Estate administration is the process of collecting in, managing and distributing a person's assets in accordance with their Will or, if no Will exists, in accordance with intestacy rules set out in the Administration Act 1969 when that person has passed away. ("Intestacy" occurs when a person dies without a valid).

The process of estate administration is carried out by the executor(s) (if named in the Will) or the administrator(s) (if no Will exists or if the executor named in the Will is unable to act). This article provides an overview of the estate administration process and the role of an executor or administrator in that process.

The administration of an estate involves several steps that often occur over many months and sometimes, years. Timeframes for estate administration can vary depending on a number of factors including but not limited to the complexity of directions in the Will, whether a right to occupy a property has been included in the Will, family dynamics and circumstances, whether a claim is made or is likely to be made against the estate, the assets involved (and the location of the assets (e.g. in New Zealand and/or overseas) and whether there are other entities, such as trusts or companies, involved.

Locating the Will

The first step is to locate the deceased person's Will, if one exists. The Will outlines the deceased's wishes regarding the distribution of assets, guardianship of minor children, and the appointment of one or more executors. It may also provide directions on funeral and cremation or burial.

Applying for Probate (if a Will exists)

If there is a valid Will and the deceased person had an asset over the value of $15,000 then an executor must apply to the High Court for Probate. Probate essentially confirms that the Will provided to the High Court was the deceased's last Will and that the executor has authority to handle the deceased's assets and administer the estate.

As part of applying for Probate, an executor is required to provide an affidavit confirming the will-maker has died, that they are the executor named in the Will and that they agree to carry out their duties.

The application for Probate can take a few weeks for the High Court to process although this can vary – earlier this year it was taking a few months.

Once Probate is granted, the executor can begin administering the estate including collecting in assets and selling any property. Without Probate, the executor has no legal authority to receive and/or manage the deceased’s assets.

Applying for letters of administration (if no Will exists or no executor is able to act)

If the deceased did not leave a Will, the estate is administered under the intestacy rules. In this case, the person or people with the highest priority will apply for letters of administration from the High Court. This process is similar to applying for Probate and provides the administrator(s) with the authority to administer the estate in accordance with the intestacy rules.

Identifying and collecting assets

It is essential for an executor or administrator to maintain detailed records of all assets and liabilities of an estate. It is also recommended that executors and administrators advertise for creditors in a local newspaper to ensure there are no liabilities that they are unaware of.

Paying debts and taxes

Before distributing any assets, the estate’s debts must be paid. This includes any outstanding bills, loans, and taxes owed by the deceased. An executor or administrator may need to file income tax returns on behalf of the deceased. It is worth noting that 1) the tax rate for estates differs from the tax rate for individuals and 2) estate duties are not currently payable in New Zealand.

Distributing the estate

Once all debts and taxes are paid, an executor or administrator can distribute the remaining assets to the beneficiaries in accordance with the Will or intestacy rules.

Usually this does not take place until at least six months after Probate or letters of administration has been granted. The reason for this is because executors or administrators will be held personally liable for any funds distributed during this six month period if a claim against the estate is made.

If a claim against the estate is likely, it is usually advisable to hold-off distributing the estate for a year or longer or even unless and until the claim has been resolved.

We're here to help

We understand that a process such as estate administration may appear daunting, stressful and clinical particularly when it relates to the affairs of a recently-passed loved one. Our team is well experienced in these matters. We can assist in all aspects of estate administration when needed and make the exercise as easy as possible. If you need assistance following the passing of a loved one, contact our Trusts and Private Clients specialists. We would be happy to help you through this difficult time.

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