Rights and Obligations of Executors in Administering an Estate

KEY TAKEAWAYS:

• Executors have significant responsibilities in administering an estate, including acting in the best interests of the estate and properly collecting, managing and distributing estate assets.

• Executors also have important rights, including the potential to claim commission for their work and to be reimbursed for reasonable and properly incurred expenses in administering the estate.

• Understanding these rights and obligations can help executors minimise the risk of disputes, delays and potential personal liability.

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Being appointed as an executor of an estate carries significant responsibility and places the executor in a position of trust. An executor is responsible for administering the deceased’s estate, including collecting and managing estate assets, paying liabilities and expenses, and ultimately distributing the estate to the beneficiaries.

While executors have a range of legal obligations they must comply with, they also have certain rights and protections when carrying out their role.

Understanding the distinction between an executor’s rights and obligations is particularly important where the administration of an estate becomes complex or disputes arise.

The following are four important rights and obligations of executors when administering a deceased estate:

 

1. Obligation: Acting in the best interest of the estate

Executors are required by law and by their fiduciary duties to the estate to comply with their legal obligations and the terms of the Will, while acting honestly, impartially and in the best interests of the estate. This reflects the position of trust occupied by an executor and requires them to act properly and not use their position for personal benefit.

Executors must avoid conflicts between their personal interests and their responsibilities to the estate. This includes ensuring that estate funds are not used for personal purposes and that they do not obtain a personal benefit from the estate unless authorised by the Will or otherwise permitted by law.

Executors must also act impartially between beneficiaries and cannot favour one beneficiary simply because of a personal preference. Where an executor is also one of several beneficiaries, they must take particular care to manage any potential conflict between their personal interests and their duties to the estate and other beneficiaries.

Acting in the best interests of the estate includes taking reasonable steps to protect estate assets, such as arranging appropriate insurance and securing estate property, paying the deceased’s debts and liabilities, and progressing the administration and distribution of the estate efficiently and properly.

 

2. Right: Claiming executor’s commission

In administering an estate, an executor may have a right to receive compensation for the work, time and responsibility involved in the administration. This is commonly referred to as executor’s commission. Whether commission is available depends on the circumstances of the particular estate, and an executor is not necessarily required to administer an estate without compensation.

Executor’s commission recognises the labour, responsibility and time contributed by an executor in administering an estate. For example, an executor may spend significant time cleaning, maintaining or managing estate properties, dealing with complex investments, or addressing disputes between beneficiaries.

However, an executor cannot generally claim commission for work that has been undertaken by legal practitioners or other professionals and for which the estate has separately paid professional fees.

It is also important to distinguish executor’s commission from payment for professional services. An executor is not necessarily entitled to be paid simply because they have been named as executor. Whether commission is awarded, and the amount of any commission, will depend on the work undertaken, the responsibilities assumed and the circumstances of the particular estate.

 

3. Obligation: Properly administering and distributing the estate

Another important obligation of an executor is to progress the administration of the estate efficiently and ultimately distribute the estate to the beneficiaries. Executors must take reasonable steps to identify and collect estate assets and liabilities and ensure that debts, expenses and other liabilities are properly dealt with.

Where required, executors should also take steps to obtain the appropriate grant of representation and progress the administration towards distribution without unnecessary delay. Executors must identify and distribute estate assets in accordance with the terms of the Will (if any) and applicable legislation, while acting properly and in the interests of the beneficiaries.

Executors should also maintain accurate records of estate transactions and exercise appropriate care and diligence throughout the administration. Unnecessary delays can cause financial and practical difficulties for beneficiaries and may expose an executor to criticism or potential legal action.

Executors should also avoid distributing estate assets prematurely before properly addressing the estate’s debts and liabilities. If an estate is distributed without adequate provision being made for liabilities that subsequently come to light, an executor may, in certain circumstances, become personally liable for those liabilities. Executors should therefore take reasonable steps to identify and pay, or make adequate provision for, all known and anticipated debts and expenses before distributing the estate.

 

4. Right: Reimbursement for proper estate expenses

Executors are generally entitled to be reimbursed from estate assets for reasonable and properly incurred expenses associated with administering the estate. An executor should not ordinarily be personally responsible for expenses properly incurred in carrying out their duties.

Examples of reasonable estate expenses may include Supreme Court filing fees, property insurance, council rates and other property-related expenses, and funeral expenses incurred by the executor as part of the administration of the estate.

Reimbursement of estate expenses is distinct from executor’s commission. Reimbursement repays the executor for money they have personally spent on proper estate expenses, whereas commission is compensation for the work, time and responsibility involved in administering the estate.

If you have been appointed as an executor or are involved in the administration of an estate, our experienced Wills and Estates lawyers can assist you in understanding your rights and obligations and navigating the administration process, which will vary depending on the circumstances of each estate.

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