The following is a 13 step process to assist Church agencies, congregations, parishes, schools etc (hereinafter referred to as the Church Entity) in understanding what legally occurs after the death of a benefactor who has left a bequest to a Church Entity. By developing a better understanding of the legal process involved, it is arguable that Church Entities will be in a stronger position to collect their bequests in a timely fashion and without any unnecessary deductions being made from the bequest.
Step 1 – Learn of death of benefactor
As difficult as it is to arrange, it is in the interests of a Church Entity to learn of the death of a benefactor
as early as possible.
Step 2 – Church Entity seeks to obtain a copy of the will
Whether or not a Church Entity is, at this point in time, entitled to insist upon receiving a copy of the will depends upon the State or Territory in which the benefactor lived. A summary of the position is set out in the table below:
Step 3 – Executor applies for Probate
Following the death of the benefactor, the executor must apply to the Supreme Court Registry for a grant of probate.
The simpler the assets and liabilities of the benefactor, the sooner the executor should be able to obtain a grant of Probate.
Step 4 – Probate is granted
The executor is now free to collect all of the assets of the estate, pay the liabilities and commence paying the legacies and distributing the estate to the beneficiaries generally.
Step 5 – Church Entity obtains a copy of the Probate, including the inventory of assets
It is of great benefit to a Church Entity to obtain a copy of the grant of the Probate (which will often also include a copy of the will and a copy of the inventory of assets and liabilities). In most jurisdictions it is possible to obtain a copy of these documents directly from the Supreme Court Registry.
Are you collecting all of your bequests?
Obtaining a copy of the inventory of assets will assist the Church Entity in assessing roughly how long it will be before the Church Entity is paid its bequest.
Step 6 – Executor realises the assets and pays all of the debts of the estate
After Probate has been granted, the executor will need to realise the assets of the estate and commence paying all of the liabilities. If a Church Entity is a residuary beneficiary, it will often need to wait until the assets have been realised and the liabilities have been paid before the Church Entity can receive an interim or final distribution.
Step 7 – Executor attends to taxation issues of the deceased and the estate
It is the duty of the executor to lodge tax returns on behalf of both the deceased and the estate.
Step 8 – A claim may be made against the estate under the Family Provision legislation
A claim which is made under the relevant Family Provisionlegislation will expend some of the assets of the estate and will inevitably result in delays in the final distribution of the estate. A Church Entity which is a beneficiary of an estate where a Family Provisionclaim has been made should obtain legal advice about how to respond to that claim.
Step 9 – Executor makes an interim distribution to the beneficiaries
At any point during the administration of the estate, if the executor has calculated how much of the estate
is necessary to pay out all of the liabilities (including tax) and all of the legacies, the executor should
be in a position to make an interim distribution to a Church Entity which is a residuary beneficiary.
Step 10 – A commission is negotiated between the beneficiaries and the executor
An executor is entitled to apply to the Supreme Court to be allowed to deduct from the estate a commission to recompense him or her for the pains and troubles incurred by the executor in administering the estate. The earlier that a Church Entity, which is a beneficiary, reaches agreement with the executor in relation to his or her commission, the sooner that the final distribution of the estate can occur. Further, costs will not be incurred by the estate in an executor making an application for commission to the Supreme Court.
Step 11 – Executor accounts to the beneficiaries
An executor, as a trustee, must:
- keep full and proper accounts of the estate property, income and outgoings; and
- render these accounts when required by the beneficiaries.
Step 12 – Release and indemnity
The executor may ask a Church Entity which is a beneficiary to sign a Deed of Release and Indemnity in favour of the executor. Assuming that the terms of that Deed are reasonable, the signing of such a Deed will often speed up the final realisation and distribution of the estate.
Step 13 – Executor makes final distribution to the beneficiaries
Once all of the other steps listed above have been attended to, the executor is in a position to make a final distribution to the residuary beneficiaries of the estate.