each institution are under their low value threshold or cap, then Probate or Letters of Administration should not be required.

The assets can generally be dealt with by providing the following documents to each institution where assets are held (eg. a bank, a share registry):

The Death Certificate; and

  • A copy of the Will (if there is one);
  • Certified copy of identification for the Executor;
  • Some form of Indemnity and Release document completed by the Executor.

If you think that the value of the assets of the deceased are on the ‘borderline’ so to speak of requiring or not requiring a grant of Probate, it can be useful for your solicitor to also send an accompanying cover letter with the above forms providing a persuasive argument as to why the assets should be released without Probate. Arguments such as:

The deceased has few other assets;

  • That institution would be the only institution requiring probate
  • The estate is small and having to obtain probate would be costly
  • The deceased left their estate to each of their children in equal shares;
  • The beneficiaries all get along
  • There are no claims being made against the estate,

can be persuasive arguments to convince the institution that Probate should not be require to release assets. Please contact us if you require us to liaise with an organisation and put forward a case as to why estate assets should be released without Probate.

 4. Obtain Probate if required

 If the estate includes real estate (e.g. a family home), and the real estate is not held in joint names or the institutions referred to in above Step 3 deny your request for a waiver of the requirement for Probate, then Probate (or Letters of Administration) will be required before the land can be transferred to the appropriate beneficiary.

This is because the land titles office will not anyone to deal with the property until they have the appropriate authority in the form of a grant of Probate. The main reason for this requirement is so that that institution can not be held liable for transferring or distributing estate assets to the Executor without formal approval being granted by the Supreme Court and so that the institution is not held liable for these things in the event that the estate is challenged.

If you do require a Grant of Probate or Letters of Administration, please contact us and we would be happy to assist you obtain a Grant or administer the estate.

 

 

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