What is probate and when is it required?

One of the most important, but most often misunderstood, aspects when a person passes away and the estate administration process is Probate. So what is a Grant of Probate and is it always necessary when administering an estate?

What is probate and when is it required

In our experience, most people do not have an understanding as to the process involved in administering a deceased person’s estate – that is, until friend or family member passes away and they find themselves with a mystifying process ahead of them which might take some time to get their heads around.

One of the most important, but most often misunderstood, aspects of the estate administration process is Probate. In fact, we have found that many of our clients, on visiting us for the first time for advice after a family member has died, tend to conflate Probate with the estate administration itself or think that probate is just another name for estate administration.

Is a Grant of Probate Always Necessary?

In fact, Probate is just one step that may need to be taken during the administration of an estate, and while very important when necessary, in some estates it is not even required. A Grant of Probate is in fact a document issued by the Supreme Court of Queensland, which looks like a certificate with a copy of a deceased person’s Will attached. In issuing a Grant of Probate to an executor, what the Supreme Court is saying is that the deceased person has in fact died, that the Will attached to the Grant is authentic and that the executor to whom to Grant has been issued is who they say they are and is the person who is entitled to be executor under the Will.

When people learn this, their first response, particularly where the estate and family situation of the deceased is simple, is to say ‘I know that I’m entitled to be the executor because it says so in the Will, I know that the Will is authentic because I obtained it from the deceased’s solicitor and I know that the deceased has passed away because I attended their funeral’. Quite correctly, they are questioning relevance of a Grant of Probate to their situation. In situations where the sole executor of a Will is also the sole beneficiary to receive the assets of the deceased, applying for a Grant of Probate often seems unnecessary red tape to the executor.

The first thing to remember here is that a Grant of Probate is not just a document for the benefit or peace-of-mind of the executor, which is something we will touch on later. Citing a Grant of Probate will be a requirement of most financial institutions an executor needs to deal with when collecting in the assets of the deceased for distribution. This is a matter of risk for these institutions, so before they hand over access or transfer many thousands of dollars’ worth of the deceased’s assets to the executor, they quite understandably want to see proof, in the form of a Grant of Probate from the Supreme Court, that the deceased has passed away, that the executor is who they say they are and is entitled to fulfil that role and that the Will is authentic. In fact, if an institution requires citation of a Grant of Probate to deal with an executor or allow an executor to deal with estate assets, obtaining such a Grant becomes a de facto requirement as these institutions will flat out refuse to deal with an executor who cannot show them a Grant.

Probate Floor Value

The way in which these institutions balance this risk against simplicity is to use dollar value limits. While some institutions err on the side of caution and will always require a Grant of Probate to deal with an executor, most set a ‘floor’ dollar value of assets to be dealt with above which a Grant will be required. This is why even among people who understand what Probate is, many will be under the impression that it is required for ‘large estates’ and not for ‘small estates’. This is simplistic and not always the case, because the ‘floor’ dollar values prescribed by each institution refer only to the assets held by the institution in question.

Probate Floor Value Examples

To give two very simple examples – on one hand there could be a large estate where the assets are held by a range of different institutions, so that the value held by each of the institutions is less than each of their respective ‘floor’ values. This means that despite the large overall value of the estate the executor has ‘lucked out’ due to the dispersed nature of the assets and none of the institutions will require a Grant of Probate to deal with the executor. On the other hand, there could be a small estate where the majority of assets are bank accounts and term deposits held by a single financial institution, meaning that despite the low overall value, the ‘floor’ value of the bank in question has been exceeded and the executor will have no choice but to obtain a Grant in order to collect in and deal with those assets. This makes sense because when assessing their risk, a bank will see releasing $2,000 to the wrong person as relatively minor, despite the fact that the deceased might have had millions of dollars’ worth of assets stashed away elsewhere, whereas they will see the potential of releasing $60,000 dollars to the wrong person as having substantial ramifications, regardless of the total value of the estate.

Below are some examples of the ‘floor’ limits set by various financial institutions at the time of writing, noting that such values are of course subject to change at any time:

Commonwealth Bank of Australia:$50,000;
Australia and New Zealand Banking Corporation:$80,000;
Credit Union Australia:$15,000.

Most institutions set ‘floor’ limits of between $20,000 and $50,000, however retirement villages can be notorious for always requiring a grant of probate to release the exit entitlement of a deceased estate.

Probate and Joint Tenancy

One situation which may render a grant of probate potentially unnecessary is where the assets of the deceased were jointly held with another, for instance the deceased’s spouse, as joint tenants. This is because where a joint tenancy exists, the interest of one joint tenant immediately and automatically passes to the other upon the death of the first joint tenant, independent of any Will. In fact, it is common to see situations where a deceased held a very high value of assets, but where the residential property or bank accounts were held as joint tenants with another, and as such these assets automatically passed without any need for a collecting in or administration. As there are other ways of holding assets jointly, such as holding assets as tenants-in-common, which do not allow for an automatic passing of the interest upon death and do need to be collected in and administered by executors, it is important to speak to a lawyer at the outset of the administration process to gain a proper understanding as to what category of joint holding particular assets fall into.

Protection from Future Claims on the Estate

Aside from being necessary to deal with estate assets in certain circumstances, another reason to obtain a grant of probate is for the executor’s own protection and peace-of-mind. At Forge Legal, when we apply for a Grant of Probate on your behalf, we publish a notice in the Queensland Law Reporter giving potential creditors or beneficiaries a chance to send us particulars of their claims, and noting that you intend to distribute the estate upon the expiry of the notice period without paying anyone who has not given notice. This means that you will be protected from such claims later on, so long as you follow our instructions as to when you are safely able to commence the distribution. Without such a notice, a creditor could seek to make you personally liable for their claim in circumstances where the estate assets have been distributed without notice.

This raises another issue around the purpose of a Grant of Probate as discussed above: to certify that the deceased has passed away, that the executor is who they say they are and is entitled to fulfil that role and that the Will is authentic. As there is no central registry of Wills, these documents are often lost or overlooked, with nobody being the wiser until they eventually show up. Most estate solicitors have heard horror stories of an executor proceeding to collect in and distribute estate assets only to have a more recent Will (which supersedes any previous Will) show up in a filing cabinet or solicitor’s safe custody storage! Once the later Will is found and the assets are transferred to beneficiaries or creditors who will not relinquish them, it is already too late. Accordingly, obtaining a Grant of Probate provides executors with much needed peace-of-mind in the form of a ‘seal of approval’ (no pun intended, as Grants of Probate do indeed carry a literal seal) from the Supreme Court that they are safely and legitimately able to act in the capacity of executor. In circumstances where there are complex family dynamics in play or potential for a contesting of the will or family provision application, obtaining Probate obviously becomes all the more vital.

Intestate and Letters of Administration

While most prudent people always keep a valid Will in place, another situation to consider is that in which a person dies intestate, that is to say, without a Will. In these circumstances, the person who wishes to act as administrator, which is the equivalent of an executor in such circumstances, must apply to the Supreme Court for Letters of Administration. This is a very similar document to a Grant of Probate, it entails a similar application process and serves an equivalent role – to certify that the deceased has passed away, that the administrator is who they say they are and that they are entitled to act as administrator.

Regardless of whether a deceased passes with or without a Will, or whether the estate appears large and complex or small and relatively simple, it is vital that would-be executors and administrators speak with their solicitor as soon as possible after their friend or relative’s passing. At Forge Legal, we are experts in all aspects of estate law and we will sit down with you to discuss whether Probate is necessary or advisable in your circumstances, to determine how any joint assets are held and to determine what will be involved in the administration. From there, we can apply for a Grant of Probate or Letters of Administration on your behalf to make things simple and seamless in what is usually a difficult time. You will also have the opportunity to decide whether you wish for us to act on your behalf in the administration itself to save you the hassle, or whether the estate is simple enough that you feel confident to do it yourself. Just remember to contact us right away.

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