who?

what?
why?
A guide for
beneciaries
MARCH2013
20frequentlyaskedquestions
aboutbeinganbeneciary.
Thisbookletprovidesaguide,inquestionandanswerformat,for
beneciariesaboutwhatismeanstobeabeneciary,whatisrequiredof
themandwhatisinvolvedinmanagingandnalisinganestateinVictoria.
Formoreinformationbeneciariesshouldcontacttheirlegalpractitioner.
Contents
1Whoisabeneciary? 1
2Whatisanestate? 1
3Whoisanexecutor? 1
4Whatistheroleoftheexecutor? 1
5Doallthebeneciariesneedtoagreewithdecisionsoftheexecutor? 2
6Mustanexecutortakeontheresponsibility? 2
7Whopaystheexecutor? 3
8Whoarrangesthefuneral? 4
9ShouldtherebeareadingoftheWill? 4
10Whatshouldthebeneciariesbetold? 5
11WhatifthereisnoWill? 5
12Whatisprobateandisitnecessary? 6
13Howlongdoestatestaketonalise? 7
14Candependentsclaimmore? 8
15Canbeneciariesrejectagift? 9
16Whathappenstohouseholdgoodsandpersonalitems? 9
17Whatiftheestateliabilitiesexceedtheestateassets? 9
18Istheretaxtobepaid? 10
19Planningforyourinheritance 10
20Whathappenstochildrensinheritanceheldintrust? 11
Supportservices 11
what?
what?
why?
A guide for beneciaries page 1
1

Whoisabeneciary?
Abeneciaryisanypersonorentity(e.g.acharity)
thatreceivesagiftorbenetfromapersonsestate.
2

Whatisanestate?
Anestateisallofthepropertyandliabilitiesofaperson
inexistenceafterherorhisdeath.
3

Whoisanexecutor?
AnexecutorisapersonwhohasbeenappointedinaWill
tomanagethewillmakersestate.
4
Whatistherole
oftheexecutor?
Theroleoftheexecutoristocarryoutthewishesofthewillmaker
asspeciedintheWill.Thisisapositionofgreattrustandmustbe
carriedoutwithcareandhonesty.
Theexecutormust:
Act in the best interests of the estate and all of the benefciaries and
cannotactinhisorherowninterestsiftheyarenotthesameasthe
interestsoftheestateandthebeneciaries.
Do what is specifed in the Will (unless there is a proposal to distribute
theestateotherthanassetoutintheWill,inwhichcasealloftheadult
beneciariesneedtoagreetothechange).
Protect all of the assets of the estate until they are distributed.
Keep good records of everything they have done for the estate.
Obtain advice from professionals such as lawyers, accountants,
realestateagentswherenecessary.
Anexecutormaybeorderedbyacourttoactproperlyandpromptlyifthe
beneciariesbelievethattheexecutorisnotdoingwhatheorsheshould.
page 2 A guide for beneciaries
5
Doallthebeneciariesneedtoagree
withdecisionsoftheexecutor?
Allofthebeneciariesdonothavetoagreewiththedecisionsoftheexecutorif
theexecutoriscarryingoutthewishesofthewillmakerassetoutintheWill.
Ifthereisaproposalthattheassetsbedistributedotherthanasspeciedinthe
Will,theexecutorwillneedtoinformallbeneciariesandobtainconsentfrom
alladultbeneciariestothechange,preferablyinwriting.
Beforeconsentingtoachangeinthedistribution,beneciariesshouldobtain
theirownlegalandnancialadvice.Thelawyeractingfortheestateisunable
togivethebeneciariesindependentlegaladvicebecauseheorsheisacting
fortheestateandtheremaybeaconictofinterestinalsoadvisingthe
beneciaries.
6
Mustanexecutortake
ontheresponsibility?
Anexecutorcanrefusetoacceptthepositionofexecutor,butthisshould
preferablybedonebeforeprobateisgranted.Iftheexecutorseekstostepdown
fromthatpositionafterprobateisgranted,theymustobtaintheconsentofthe
SupremeCourt.
Executorscandelegatesomeoftheactionsandresponsibilitiestoothers,for
example,funeraldirectors,lawyers,accountantsandrealestateagents.The
executorwillbeultimatelyresponsiblefortheactionsofthosepeople.
A guide for beneciaries page 3
7
Whopays
theexecutor?
Anexecutorisentitledtobereimbursedbytheestateforanyamountsheor
shehaspaidonbehalfoftheestate,providedtheywereappropriateamounts.
Theexecutorsroleisoftendescribedasatrusteeorduciaryrole.Inmost
circumstances,wheretheexecutorisapersonknowntothewillmaker,he
orshewillnotreceiveanynancialbenetorpaymentfortakingonthe
role.However,theexecutormayreceivesomepaymentfortheirworkinthe
followingcircumstances:
if the will maker sets out in the Will that the executor is entitled to be paid
forhisorhereforts.UsuallytheWillstatestherateofpaymentintermsof
apercentageofthetotalassetsand/orincomeoftheestate;
where a gift to the executor is included in the Will in lieu of the right to
applytothecourtforremuneration;
if all of the benefciaries agree on an amount the executor should be paid
fromtheestate.Beneciariesshouldbegivendetailsofallthework
undertakenbytheexecutorandshouldobtainindependentlegaladvice
beforeagreeingtosucharequest;
if the Supreme Court orders that the executor is entitled to be paid.
ThepaymenttotheexecutoriscalledacommissionandinVictoria,itcannot
exceed5%ofthetotalvalueoftheestateassets.Whenacourtconsiders
whetheranexecutorshouldbepaidacommissionittakesintoaccountthe
workdonebytheexecutoraswellastheresponsibilityandtimeinvolved,
oftenreferredtoasthepainsandtroubles.Itisrarethatacourtwouldorder
commissionof5%.Themaximumrateof5%isgenerallyreservedforvery
complicatedandtime-consumingestates.Generallyspeaking,therateof
commissionawardedwouldnotexceed3%ofthetotalassets.
Executorswishingtoreceiveacommissionshouldkeepextensiverecords
ofalltheyhavedoneintheirexecutorialroletojustifythecommission.
page 4 A guide for beneciaries
8
Whoarranges
thefuneral?
Theexecutorisresponsibleformakingthefuneralarrangementsifthewill
makerhasnotalreadymadethosearrangements.Theexecutorshouldfollowany
directionsleftbythewillmakerastothefuneralarrangementsbutisnotboundto
doso.Thingstoconsiderinclude:
whether the body is to be buried or cremated;
if the body is to be buried, where;
if the body is to be cremated, whether the ashes are to be scattered or retained;
the nature and format of the funeral service; and
who they should notify about the service.
Iftheexecutorisnotanimmediatefamilymember,thentheexecutorshould
consultwiththefamilyaboutthefuneralarrangements.
Thereasonablecostofthefuneralisanexpenseoftheestate,buttheexecutor
shouldbecarefulnottoincurexpensesbeyondtheavailablefundsintheestate.
9
Shouldtherebea
readingoftheWill?
ItisnotusualtohaveaformalreadingoftheWill.Usuallythebeneciariesare
notiedoftheirinterestbytheexecutororthermofsolicitorsappointedbythe
executor.
InVictoria,variouscategoriesofpeopleareentitledtorequestacopyofaWillifit
wasmadeonorafter20July1998:
a) anypersonnamedorreferredtointheWill,whetherasbeneciaryornot;
b) anypersonnamedorreferredtoinanyearlierWillasabeneciary;
c) anyspouseofthetestatoratthedateofthetestatorsdeath;
d) anydomesticpartnerofthetestator;
e) anyparent,guardianorchildrenofthedeceasedperson;
f ) anypersonwhowouldbeentitledtoashareoftheestateifthedeceased
personhaddiedintestate;
g) anyparentorguardianofaminorreferredtointheWillorwhowouldbe
entitledtoashareoftheestateofthetestatorifthetestatorhaddiedintestate;
h) anycreditororotherpersonwhohasaclaimatlaworinequityagainstthe
estateofthedeceasedpersonandwhoproducesevidenceofthatclaim.
AbeneciaryhasnolegalrighttoseeaWillofadeceasedpersonmadebefore
20July1998.However,onceprobateisgranted,acopymaybeobtainedfromthe
SupremeCourt.
Itisusuallyappropriateandgoodpracticefortheexecutor,orthermoflawyers
appointedbytheexecutor,towritetothebeneciariesandtellthemtheyare
beneciariesoftheWillassoonaspossible.
A guide for beneciaries page 5
10
Whatshouldthe
beneciariesbetold?
Thereisnolegalobligationforbeneciariestobetoldthattheyarebeneciaries
beforethegiftsintheWillaregiventothebeneciaries.Abeneciaryisentitled
toreceiveacopyoftheWilluponrequestassetoutinthesectionShouldthere
beareadingoftheWill?
Executorsareusuallyencouragedbysolicitorsfortheestatetobeopen,honest
andinregularcommunicationwithbeneciaries.Thesolicitorsfortheestate
willusuallydiscusswiththeexecutorwhoshouldprovideinformationonthe
progressofestatetothebeneciaries.Thesolicitorsfortheestatecanonly
provideinformationtothebeneciariesifgivenpermissionbytheexecutor.
Theremaybeinstanceswherethesolicitorshavetotellanybeneciarywhoasks
abouttheprogressoftheestatethattheyshouldspeakdirectlywiththeexecutor.
Executorsshouldprovidearesiduarybeneciarywithastatementsummarising
thenancialaspectsoftheestateforapprovalpriortomakingnaldistributions.
11
Whatifthere
isnoWill?
IfthereisnoWillthenextofkinofthedeceasedusuallyhastoapplytothe
SupremeCourtforadocumentcalledLettersofAdministration.This
documentisthecourtsformalapprovalforsomeonetoadministertheestate
ofthedeceased,efectivelyactinginthesameroleasanexecutorbutcalledan
Administrator.Approvalisusuallygrantedinfavourofafamilymemberor
anotherpersonwhohasasubstantialinterestintheestate.
page 6 A guide for beneciaries
12
Whatisprobate
andisitnecessary?
ProbateisadocumentgivenbyaSupremeCourt(usuallyitwouldbethe
SupremeCourtofVictoriawherethereispropertyinVictoria)thatconrms
thevalidityoftheWillandtheappointmentoftheexecutortolookafterthe
estateofthedeceasedwillmaker.
Beforeapplyingforprobate,theexecutor(orhis/hersolicitor)mustadvertise
thefactthatanapplicationforprobateisbeingmade.Thisadvertisementis
usuallypostedontheSupremeCourtswebsiteandmustbeplacedatleast14
daysbeforetheprobateapplicationislodgedwiththecourt.
Anapplicationforprobaterequiresthepreparationandlingofvarious
documentswiththeCourt,including:
a statement of assets and liabilities with appropriate valuations. This often
takessometimetoprepareasinformationneedstobeobtainedfromthe
banks,companiesinwhichthewillmakerheldshares,superannuation
funds(etc).Itcantakeuptosixweekstoreceivearesponsefromallof
theseinstitutions.Formalvaluationsofrealestateorantiqueitemsmaybe
necessary;
a certifed copy of the death certifcate;
the original Will;
an afdavit from the executor setting out background information about the
deceased, the Will and fnancial position of the estate. An afdavit is signed
inthepresenceofanauthorisedwitnessandhasthesameimportanceas
evidencegivenunderoathincourt;and
an afdavit including a copy of the advertisement required and a statement
aboutwhatsearcheshavebeenmadetoascertaintheexistenceofanyprior
grantsofprobateoradministrationinrelationtothewillmakersestate.
Probateisnecessarytogivetheexecutortherighttodealwithcertainassets
suchasrealestateandmoneyinbankaccounts.Realestatecannotbe
transferredunlessprobateisobtained(excepttoasurvivingjointproprietor).
Mostbankswillnotallowthewillmakersnominatedrepresentativeinthe
Willtodealwithaccountswhichhaveabalanceaboveacertainamountunless
probatehasbeengranted(althoughbankswillusuallyallowaccesstofundsfor
thepaymentofthefuneralaccount).
Itcansometimestakeaconsiderableamountoftimetoreceiveconrmation
frombanksandshareregistriesaboutdateofdeathbalancesandsharevalues.
Thiscandelaytheapplicationforprobate.
Therearesomeestatesthataresmallanddonotcontainrealestate(for
example,becauseitistransferredtoasurvivingjointproprietor)andinthese
cases,probatemaynotberequired.
A guide for beneciaries page 7
13
Howlongdoestates
taketonalise?
Thetimeittakestonaliseanestatedependsonwhatmustbedoneand
how long it takes for each step to be completed. Often third parties such as
banksandcompaniesinwhichtheestatehassharesarerequiredtosupply
informationandthiscantakesometimetoreceive.SeeWhat is probate and is
it necessary?(Point11).
Itisprudentforalloftheestatesliabilitiestobepaidbeforetheestateis
nalised.SeeIs there tax to be paid?(Point18).
ThelawinVictoriasaysthatexecutorsdonothavetodistributetheestate
within12monthsofthedeathofthewillmaker.After12months,beneciaries
maybeentitledtoreceiveinterestonthevalueoftheirgiftsofupto8%in
certaincircumstances.Itisprudentforestatesnottobedistributedfully
withinsixmonthsfromthetimeofprobate-forfurtherinformation,seethe
discussionundertheheadingCan dependents claim more?(Point14).
SomeWillsmayrequiregiftstobeheldontrustuntilacertaineventoccurs
(ieuntilaminorbeneciaryreachesacertainage).Inmanyinstancesthe
executorwillbecomethetrusteeofthatmoneyandwillhavetolookafterit
untilthespeciedevent.
Inothercases,agiftmaybeleftinatrustforapersonsbenet,ratherthan
beinglefttothemintheirownright.ProtectiveTrustsandSpecialDisability
Trustsareexamplesofsuchongoingtrusts.
Wherepropertyisthesubjectofongoingtrustobligations,theexecutorshould
discusstheseobligationswiththeirlawyer.
Somegiftsmaybeleftaslifeinterestsonly,sothatthebeneciaryisentitledto
usetheassetsbutisnotfreetodisposeofthem.Forexample:
the benefciary who is given a life interest in a house may live in the property
butcannotsellthepropertyexceptincertainlimitedcircumstances;and
the benefciary who is given a life interest in shares may have the income
fromashareportfoliobutcannotsellthesharesandtakethesaleproceeds.
Whenthatbeneciarydies,theassetthatwasthesubjectofthelifeinterest
(i.e.thehouseorthesharesetc)thenpassestothebeneciarywhowasleftthe
remainderinterestintheWill.
page 8 A guide for beneciaries
14
Candependents
claimmore?
Yes,beneciariesundertheWillmaymakeaclaimforalargershareoftheassets
andothersnotmentionedintheWillcanalsomakeaclaimforashareoftheassets.
Thecourtmayorderthattherebeadistributionofassetsotherthanassetoutin
theWillifthecourtissatisedthatthewillmakerhadaresponsibilitytoprovide
forthemaintenanceandsupportofthepersonclaimingfurtherprovisionfrom
theestateandthewillmakerhasfailedtomeetthisresponsibility.
InVictoriatheapplicantneednotbearelativeofthewillmaker.However,
theapplicantmustshowthatthewillmakerhadanobligationordutytomake
adequateprovisionforthemandthatthiswasnotdone.Therearemany
factorsthatthecourtwilltakeintoaccountwhenconsideringthesetypesof
applications.Ingeneral,thecourtswilllookcarefullyatsituationswherechildren
orspousesofthewillmakerhavebeenleftoutoftheWillorbeenunfairlytreated.
Considerationwillbegiventothenancialcircumstancesofthepeopleclaiming
aswellastherelationshiptheyhadwiththewillmaker.
Inrelationtomoredistantrelativesornon-relatives,thecourtswilllookat
whethertherewasanyspecialrelationshipwiththewillmakerandwhat
contributiontheymadetothebuildingupoftheestateorthewelfareofthewill
maker.Itisacomplicatedareaoflawandeachmatterisjudgedonitsownfacts.
Youshoulddiscussthematterwithalawyerifyouhaveanyconcernsorsuspect
thataclaimmaybebroughtonthisbasis.
Anyonewishingtomakeanapplicationisentitledtodosowithinsixmonthsof
thedatethatprobatewasgranted.Iftheytrytomakeanapplicationafterthat
time,specialpermissionfromthecourtisrequired.
Itisprudentfortheexecutortoholdontosomeoralloftheestateassetsforsix
monthsfromthedateprobateisgranted.Iftheexecutordistributestheestate
withinsixmonthsofthedateprobatewasgrantedandaclaimismadeforfurther
provisionfromtheestatewithinthesixmonthperiod,thentheexecutormaybe
personallyliableforanyamountsthecourtrequirestheestatetopay.Theexception
tothisruleisthattheexecutormaymakeadistributiontothespouseorpartner
orchildrenofthewillmakerofallorpartoftheirentitlementundertheWillfor
thepurposeofprovidingfortheirmaintenance,supportoreducationwithoutany
personalliabilityintheeventofaclaimbyothersforprovisionfromtheestate.
Anexecutorshouldnotmakeanydistributionofanestateifheorshehasreceived
writtennoticationthatsomeoneintendstomakeanapplicationtoacourtfor
furtherprovisionfromtheestate.Theexecutorneedstowaitthreemonthsfrom
receivingthatnoticebeforeadistributioncanbemade,andthedistributioncan
onlybemadeiftheexecutorhasreceivednofurthernoticethattheapplication
hasactuallybeenmade.Itwouldbeprudentforanexecutorwhohasreceived
noticeofaclaimtoconductlitigationsearchesintheSupremeCourtandCounty
Courtbeforedecidingtodistributetheestateassets.
A guide for beneciaries page 9
15
Canbeneciaries
rejectagift?
BeneciariescanrefusetoacceptagiftfromaWill.Theexecutorwillusuallyrequire
thebeneciarytogivewrittenconrmationthattheyrefusetoacceptthegift.
Beforerejectingagift,beneciariesshouldobtainlegaladvice.Inparticular,
beneciariesinreceiptofCentrelinkpaymentsshouldseekadviceasto
whethertherejectionofthegiftwillafecttheirCentrelinkentitlements.
16
Whathappenstohouseholdgoods
andpersonalitems?
Theexecutorshouldmakeanitemisedlistofalloftheassetsassoonas
possible,includingadescriptionoftheircondition,andwheretheyarestored
(ifnecessary).Theexecutormayalsouseavideorecorderorcameratorecord
whathouseholditemsexist.
Itiscommonpracticeforexecutorstooferthebeneciarieswhoareto
receiveashareoftheestate(otherthanspecieditems)anopportunityto
choosehouseholditemsinpartsatisfactionoftheirshareoftheestate.These
itemswouldneedtobevalued,eitherbyagreementofthebeneciariesor
professionally,andthenofsetagainstthebeneciariessharesoftheestate.
17
Whatiftheestateliabilities
exceedtheestateassets?
Iftherearemoreliabilitiesintheestatethanassets,thentheestateisinsolvent.
Inthissituation,theestateshouldbedeclaredbankruptandtheremaining
assetsusedbythetrusteeinbankruptcytopayouttheliabilities.Theexecutor
andbeneciarieswouldnotbeliablefortheshortfallprovidedthattheyhadnot
alreadytakenanyassetsfromtheestate.
page 10 A guide for beneciaries
18
Istheretax
tobepaid?
Theexecutorisresponsibleforlodginganyoutstandingincometaxreturns
onbehalfofthewillmakerwherenecessary.Thelasttaxreturnshouldalso
containastatementofassetsandliabilitiesofthewillmakeratthedateofhis
orherdeath.
Theestateisalsosubjecttoincometaxifitearnsincome,suchasrentonreal
estateorinterestoninvestments,andataxreturnmayneedtobelodgedon
behalfoftheestate.Theestateshouldnotbefullydistributeduntilallincome
taxliabilitiesareknownandaccountedfor.
TherearenoinheritancetaxesordeathdutiesinVictoria.
IfpropertyisgiventobeneciariesinaccordancewiththeWillnocapital
gainstaxorstampdutywillbepayablebytheestateorbeneciariesatthe
time.However,capitalgainstaxmaybepayablebythebeneciarieswhenthey
disposeofthepropertyatalaterdate.
Thereisanexceptiontothissituation,whenthebeneciaryisatax-exempt
charity,anon-residentoracomplyingsuperannuationfund.Theseentitiesdo
notpaytaxandsothecapitalgainstax(ifany)mustbepaidbytheestate.
Ifassetsaresoldbytheestate,thencapitalgainstaxmaybechargedtotheestate.
Therewillbenocapitalgainstaxonthesaleofthewillmakersmainresidenceif
itissoldandthesalesettleswithin2yearsofthedateofhisorherdeath.
Ifthebeneciariesagreetothedistributionofrealpropertyotherthanasstated
intheWill,therewillbestampdutypayableonthetransferoftheproperty.
Capitalgainstaxadviceshouldalsobesoughtonavariationofthisnature.
19
Planningfor
yourinheritance
Beneciariesshouldtakesometimetoplanwhattheywilldowiththeir
inheritance. Once the approximate amount of the inheritance is known, it
wouldbeprudenttoobtainaccountingand/ornancialadvice.
A guide for beneciaries page 11
20
Whathappenstochildrens
inheritanceheldintrust?
Somewillmakersprovidethatchildrencannothaveaccesstotheirinheritance
untiltheyreachacertainage.Theassets,usuallymoney,areheldintrustfor
thechildbeneciaryuntilthattime.Theyareusuallyinvestedandearnincome
duringthattime.
TheWillmayprovidethatwhileintrustthecapitalorincomemaybeusedfor
themaintenance,education,benetoradvancementofthebeneciary(or
similarwording).Thisallowsthefundsintrusttobeappliedforthingslike
schoolfeesandothereducationalrequirements.
Thetrusteesofthetrustwillusuallyrequireawrittenrequestforspecicitems
andanaccountingofhowthemoneywasspent.
Supportservices
LifeLine Telephonecounsellingforanyoneneeding
emotionalsupport131114
NationalAssociation
forLossandGrief(Vic)
www.nalagvic.org.au0393294003
AustralianCentrefor
GriefandBereavement
www.grief.org.au/grief_and_bereavement_support
WIRE WomensInformationandReferralExchange
www.wire.org.au1300134130
Menssheds www.mensheds.org.au
0457888387(helpdesk)
MenslineAustralia www.mensline.org.au/What-We-Do.html
CommunityHealth
Services/centres
www.health.vic.gov.au/pch/commhealth/directory.html
VeteransandVeterans
FamiliesCounsellingService
www.dva.gov.au/health_and_wellbeing/health_
programs/vvcs/access/Pages/index.aspx
AgedCareInformation www.agedcareaustralia.gov.au1800200422