There is a general principle that a legal personal representative has an obligation to collect estate assets, pay debts and estate expenses and distribute the estate to beneficiaries within 12 months of the deceased’s death.
Legal Personal Representative = includes an Executor of a will or an Administrator appointed in the event of intestacy (death without a will)
This principle is commonly referred to as ‘the executor’s year’. The executor’s year principle extends to the payment of any legacy left by a Will in that interest will not be payable on a legacy until 12 months after the deceased’s death, unless the contrary intention is contained in the Will.
Section 52 of the Succession Act in provides that an executor may be liable to pay interest at 8% on an undistributed legacy after 1 year from the date of death.
Why should an Executor distribute an estate within 1 year
In addition to avoiding paying interest on undistributed legacies, there are many other good reasons to distribute an estate swiftly.
- Capital Gains Tax exemptions – if real estate is involved in the estate you should be mindful of taxation implications
- Avoiding issues with (sometimes insurers and other institutions have a grace period for disposing with a deceased person’s assets. After that period the property usually must be transferred to the legal personal representative to be held on trust for the beneficiaries. This may incur additional expense and will almost certainly incur additional time to make arrangements).
What happens if the estate administration is longer than 1 year?
Depending on the conduct of the executor and the complexity of the estate administration, an executor who has failed to administer the estate within one year may be liable to pay interest, and if their conduct is particularly unfit they may be removed from their role as executor and may not be entitled to executor’s commission.
You should consult with a wills and estates lawyer about your circumstances to understand your options. We act for executors and beneficiaries. At Will and Estate Lawyers Australia we offer a free solicitor consultation and flexible fee arrangements to help resolve your estate dispute quickly.
