Typically, the Executor of a will needs a Grant of Probate from the Supreme Court to gain access to some assets of a deceased person. But, there are some situations when Probate is unnecessary in Australia.
In today’s guide, we uncover when you don’t need Probate in Australia and how to know when a grant of Probate is necessary as the Executor of a will. As someone preparing their will, it’s important to understand the meaning of Probate.
Why is Probate needed?
Specific entities that hold assets or maintain registers for a deceased person require Probate. These entities can include financiers, super funds, insurance companies, local councils and utility companies.
They won’t release or transfer the assets to the Executor until they’ve received a certified Grant of Probate from the Supreme Court. In addition, retirement homes will almost always require a Grant of Probate to release the deceased’s exit entitlement.
When is Probate unnecessary in Australia?
Although Probate is usually required when administering an estate, there are situations where Probate is unnecessary. Below are three conditions that don’t need a Grant of Probate.
1) Property held as ‘Joint Tenants’
Probate for any assets held as ‘joint tenants’ is not necessary. For example, the deceased person may own a home with their spouse or de facto partner as a joint tenant. The deceased’s portion of the jointly-held asset doesn’t technically form part of their estate and passes on to the ‘surviving joint tenant’ without the need for Probate.
The same rule can apply to any asset held as a ‘joint tenant’ including bank accounts, motor vehicles and more. In addition, if the state recognises ownership of a property as tenants-in-common, the deceased’s share in that property will form part of their estate and Probate is required.
Probate is required in this situation because the deceased’s interest does not naturally pass to the other registered owner. If the interest naturally went to the other surviving owners, it’s referred to as the rule of survivorship.
2) Low-value assets
The Executor of a will can avoid Probate when the deceased person’s assets are low-value. Each financial institution and share registry have a low-value cap. The total value of the assets must be below this cap before Probate, or a Letter of Administration is necessary.
It’s necessary to establish that you would be the person administering the estate by providing a certified copy of the will and a death certificate to transfer low-value assets.
It’s important to note that the financial institution may issue a cheque in the name of the estate. However, in most cases, most banks will then require a bank account in the name of the estate, requiring a Grant of Probate.
If you think that the value of the deceased’s assets is on the ‘borderline’ of the low-value cap, you can use the help of a solicitor to provide a cover letter outlining why Probate is not necessary. These arguments can include:
- The deceased doesn’t have many other assets
- That institution would be the only institution requiring probate
- The estate is small, and obtaining probate would be expensive
- The deceased left their estate to each of their children in equal shares
- There are no claims made against the estate
When someone dies in Australia without a will, it’s referred to as having died intestate, also known as Intestacy. In this situation, a Grant of Probate is unnecessary, but the Next of Kinwould need to apply to the Supreme Court for a Letter of Administration.
Letters of Administration is also required when a deceased person leaves a will. Still, the named Executors named in the last will have already passed away or are unable to act as the Executor of the deceased’s estate.
In this case, a person known as the ‘administrator’ will apply to the Supreme Court for a Letter of Administration for legal authority to administer the deceased person’s estate instead of an executor named in the dead person’s will.
How do you know when Probate is required?
To decide whether a grant of Probate or Letters of Administration are required, we recommend following the steps outlined below:
1. Compile a list of Assets and Liabilities
The first step to understanding whether or not you need Probate is identifying all of the assets and liabilities in the deceased person’s estate. From there, make sure to note who holds them and where.
2. Transfer property held as ‘Joint Tenants’
Suppose there’s any property under joint tenants. In that case, it may be necessary to lodge a ‘Request to Record Death’ using a certified death certificate with various registries to record the passing of the joint interest to the surviving owner.
3. Handle property owned solely or as Tenants-in-Common
If the deceased person owns property solely or as Tenants-in-Common, you need to contact each organisation holding these assets to determine their ‘deceased estate transfer policy’. If the value of the assets is below the low-value threshold, then Probate shouldn’t be required.
4. Obtain Probate if required
The main reason for this requirement is that the relevant institutions can’t be held liable for transferring or distributing estate assets to the Executor without formal approval by the Supreme Court.
It’s important to know both as someone making their will and the Executor of a will when Probate is necessary in Australia. When in doubt, it’s always best to clearly outline the assets you have in your will and seek legal help if you’re unsure what documentation you need to hand an estate. If you haven’t created your will, the time to start is now with the help of Willed.
Disclaimer: The content of this blog is intended to provide a general guide to the subject matter. This blog should not be relied upon as legal, financial, accounting or tax advice.