Things that an Executor should know to avoid Estate Disputes

Being appointed executor of a will is an important responsibility. Executors must act in the best interests of the estate and beneficiaries, follow the will, protect estate assets and avoid conduct that could create conflict or unfairness.

Many estate disputes arise because executors act before they fully understand their duties. Below are common mistakes that can increase the risk of beneficiary complaints, court proceedings or personal liability.

Executors cannot deal with estate assets for personal benefit.

An executor must not prefer their own interests, or the interests of family or friends, over the interests of the beneficiaries. This applies even if the executor is also a beneficiary.

Examples include selling estate property to themselves or a related party, transferring an asset to themselves as part of their inheritance, living in estate property rent-free, allowing other family members or related parties live in an estate property rent free or at reduced rent, or engaging their own business or family member to do paid work for the estate, all without proper authority of the other beneficiaries in of the estate.

If an executor wants to buy or receive an estate asset, they should obtain an independent valuation and the informed consent of all beneficiaries, or seek court approval. Otherwise, they may breach their duties and be personally liable for any loss.

An Executor must keep beneficiaries informed about Estate Administration.

Poor communication is one of the most common causes of estate disputes. Executors should keep beneficiaries updated about important steps, including probate, collecting assets, selling property, paying debts, tax issues, delays and proposed distributions.

Beneficiaries cannot direct the executor or override their decisions, but they are generally entitled to information about the estate. This may include a copy of the will, a list of assets and liabilities, estate accounts and progress updates.

Executors cannot Favour one beneficiary over another.

Executors must act impartially. They should not give one beneficiary special treatment, provide information to some beneficiaries but not others, pay one beneficiary early without good reason, or allow one beneficiary to use estate assets while others wait for their entitlement.

Where beneficiaries are to receive different assets rather than cash, the executor should give all beneficiaries a fair opportunity to express interest and should consider proper valuations so that the distribution is consistent with the will.

Executors should obtain Valuations of Estate Property.

Rough estimates can lead to unfair distributions and disputes. Executors should obtain valuations or market appraisals where appropriate, particularly before selling property, distributing assets to beneficiaries as they are at the date of death (sometimes called an in specie transfer), dealing with insolvent or borderline insolvent estates, or addressing tax obligations such as capital gains tax.

Independent evidence of value helps protect both the estate and the executor if a beneficiary later questions how assets were sold or distributed.

Executors must Protect and Insure Estate Assets

Executors are responsible for securing estate assets as soon as possible after death. This may include locking and storing valuables, arranging insurance for property, vehicles, jewellery and household contents, and taking reasonable steps to prevent loss or damage.

If assets are damaged, stolen or destroyed before the estate is finalised, an executor who failed to take reasonable steps to protect them may be personally liable.

Executors should obtain legal advice from an experienced lawyer before they act.

Executors should obtain legal advice before selling, transferring or distributing estate assets, particularly where there are disputes, unusual assets, tax issues or disagreement between beneficiaries.

O’Shea Dyer Solicitors can assist with as much or as little of the estate administration as you need. We offer a low fixed fee First Appointment of $330 including GST for estate enquiries, giving you the opportunity to speak with an experienced lawyer about the issues and laws that apply.