1. INTRODUCTION
10.1 In some jurisdictions it may be possible for a person to administer an estate – or some parts of it – without a formal grant of representation. If a person administers an estate without having obtained a grant of probate of the will or letters of administration, the administration is sometimes referred to as an “informal administration”. During an informal administration, the person administering the estate may simply collect the assets, pay the debts and distribute the balance of the assets, without taking out a grant, without giving or publishing the usual notices or filing an inventory and without giving any statutory declarations, affidavits or indemnities except those required by the persons or institutions releasing or transferring funds at the request of the person administering the estate.
10.2 In some cases it may be necessary to obtain a grant because, apart from any other reasons, the person releasing money or other property to the person purporting to administer the estate is willing to release it only to a person who is authorised to give a valid discharge.
10.3 A grant is usually required in order to deal with real property. The exception is in Queensland, where real property that forms part of the estate of a deceased person may, in certain circumstances, be transferred without the need to first produce a grant.
2. EXECUTOR DE SON TORT
10.4 In Chapter 2 of this Discussion Paper, the National Committee discussed the ways in which a person may acquire the authority to administer an estate. A person who has no authority to act as a personal representative, but who nevertheless performs acts properly belonging to a personal representative, is referred to as an executor de son tort. In such a case the person is regarded at law as having held himself or herself out as the duly appointed representative and is held liable as if he or she were so appointed.1 A person acting in such a capacity is said to “intermeddle” in the deceased’s estate.
3. POTENTIAL LIABILITY OF A PERSON ADMINISTERING AN ESTATE WITHOUT A GRANT
10.5 A person administering an estate – whether or not pursuant to a grant – could incur liability if he or she makes an incorrect distribution of the estate. Such a mistake could occur for a number of reasons, for example:
- it may be found that, after the estate has been distributed, the distribution was made according to a will that was not the last valid will of the deceased person; or
- a personal representative may not be aware of all the creditors of the estate and may distribute the estate without first discharging all its debts.
10.6 One of the significant differences between the liability of a personal representative who has obtained a grant and that of a person administering an estate without a grant is that, for the former, there are a number of provisions that confer protection from liability for acts done in the administration of the estate that are not available to a person administering an estate without a grant.
10.7 For example, section 53 of the Succession Act 1981 (Qld) protects a personal representative who has obtained a grant in respect of certain acts done pursuant to a grant that is subsequently revoked. It does not, however, apply to a person who has not obtained a grant and who distributes an estate in accordance with a will that is later found to be invalid.
10.8 Many jurisdictions also have provisions that require or permit a personal representative to advertise his or her intention to distribute an estate by a certain date, and to distribute the estate after that time having regard only to the claims of which he or she is aware.2
10.9 On the other hand, an executor de son tort is protected from liability only to the extent that he or she administers an estate correctly.
10.10 If a person proposing to administer an estate is concerned about the testator’s capacity when making a will or is concerned that a particular will may not be the testator’s last will, the only way for that person to avoid liability in respect of distributions wrongly made because they were made in accordance with an invalid will is to take out a grant. Similarly, if a person proposing to administer an estate is concerned that there may be claims of which he or she is unaware, the appropriate course would be to obtain a grant and comply with the procedures for advertising the proposed distribution of the estate.
4. RECOGNITION OF PERSONS ADMINISTERING AN ESTATE WITHOUT A GRANT
| QLD | 54(1) | WA | |
| ACT | | NT | |
| VIC | 33 | TAS | 29, 30 |
| NSW | | UK | 28, 29 |
| SA | | NZ | 52 |
(a) Introduction
10.11 The National Committee considered whether the model legislation should, having regard to the frequency with which estates are administered without a grant being obtained, recognise and address the occurrence of informal administrations.3
10.12 Factors that might affect the decision whether to obtain a grant or to administer the estate informally include the following:
- whether the person proposing to administer the estate is aware of facts relating to the existence, or validity, of any will;
- the size and nature of the assets and liabilities of the estate;
- whether there are persons who might have a claim for family provision;
- whether the time for making a claim for family provision has expired;
- whether the assets and liabilities in the estate are known to all interested persons;
- whether all persons interested in the estate are prepared to allow the person administering the estate to administer the estate informally;
- whether the person administering the estate is prepared to accept personal liability for loss caused by incorrect administration or distribution; and
- whether a person releasing money or other property to the person administering the estate is prepared to do so without receiving a discharge from a personal representative acting under a grant.
10.13 The Queensland Law Reform Commission made the following observation about an executor de son tort in its 1978 Report:4
Since 1601 ... provision has been made to protect persons who act informally, but properly, in the administration of a deceased estate. In these days, when some time may elapse between the death and the grant of probate or letters of administration, protection for those who act in the meantime is essential, whether the person to be protected is an executor, intending administrator, or even an executor de son tort. Provided such person does what a duly constituted personal representative should properly do the estate will not be harmed.
10.14 The Succession Act 1981 (Qld) contains a provision that deals with the situation of a person who administers an estate without first obtaining a grant. Section 54(1) reads:
Protection of persons acting informally
Where any person, not being a person to whom a grant is made, obtains, receives or holds the estate or any part of the estate of a deceased person otherwise than for full and valuable consideration, or effects the release of any debt or liability due to the estate of the deceased, the person shall be charged as executor in the person’s own wrong to the extent of the estate received or coming into the person’s hands, or the debt or liability released, after deducting any payment made by the person which might properly be made by a personal representative to whom a grant is made. [emphasis added]
The extent of the protection is indicated by the highlighted words in section 54(1).
10.15 Section 54 affords to a person who is administering an estate without a grant the protection given by the decided cases to an executor de son tort. The person administering the estate is protected only to the extent that the estate is administered in accordance with the law. This level of protection may, depending on the circumstances of the case, be considered to be sufficient by the person intending to administer the estate without a grant.
(b) Terminology
10.16 The terms “executor de son tort” (or “executor in the person’s own wrong”) and “intermeddler” used in some legislative provisions suggest that the people described by these terms are acting improperly. This is not necessarily the case. An “executor de son tort” or “intermeddler” may administer an estate quite correctly; if he or she does so, no liability will be incurred.
(c) Arguments in favour of administering an estate without a grant
10.17 A large proportion of estates, particularly small or uncomplicated estates, are administered informally. It is arguable that the ability to administer an estate informally makes it easier for a lay person to administer an estate. It is also a cost saving for the estate, given that the costs of obtaining a grant would usually be paid out of the estate. Although the services of a professional person, such as a solicitor, may sometimes be sought, fees payable to solicitors or other professionals are lower or non-existent if a lay person, very likely a residuary beneficiary or the sole beneficiary, administers the estate. Further, there are no court filing fees.
10.18 The informal administration of the estate may also be completed more quickly if there is no need to wait for the grant.
10.19 The supervision and control involved in the administration of estates with a grant impose costs in terms of money and inconvenience on a large number of people in the community; they also impose a cost on the taxpayer to pay for the public service administration. It is important to balance the benefits that a regime of supervision and control confers on a comparatively small number of people in the community against the costs that such a system imposes on the large number of people who would otherwise not need to take out a grant.
(d) Arguments against administering an estate without a grant
10.20 A system that requires a person who administers an estate to obtain a grant gives the court (through the Registrar of Probate) a power to supervise and control the administration of the estate. The requirements associated with obtaining a grant may help to protect the interests of some potential beneficiaries or other persons with an interest in the estate.
(i) Lack of scrutiny by the court
10.21 The Registrar of Probate is not involved when a grant is not obtained and the estate is administered informally. There is no supervision by the court of the administration of the estate.
10.22 However, depending on the assets to be transferred, a third party – such as the Registrar of Motor Vehicles, a bank, a company (where it is transferring shares)5 or a financial institution – may provide some control.6 It is common for Registrars of Motor Vehicles, companies, banks and other financial institutions to require:
- a copy of the will if any;
- a copy of the death certificate; and
- a statutory declaration from the person applying for the release or transfer of the funds to the effect that the person believes that he or she is the person entitled to administer the estate, that the will is valid and effective, that no grant has been issued in relation to the estate, and that the applicant does not intend to seek a grant and that he or she indemnifies the person releasing the funds or making the transfer for any losses caused by incorrect payment, release or transfer.
(ii) Prejudice to potential family provision applicants
10.23 A person administering an estate could ignore or marginalise beneficiaries and potential family provision applicants. In particular, if no inventory is required to be filed, a potential claimant for family provision may not otherwise know that assets exist, or that they warrant bringing an application.
(e) Issues considered by the National Committee
10.24 The National Committee considered whether:
(1) a provision to the effect of section 54(1) of the Succession Act 1981 (Qld) should be included in the model legislation;
(2) if so, to what extent a person administering an estate without a grant should be protected from liability in respect of acts done in the course of the administration;
(3) if a provision to the effect of section 54(1) is to be included, it is possible to avoid the use of the term “executor in the person’s own wrong”.
(f) The National Committee’s preliminary views
(i) Protection afforded by section 54(1) of the Succession Act 1981 (Qld)
10.25 The National Committee acknowledged that, in all jurisdictions, a significant number of estates were administered informally. This practice was facilitated by factors such as joint ownership of property, and the willingness of organisations such as banks to release funds up to specified amounts without requiring a grant of probate or letters of administration. The National Committee also acknowledged that section 54(1) of the Succession Act 1981 (Qld), which protects only those informal administrators who act properly, does not change the law, but is merely declaratory of it.
10.26 Some of the Registrars of Probate expressed some concern that recognition of the practice of informal administration could lead to an erosion of the need for a grant. In particular, they thought that the model legislation should be seen to be supporting correct procedures. They also disagreed that the procedure for obtaining a grant of probate or letters of administration was expensive or caused delays and inconvenience. On the other hand, the Registrar of the Supreme Court of Queensland, who has twenty years of experience with the system of informal administration in operation in that State, found no difficulty with recognising the practice of informal administration in the model legislation.
10.27 The National Committee was of the view that, given the acknowledged high level of incidence of informal administration in all jurisdictions, it would be unrealistic for the model legislation simply to ignore the extent to which informal administration was presently occurring, and that to exclude it from the legislation would give the impression that a matter of considerable significance had been overlooked.
10.28 The National Committee also considered that to include the protection presently afforded to a person acting without a grant in the model legislation, rather than leaving it to case law, would make the law more accessible to non-lawyers.
10.29 Consequently, the National Committee was of the view that a provision to the effect of section 54(1) of the Succession Act 1981 (Qld) should be included in the model legislation.
10.30 Despite their initial reservations, a majority of the Registrars of Probate agreed with this approach.
10.31 The National Committee considered, but did not reach a decision on, the following redraft of section 54(1) of the Succession Act 1981 (Qld):
Persons acting informally
(1) Any person who obtains, receives or holds any property forming part of the estate of a deceased person must fully account for that property to –
(a) an executor appointed by the will of the deceased; or if there is no executor or no executor able and willing to act or any person entitled to share in the residuary estate [query: entitled to apply for letters of administration] of the deceased, whether under a will or upon the intestacy of the deceased; and
(b) if required to account by the Court, to the Court.
(2) A person who obtains, receives or holds any property forming part of the estate of a deceased person is permitted to use any such property for the purpose of paying any debt owed or meeting any liability incurred by the deceased being a debt or liability which an executor or administrator would have to pay or meet in the due course of the administration of the estate [or distributing any entitlement or benefit].
Example
A friend may use cash found in the deceased’s house to pay the deceased’s credit card bill so saving a perhaps considerable interest bill.
(ii) Additional protection
10.32 The National Committee was of the view that the protection afforded by section 53 of the Succession Act 1981 (Qld)7 and by equivalent provisions in other jurisdictions, should be available only when a grant had initially been obtained.
10.33 The National Committee did, however, query whether the provisions that enable personal representatives to advertise their intention to distribute and to distribute having regard only to claims of which they are aware should be available to persons acting without a grant.8 Section 67 of the Trusts Act 1973 (Qld)9 protects a personal representative, whether acting pursuant to a grant or not, provided the proper notices have been issued, the proper time has been allowed to elapse between giving the notice and making the distribution, and the personal representative has regard to claims of which he or she has notice at the time of distribution.
10.34 The National Committee considered it inconsistent with the concept of informal administration to impose various obligations on a person administering an estate without a grant. However, it saw some merit in enabling a person administering an estate without a grant to be protected from claims of which he or she was unaware if he or she had complied with the procedure for advertising an intention to distribute the estate. It is arguably in the interests of all parties for a person administering an estate – whether or not pursuant to a grant – to be able to “draw out” claims against the estate, rather than for those claims to be made, after the distribution of the estate, against a person who might not be able to satisfy them.
10.35 The National Committee did not reach a conclusion on this issue, but, instead, agreed to seek submissions.
Proposal 64
A provision to the effect of section 54(1) of the Succession Act 1981 (Qld) should be included in the model legislation.
Questions for discussion
10.1 What terminology could be used instead of “executor de son tort” and “in the person’s own wrong”?
10.2 Should a person who is administering an estate without a grant be able to advertise his or her intention to distribute the estate by a certain date and, by doing so, be protected from claims made by persons of whose claims the person was not, as of the date of distributing the estate, aware?
10.3 If yes to 10.2, should the availability of this protection depend on whether or not the person was appointed by will as the executor of the estate?
5. RENUNCIATION OF EXECUTORSHIP
(a) Introduction
10.36 The decided cases establish that an executor who has commenced administration of an estate without having first obtained a grant will not be allowed to renounce his or her executorship unless the court is satisfied that creditors and beneficiaries will not be prejudiced.10
10.37 The Queensland Law Reform Commission observed in its 1978 Report:11
This may, in some cases, be rather harsh, particularly where a person who happens to be nominated executor performs acts of administration in the emergency following a death without any intention of taking up his executorship.
The Queensland Law Reform Commission therefore recommended that it should be made clearer that an executor may renounce despite having acted in the administration of the estate.12
10.38 Section 54(2) of the Succession Act 1981 (Qld) reads:
An executor who has intermeddled in the administration of the estate before applying for a grant of probate may renounce his or her executorship notwithstanding his or her intermeddling.
10.39 Lee notes in relation to the law prior to the insertion of this subsection into the Queensland legislation:13
It has always been the law that a personal representative may choose not to act. If so choosing, it is desirable that he or she execute a written renunciation making manifest this intention, so that others entitled to seek a grant and able and willing to do so may easily prove the renunciation. The former law was that performance by an executor of executorial acts amounted to an acceptance of the office, and precluded subsequent renunciation.
No other Australian jurisdiction has a provision equivalent to section 54(2) of the Succession Act 1981 (Qld).
(b) Issue considered by the National Committee
10.40 The National Committee considered whether a provision to the effect of section 54(2) of the Succession Act 1981 (Qld) should be included in the model legislation and, if so, whether an executor who has acted in the administration of the estate, but who has not taken out a grant of probate or letters of administration, should require the leave of the court before he or she can renounce the executorship. This is not presently required by section 54(2) of the Succession Act 1981 (Qld).
(c) The National Committee’s preliminary view
10.41 The National Committee was of the view that an executor should have to obtain the leave of the court before he or she may renounce his or her executorship if he or she has started to administer the estate without having first obtained a grant of probate or letters of administration.
Proposal 65
A provision to the general effect of section 54(2) of the Succession Act 1981 (Qld) should be included in the model legislation. However, the words “with the leave of the court” should be inserted in the model provision, so that the leave of the court is required before an executor who has acted in the administration of the estate without a grant may renounce his or her executorship.
6. RATIFICATION OF ACTS DONE WITHOUT A GRANT
(a) Introduction
10.42 Section 54(3) of the Succession Act 1981 (Qld) reads:
A personal representative may ratify and adopt any act done on behalf of the estate by another if the act was one which the personal representative might properly have done himself or herself.
No other Australian jurisdiction has a provision equivalent to section 54(3) of the Succession Act 1981 (Qld).
(b) The National Committee’s preliminary view
10.43 The National Committee was of the view that a provision to the effect of section 54(3) of the Succession Act 1981 (Qld) should be included in the model legislation to enable a personal representative to ratify acts done by a person acting without a grant if the acts were otherwise done properly.
7. REAL PROPERTY
(a) Introduction
10.44 In all jurisdictions in Australia except Queensland, real property cannot be administered without a grant. In Queensland, however, real property can, in certain circumstances, be administered informally. Section 111 of the Land Title Act 1994 (Qld) provides for real property to be registered in the name of a person as personal representative both where the registered proprietor died leaving a will and where the registered proprietor died intestate. Section 112 of the Land Title Act 1994 (Qld) allows a beneficiary under a will to be registered as proprietor of an interest in real property.
10.45 Sections 111 and 112 of the Land Title Act 1994 (Qld) read:14
111. Registering personal representative
(1) A person may lodge an application to be registered as personal representative for a registered proprietor of a lot or an interest in a lot who has died.
(2) The registrar may register the lot or the interest in the lot in the name of the person as personal representative only if –
(3) A person registered under this section without a grant of representation has the same rights, powers and liabilities as if a grant of representation had been made to the person.
(4) The validity of an act done or payment made in good faith by a person registered under this section is not affected by a later grant of representation.
(5) If the grantee of a grant of representation is different from the person registered under subsection (2), the person registered must –
(a) account to the grantee for all property of the deceased person controlled by the person before the grant; and
(b) take all action necessary to divest from the person and vest in the grantee all property of the deceased person remaining under the person’s control.
112. Registering beneficiary
(1) A person who is beneficially entitled under a will to a lot or an interest in a lot of a deceased registered proprietor may apply to the registrar to be registered as proprietor of the lot.
(2) However, the registrar may register the person only if:
(a) written consent is given by:
(b) the person satisfies the registrar that the person is beneficially entitled to the lot.
10.46 The practical effect of these provisions and of the requirements adopted by the Offices of the Land Registry in Queensland (which includes, for example, lodgment of the original will) is likely to have been that the registration officers in Queensland have skills relating to the application of wills and the laws of intestacy not shared by their counterparts in other jurisdictions.
10.47 Section 45(7) of the Succession Act 1981 (Qld) provides that:
Nothing in this section [relating to vesting] affects the operation of an Act providing for the registration or recording of any person as entitled to an estate or interest in land in consequence of the death of any person notwithstanding that there has been no grant in the estate of the deceased person.
(b) Issue considered by the National Committee
10.48 The National Committee considered whether the Queensland practice of allowing the registered title to real property in a deceased estate to be transferred without the need for a grant should be included in the model legislation.
(c) The National Committee’s preliminary view
10.49 The Registrars of Probate were generally of the view that the Queensland position of allowing real property to be transferred without the production of a grant was anomalous. Despite that view, the National Committee considered that the issue required further consideration and that submissions should be sought before any decision was made on this issue. In particular, the National Committee noted that the system had been working in Queensland for many years without any apparent difficulties.
Questions for discussion
10.4 Should it be possible in some circumstances to transfer real property without producing a grant?
10.5 If yes to 10.4, what restrictions, if any, should be imposed?
10.6 If such a mechanism is considered desirable, should it be located in administration and probate legislation, or would it be more appropriate to locate it in real property legislation?
8. PAYMENTS BY THIRD PARTIES WITHOUT PRODUCTION OF GRANT
(a) Introduction
10.50 In the absence of a statutory exception, only a personal representative who has obtained a grant of probate or letters of administration is able to give a valid discharge to a debtor of a deceased estate. Some jurisdictions have enacted provisions to enable a person appearing to act on behalf of a deceased estate to give a valid discharge when certain types of debts are paid by a person owing money to a deceased estate or holding money or other property belonging to a deceased estate.
(b) Payments by employers
10.51 Victoria and South Australia make specific provision for certain outstanding wage payments owing to employees to be made by employers to appropriate persons.
10.52 Section 32 of the Administration and Probate Act 1958 (Vic) reads:
10.53 Section 71(1) of the Administration and Probate Act 1919 (SA) gives the Treasurer a discretion to pay an amount not exceeding $2,000 owed to a person who was, immediately before his or her death, an employee of the Government, to the surviving spouse of that person or to another person. The Act provides that a person may not claim against the Crown, the Treasurer or any other person representing the Crown in respect of that payment.15
(c) Other payments
10.54 Where a patient in a Government hospital dies and immediately before his or her death money or other property (not exceeding $2,000) was held on the patient’s behalf by the hospital, the South Australian Act allows the Treasurer to pay small amounts owed to the patient to the person’s surviving spouse or to another person.16
10.55 Legislation in South Australia and Western Australia allows small amounts to be paid by banks without the production of a grant.17
(d) The National Committee’s preliminary view
10.56 The National Committee considered that provisions of this kind could be a useful adjunct to the informal administration of an estate, but queried whether they should be extended beyond employers, for example, to banks and superannuation funds. It was also of the view that the present monetary limits on the operation of the current provisions could detract from their usefulness.
10.57 The National Committee formed the preliminary view that it would be more appropriate for provisions of this kind to be located in the legislation to which they directly relate, rather than be included in the model legislation.
Footnotes
1. See W A Lee, Manual of Queensland Succession Law (4th ed 1995) at para 806 and R F Atherton and P Vines, Australian Succession Law: Commentary and Materials (1996) at para 17.4.11.
2. See the discussion of s 67 of the Trusts Act 1973 (Qld) and s 92 of the Wills, Probate and Administration Act 1898 (NSW) at para 9.49-9.52 of this Discussion Paper.
3. Any person beneficially interested in an estate can require the person administering the estate to take out a grant. See, for example, J Gowers, R B Rowe, R F Yeldham, M J Downs, Tristram and Coote’s Probate Practice (27th ed 1989) at 520-521, and, in Queensland, s 70 of the Succession Act 1981 (Qld).
4. Queensland Law Reform Commission, Report, The Law Relating to Succession (R 22, 1978) at 37.
5. Acting under s 1091(2)-(7) of the Corporations Law (Cth).
6. W A Lee, Manual of Queensland Succession Law (4th ed 1995) at para 804.
7. This provision is discussed at para 9.47-9.48 of this Discussion Paper.
8. See Chapter 9 of this Discussion Paper for a discussion of provisions dealing with the giving of notices of intended distribution and the protection that is afforded by the giving of such notices.
9. Section 67 of the Trusts Act 1973 (Qld) is set out at para 9.50 of this Discussion Paper. Section 67 refers to “personal representative”, which is defined in s 5 of the Trusts Act 1973 (Qld) to mean “the executor, original or by representation, or the administrator”. It would seem that this would include an executor without a grant.
10. Will of Lyndon [1960] VR 112.
11. Queensland Law Reform Commission, Report, The Law Relating to Succession (R 22, 1978) at 37.
12. Ibid.
13. W A Lee, Manual of Queensland Succession Law (4th ed 1995) at para 810.
14. In Queensland, certain other interests may be transferred without the production of a grant. See s 377(2)(c), (3) and 379 of the Land Act 1994 (Qld).
15. Administration and Probate Act 1919 (SA) s 71(3).
16. Administration and Probate Act 1919 (SA) s 71(1a).
17. See Administration and Probate Act 1919 (SA) s 72; Administration Act 1903 (WA) s 139.
