Rights of beneficiaries

Beneficiaries under a will have certain rights and protections under the law. The grant of probate or administration provides some protection to beneficiaries or next of kin. Subject to the family provision sections of the Succession Act 2006 (see Family Provision Orders), they can be sure that they are the only people who will receive the property of the deceased person. If someone disputes the claim by producing another will, for example, the only way that person can receive any of the estate is to apply to the court to revoke the grant of probate (or letters of administration).

If the deceased left gifts of money, assets may have to be sold to obtain the money. If the executor does not act diligently, the beneficiaries may complain to the Supreme Court. This is the only right a beneficiary has before distribution. A beneficiary does not own the property until the executor distributes the estate. Before distribution, the executor is regarded as the 'owner' of the assets in so far as the executor holds the estate in trust for the beneficiaries.

If surviving family have no income

Until the estate is distributed, surviving members of the family can sometimes be left without any access to family funds. This could happen where all the family assets have been in the deceased's name. This causes a particular difficulty if the major beneficiary is a spouse who has no other source of income. (The same difficulty will arise if the deceased did not leave a will.) In such cases, the spouse should immediately contact Centrelink to check their eligibility for a pension or allowance. Another option may be to seek a loan, using the estate as security.

Spouses can avoid this situation by maintaining a joint bank account. On the death of either of the joint account holders, the right to the whole of the account passes to the survivor. For some people, joint accounts may create problems so another option is for spouses to have their own accounts to cover this situation.

Under the Probate & Administration Act 1898, section 92A, the executor or administrator can make urgent payments from the deceased person's estate for the maintenance and support of any person who was substantially dependent on the deceased person at the time of his or her death.

Interest on legacies

If a gift of money (a legacy) is not paid within 12 months, the person to receive the money (the legatee) is entitled to interest on the money, unless the will provides otherwise. The current rate can be found in section 84A of the Probate & Administration Act 1898).

Rights of creditors

People who are owed money by someone who has died have to wait until the assets of the estate are available to the executor or administrator (after the grant of probate or letters of administration) before they receive payment. Secured creditors have special rights over goods or land belonging to the debtor and are paid before unsecured creditors – for example, a bank with a mortgage over a property will be paid out before unsecured creditors.

Life insurance and superannuation

Some assets are preserved from the payment of outstanding debts. Unless a contrary intention is expressed in the will, the proceeds of any life insurance policy of the deceased are protected from payment of estate debts except for funeral and testamentary expenses (the costs of administering a will). Proceeds from a life insurance policy may be distributed by the executor in accordance with a will or the intestacy rules (Life Insurance Act 1995 (Cth) section 205).

Superannuation benefits under some government funds are protected by legislation and the protection cannot be revoked by a will.

Legal actions taken by or against a person may (with some exceptions) continue after their death (Law Reform (Miscellaneous Provisions) Act 1944 section 2). Unresolved legal actions will pass to the estate. If the estate is sued and loses the case, the beneficiaries could be left with nothing. If the value of the estate is not sufficient to pay off debts, the debts will die with the person, unless they were held jointly with someone (for example a mortgage on a property), or guaranteed by someone else. In these situations, the debts will automatically pass to the surviving co-owner or guarantor.

Funeral expenses

Funeral expenses must be paid before any assets of the deceased's estate can be distributed to beneficiaries. The person who orders the funeral is responsible for paying the account but is entitled to reimbursement from the estate ahead of other creditors.