11 Steps to winding up an estate after death

Written by Ronald Pratap

on July 5, 2024

The loss of a loved one or friend is something few of us want to think about and thinking about winding up an estate after death can be very stressful, but if you are appointed executor in their Will, you are legally responsible for handling their estate.

This may seem simple, but winding up a spouse or parent’s estate is not and that’s why we have broken it down into 11 steps to assist you.

It might be confusing and difficult to arrange all the documentation and interaction with their banks, super fund/SMSF, insurance provider, and utility companies.

Before accepting to be executor, consider the time and effort necessary, even if you’re retired and have time.

Winding up an estate: what’s involved

As executor, you must complete the deceased’s legal obligations. You also own the deceased’s estate and distribute its assets to the beneficiaries per their Will until the directions are finalised.

Most estates require more than just funeral planning and debt payment. You must also pay the deceased’s taxes and file an estate tax return.

An estate might take six months to several years to finalise, depending on the deceased’s affairs, assets, beneficiaries, and competing claims.

Executors must follow 11 steps to govern an estate, depending on its complexity:

Step 1: Organise the funeral (or memorial service)

First, find out who has legal power over the deceased’s estate and whether the named executor is willing to serve. If you no longer want to be executor, you must write a letter of renunciation and submit it to the probate office or supreme court.

The executor usually works with the deceased’s spouse or next of kin to carry out funeral wishes.

Step 2: Obtain the basic documents

Locating the deceased’s Will is another early executor responsibility. This document is the foundation of administration and states the deceased’s final desires for asset distribution.

Death without a Will is called ‘intestate’. Usually, the next of kin or person with the principal estate claim must file for Letters of Administration to the state or territorial supreme court. They can become estate administrators after approval. Intestacy laws apply if there is no Will and the estate is allocated according to state law.

A deceased person’s death certificate is also crucial. A death certificate is usually issued three to four weeks after the funeral director registers the death with the state Office of Births, Deaths, and Marriages.

When representing the estate, most banks, utilities, and telcos will want verified copies of the death certificate.

Step 3: Identify the estate assets

While waiting for the death certificate, the executor should visit the deceased’s house to list their assets and value the estate.

The executor must detail the deceased’s home, vehicles, jewels, bank accounts, shares, insurance, and entitlements, such as unpaid loans, a rental bond, or part-ownership of a business.

Collecting all the keys if the deceased lived alone may help prevent assets from being taken before the formal asset distribution. It may be prohibited for beneficiaries to remove things before assessment to guarantee assets are allocated according to the Will.

Banks must be notified of the death to freeze accounts and prevent unwarranted charges and withdrawals. Online forms are available at most banks. The free Australian Death Notification Service notifies various entities with a single web notification.

Most banks demand official executor notification after receiving the death certificate. Certified copies of the death certificate, Will, and personal identification may be required.

Step 4: Apply for probate

After telling banks you are executor, they will instruct you on closing the deceased’s account and transferring funds to the estate.

If the account balance is over $20,000, the bank may compel the executor to petition for probate from the applicable state supreme court (see below). When probate is not needed, the bank normally requires executors to give certified copies of the Will and death certificate and sign an indemnity form before releasing funds to finalise winding up the estate for bank purposes.

Joint accounts don’t need probate because the bank helps the remaining joint accountholder assume sole ownership.

Probate validates a deceased’s Will and authorises the executor to carry it out winding out the estate. Grants of Representation grant this authority. If there is a valid Will, the executor applies for Grant of Probate; if not, Letters of Administration are needed.

The applicable state supreme court requires the original death certificate and personal identification to grant a Grant of Representation. Probate applications might take months, depending on court workload.

A bank Estate of the Late account can be opened after receiving the Grant of Representation. This can be used to recover closing sums from the deceased’s bank accounts and proceeds from the sale of assets like shares or real estate for their beneficiaries.

Step 5: Pay outstanding bills

If the estate is solvent, executors must pay utilities, rates, and personal debts on behalf of the deceased.

Even with a frozen account, banks will release funds for funeral fees with an invoice or receipt, death certificate, and Will. Funeral and estate administration costs take precedence over debts when winding up.

To prevent interest, pay off credit card balances. Cancel the deceased’s bank and credit card direct debits.

Step 6: Prepare and sell assets

The executor is not legally allowed to sell any assets (such stocks or real estate) that the dead possessed until they have a Grant of Representation in order to disperse the revenues to the beneficiaries. State share registers and land title offices will need certified copies of the award in order to transfer asset titles.

Real estate automatically reverts to the other joint tenant if the dead was a joint tenant rather than a tenants-in-common owner.

Step 7: Claim any outstanding benefits and refunds

Certification of the death certificate allows you to cancel services and benefits and collect refunds for the estate. To save the estate money, terminate media streaming and other subscriptions.

Social media accounts of the deceased should likewise be deleted if winding up an estate.

The estate may receive a death benefit if the dead was a club member, trade union member, or public safety officer like a firefighter or police officer. When canceling a deceased driver’s license, the state may offer a nominal refund.

The Australian Electoral Commission should be notified of the death to remove the deceased from electoral rolls.

Step 8: Apply for super death benefits

The executor should notify the fund about the deceased’s superannuation accounts while awaiting a Grant of Representation because the deceased’s Will does not cover them.

Inform the beneficiary of a death benefit nomination. Super funds require a valid death certificate when claiming death benefits.

Step 9: Apply for insurance benefits and refunds

Check if the deceased had insurance coverage and if a claim may be made. To distribute claimable benefits according to the Will, the estate’s asset list must include their complete worth, save for funeral insurance, which will be paid straight to the funeral director.

Health, income, house, contents, mortgage, car, and pet insurance are common plans to examine. Cancelling these policies may result in asset list refunds.

Step 10: Notify the ATO and finalise tax obligations

The ATO must be notified of taxpayer deaths. Call 13 28 65 to unofficially alert the ATO and halt tax correspondence while awaiting probate. Visit the ATO website for details.

After receiving a Grant of Representation, you must notify the ATO of your estate management duties via an online death notification form. You must supply original or certified copies of the Will and Grant of Representation and attend an Australia Post branch interview.

Step 11: Finalise and distribute the estate

Estate income is taxed separately from pre-death personal income. A trust tax return reports estate income and capital gains to the ATO. A distinct estate Tax File Number (TFN) is needed to file a trust return.

If the sale of estate assets (such property) generates a capital gain or earnings over $18,200, a trust tax return is required. This tax might be paid immediately or from beneficiary assets.

You must post a Notice of Intent to Distribute in some states before distributing assets to beneficiaries. This is the last chance for creditors or inheritance claimants to claim the estate.

After completing all formalities, the executor distributes assets to beneficiaries and closes the Estate of the Late bank account.

If you require assistance with winding up an Estate or need assistance managing your own Estate Planning affairs, contact our office to discuss what is best for your needs. Please reach out to our office on 02 9188 1547 and you will get through to our Oran Park or Norwest/ Baulkham Hills location, alternatively you can fill out the contact form and an Adviser from our office will contact you.

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The information in this website and the links has been prepared for general information purposes only by our office and does not take into account your personal objectives, financial situation or needs. It is not intended to provide commercial, financial, investment, accounting, tax, personal or legal advice. You should, before you make any decision regarding any information, strategies, or products mentioned on this website, consult a professional financial advisor to consider whether it is suitable and appropriate for you and your personal needs and circumstances.

Ronald Pratap

Principal Financial Planner at RP Wealth Management | Financial Planning l SMSF I Insurance l Property Advisory. Our purpose is to provide our clients with sound advice and direction to assist with their financial affairs and help them make the best choices in achieving what is important to them.

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