Financial Planners and Investment Advisers Sydney North Shore  1300 623 936 rob@mcinvest.com.au

What is probate?

Probate is a legal process that is sometimes – but not always – required to validate a deceased person’s will in order for their assets to be released to the executor named in the will. Once the assets have been released, the executor can distribute them to the beneficiaries, as set out in the will.

In essence, a Grant of Probate provides proof that the executor is authorised to administer the estate.

In New South Wales, all matters concerning wills, estates and disputes are handled by the Supreme Court. An application for a Grant of Probate will be filed with the Supreme Court of NSW.

Who decides if a Grant of Probate is required?

The organisation holding the asset on the deceased person’s behalf decides whether they require a ‘Grant of Probate’ before they will release the asset. Banks, share registries, investment funds, and the like, each have their own ‘deceased estate transfer policy’, which sets down the criteria and requirements for releasing assets.

Usually, the entity’s estate transfer policy will set an asset value threshold, at which point a Grant of Probate is required. If the asset value falls below this, then probate will generally not be needed. The reason asset holders require probate is to protect themselves from liability in the event that the estate is challenged.

When is probate not required?

Property co-owned as joint tenants

People commonly purchase property (such as real estate, shares, or bank accounts) together. How this property is treated when one of the owners dies depends on the type of ownership – whether it is ‘joint tenancy’ or ‘tenancy in common’.

A joint tenancy is where two or more people own the same property together. Joint tenants own the whole asset between them and share undivided ownership. It is not possible to hold property as joint tenants in unequal shares. A typical example is the family home, which many couples will own as joint tenants.

In a joint tenancy, the ‘principle of survivorship’ applies. When one owner dies, their ownership ceases, but the surviving joint tenants remain owners in equal shares. The executor will still need to follow a procedure for ceasing the deceased person’s ownership, but this does not require probate.

For example, if one member of a couple dies (and is survived by their partner), and their bank accounts, motor vehicles and family home are all held together as joint tenants, probate will not be required.

A tenancy in common occurs where two or more persons own a distinct share of an asset. Each tenant in common is able to sell or dispose of their share of the asset. The ownership does not need to be equal, for example, one owner may own 60% and the other may own 40%.

If one ‘tenant in common’ dies, their will regulates where their share of the asset goes. The other tenants in common do not become the new owners automatically. They continue to hold their share of the asset only.

Real estate held solely in the name of the deceased, or co-owned as tenants in common, will always require probate, no matter what the proportion of ownership may be.

So how do you know whether property is held as joint tenants or tenants in common?

For real estate, the certificate of title will state whether ownership takes the form of joint tenants, or tenants in common (and the proportionate holdings).

Otherwise, the law generally presumes that co-owners of property hold that property as joint tenants. For example, where a share certificate or a bank account is in the names of two spouses then they will hold the property as joint tenants, unless there is evidence that they intended to hold that property as tenants in common.

Assets of low value

As explained above, different asset holders have different criteria and requirements for releasing assets. Although the threshold amount varies from one entity to another, many banks set the threshold at somewhere between $20,000 and $50,000.

Assets falling below the nominated threshold will not require probate. However, the asset holder will still require documentation to validate the transfer instructions. The executor will usually need to provide certified copies of the will and death certificate. In addition, financial institutions will often require the executor to sign an indemnity and release form which protects them against any claims on the estate.

What if there is no will?

Passing away without a will is known as dying ‘intestate’.

If the deceased person does not have a will, or their will cannot be found, the process of validating the estate is not done with a Grant of Probate, but with a similar document known as ‘Letters of Administration’. Under this process, the Supreme Court appoints an administrator to deal with the estate in the same way an executor would.

Applying for Letters of Administration can be more complicated than probate. This is because more information is usually required, and this information may not always be readily available. The court generally grants administration of an intestate estate to the person or people with the greatest entitlement in the estate (often a spouse or children).

How do I know if probate is required?

The only way to know for sure whether probate is required, is to ask each of the organisations holding assets which belong to the deceased person.

The first thing to do when executing a deceased person’s will, is to list all of the deceased person’s assets, and clearly identify:

  • How they are held (solely, jointly or as tenants in common);
  • Where they are held (the name of the bank, share registry, or Lands Title Office etc);
  • The current market value of each asset, and
  • Whether there are any associated liabilities.

Once you’ve identified all of the assets and know where they are held, it’s a matter of contacting each organisation, one by one, and confirming their requirements to transfer or release the asset. Many larger organisations, such as banks and share registries, have a dedicated deceased estates team to guide you through their estate transfer processes.

How much does probate cost?

In New South Wales, fees to obtain a Grant of Probate are fixed by law. The cost is based on the gross value of the estate assets held in New South Wales only.

Whether you decide to apply for probate yourself, or you seek the help of a legal practitioner, filing fees will be the same.

As a general guide, the filing fee for a Grant of Probate on an estate valued between $1M and $2M is currently $2,141. Some additional fees may also apply. Click here to see the Supreme Court’s schedule of filing fees as at 1 July 2020.

If the probate application is contested, the estate will generally incur additional legal costs to defend the contested application. Most probate applications are not contested.

Can the requirement for probate be challenged?

When it’s all boiled down, it’s up to the releasing organisation to decide if it requires a Grant of Probate. Often, it will be obvious given the value of the asset relative to the threshold that is set down by that entity. But, sometimes, the asset may hover around the threshold, or sit just above it, triggering a requirement for probate.

If this is the case, the executor (or the deceased person’s solicitor) could make a written request that the organisation reconsider.

Your case might carry more weight if the estate is small and obtaining a Grant of Probate would be expensive, or if the organisation is the only one requiring probate. If the organisation does waive the requirement for probate, it will most likely require that the executor sign an indemnity form to ensure it does not become liable for any claims made against the estate.

The ‘notice of intention to apply for a grant’

Before making an application for Grant of Probate, the executor must publish an online ‘Notice of intention to apply for a grant’ on the New South Wales Registry. The reason for doing this is to allow any creditors an opportunity to make a claim on the estate by contacting the executor. The notice of intended application also gives notice to anybody that may intend to challenge the validity of the will, or who may know of an alternate will.

Need more information?

The Supreme Court of New South Wales has a series of fact sheets on probate. It’s also possible to commence the probate process, including the notice of intent to apply for a grant, through their website. Click here to visit their website.

Alternatively, the lawyer of the person who has passed away, or an estate planning lawyer, will be a key resource for helping you navigate probate requirements.

General disclaimer

This content is intended only to provide a summary and general overview of the subject matter covered. It is not intended to be comprehensive nor does it constitute advice. We attempt to ensure that the content is accurate and current but we do not warrant the content nor its currency. You should seek professional advice before acting or relying on any of the content.

How can we help?
If you’d like to know more, please call us on 1300 623 936 to arrange a time to meet and we can discuss your particular requirements in more detail.

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