The property and assets belonging to a person who has died is called their deceased estate. This may include real estate, money in bank accounts, shares, and personal possessions.
Some types of income will also form part of the deceased estate. However, some assets will not be included in the deceased estate because the deceased person has made other arrangements to distribute those assets.
The deceased estate is held in trust from the death of the person until the transfer of the property and assets to the beneficiaries. It is administered by either:
- an executor appointed in the person’s will, or
- an administrator appointed by the Supreme Court.
You don’t have a choice as to whether to establish a trust – as an administrator or executor, you are the trustee of the deceased person’s estate.
Assets excluded from an estate
Superannuation and life insurance payments may or may not form part of the deceased estate. If there are stipulated beneficiaries under the policies, the payments may go directly to the beneficiaries without going through the deceased estate.
Assets that are jointly owned may or may not form part of the deceased estate – this will depend on the type of co-ownership. There are two categories of co-ownership:
- joint tenancy
- tenancy-in-common.
When a joint tenant dies, their share in the asset is extinguished and they cannot pass the asset to their estate – the surviving owner becomes the sole owner. The most common type of asset held in joint tenancy is the family home.
When a tenant-in-common dies, their share passes to their deceased estate and the executor deals with that share in the asset. In the case of real estate, the title deed usually specifies the type of co-ownership. Under common law, joint tenancy of real estate is presumed in the absence of any documented contrary intention.
For other assets, like bank accounts and shares, the type of ownership is often not stipulated – the contract or purchase documentation may provide clues.
Stages of administration
The period of administration begins at the date of death, and ends when the administration of the estate is complete, in this order:
- Date of death
- Funeral arrangements.
- Executor appointed by will, or administrator appointed by the court.
- Probate applied for and granted by the court.
- Assets vested in executor who administers estate –
- date of death and trust tax return lodged
- initial stage – net income of estate is applied to reduce debts (including tax liabilities)
- intermediate stage – part of the net income of estate that is not required to pay debts may be paid to beneficiaries
- final stage – debts are paid or provided for in full and net income and assets of the estate are distributed to beneficiaries.
- Administration of estate is complete.
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