The short version
The most straightforward answer to this question is that the estate of the deceased pays any outstanding debts, funeral expenses, legal and accounting fees, and any accounts that become due, such as utilities and phone.
If only it was that simple.
Obliging people accept the role of executor when family or close friends are attending to the worthwhile task of creating their Will. This position is often accepted with little further thought, with nothing required until years or even decades later, upon the death of the person concerned.
While the general duties of an executor are known or can be readily learned, unless the deceased is a spouse or partner, the intricate details of bank account numbers, utility providers and such will not be so easily accessed.
While the estate must pay all expenses in the long run, it is the executor who must satisfy all financial demands in the short term.
The most obvious expense is that of funeral arrangements, and this may be eased if the deceased has put in place a pre-paid service to cover costs. If not, this can be a significant expense.
If the deceased had individual ownership of assets or a large and complex estate, it may well be necessary to apply for probate, a court process that:
- Gives formal validity to the Will, and
- Formally provides authority to the executor to administer it.
The procedure for Probate application is described in other articles, but the important point here is that there is a cost involved – a couple of examples being:
- With an estate of $500,000 to $1,000,000 – $1,669
- With an estate of $1,000,000 to $2,000,000 – $2,224
Until probate is granted, which can take several months, there may well be immediate demands on the executor to settle outstanding accounts.
Less obvious, but equally important expenses, include:
- Accountant fees to finalise tax and business accounts
- Outstanding credit card debts
- Utilities such as gas and electricity
- Monthly payments for insurance, phone, internet
- Council rates, and possible costs to maintain the property.
While an executor may have lived close to the deceased when accepting the role, elapsed time may have seen a geographic move, potentially necessitating travel and accommodation expenses for the executor.
Right of survivorship
One element that may simplify things is if the deceased has a surviving spouse or partner. In this case, a bank account in joint names will automatically pass to the surviving account holder upon provision of a Death Certificate. This can provide access to funds straight away.
The payment of the abovementioned costs falls to the executor, and it may be necessary to pay these accounts from personal funds if delayed settlement until estate administration cannot be arranged.
With the engagement of a qualified probate lawyer who can handle all matters from probate application to winding up of accounts and payment of debts, it’s highly likely that all outgoings can be prioritised and timed to be dealt with upon final estate processing.
2 key take-aways
It is important for executors to:
- Keep a clear and accurate paper-trail of all costs and outgoings with invoices and receipts.
- Obtain professional advice from a highly qualified and experienced probate lawyer.
Calmly and methodically working with experienced professionals is the best plan to cope with the task of not only administering the Will, but of ensuring that all debts, fees, and costs are met. It is the legal responsibility of the executor and must be handled properly, ideally without too much need to pay out of one’s own pocket.