The loss of a family member causes grief and practical consequences that occur simultaneously. While family members are grieving the loss of their loved one, they are also faced with a mountain of legal and administrative requirements which must be attended to immediately. These matters do not wait as one grieves and frequently families find out that there are legal complexities not encountered previously.
Being aware of what legal problems are likely to arise after death enables families to more easily anticipate what lies ahead, or at least to recognize when a situation requires professional assistance rather than attempting to do it alone.
Table of Contents
Estate Administration Reality
Someone has to be responsible for handling the deceased person’s affairs. The person, called the executor if there is a will or administrator if there is no will, has more work to perform than most people realize. The position involves legal duties and possible personal liability if things go awry.
The executor has to locate all of the assets, appraise them, notify certain persons of the death, manage the assets during the time of administration, pay the debts and taxes and finally distribute what is left to the beneficiaries. Each of these segments involves legal requirements and pitfalls. The assets which appear to be very simple to find may be quite complex. There may be bank accounts existing of which no one knew. The investments may be held in such a way as to complicate their transfer. The ownership of property may have its own complexities which are not obvious at first.
For estates which require formal court proceedings, services such as probate canberra and similar assistance in other regions handle the required court applications and documents in order to get the legal authority to administer the estate. This formal procedure is expensive and time-consuming, but does provide legal protection and helps ensure that the estate is properly administered.
The problem for many executors is that they are often family members who are battling their own grief while they try to undertake significant legal responsibilities. It is a time-consuming job that requires attention to detail, and if it is not done properly there will be consequences. Many executors do not realize how much time and effort will be required until they are well into the process.
When Families Disagree
Disputes among families concerning estates can be anything from small disagreements up to full-blown legal battles. Even families who have mostly gotten along well will often become fractured while trying to settle an estate. Money, sentimental items and even family dynamics that have been buried for years surface during this period.
Some controversies center around the will itself. A family member may contest the will, claiming that the deceased did not have the mental capacity at the time of the execution of the will, or that another party unduly influenced the deceased, or that the will does not reflect the true intent of the deceased. These sorts of contests cause delays and additional legal expenses which lessen the amount that will finally go to the beneficiaries.
Other controversies arise even though no one questions the validity of the will itself. Beneficiaries may disagree with the way the executor is managing the estate. They may disagree with the pace of administration, or they may question the expenses being charged to the estate or the valuations of assets. Disputes sometimes arise over whether the executor has the right to sell property or whether investments are being properly managed.
At times the disputes arise over items concerning which the will makes no specific provision. Who is going to get grandmother’s jewelry? Which child is going to have the family pictures? These questions can cause unexpected levels of conflict in families already stressed and emotional.
The legal system provides means to resolve these issues, but they are time-consuming and costly. Court actions consume estate assets that could go to beneficiaries. The emotional cost of having family members become opponents in legal proceedings often exceeds the financial costs.
The Creditor Problem
Deceased persons often leave debts. Credit cards, loans, mortgages, medical bills, business obligations, all these become burdens of the estate. The executor must identify the creditors, determine their claims and discharge the legitimate debts from estate assets before making distributions to beneficiaries.
This creates several potential problems. First, the executor may not know about all debts. Creditors must be given an opportunity to make claims, which means advertising the death and waiting to see what claims are made. Second, there may not be enough assets to discharge all the debts. When estates are insolvent, complex rules control the payment of creditors and their relative order in the distribution.
Third, some creditors are aggressive and may pressure family members to pay debts personally. Family members are not usually responsible for the debts of a deceased person, unless they co-signed or are otherwise legally obligated. However, creditors may sometimes imply or tell family members that they must discharge these debts, hoping thereby to take advantage of their lack of knowledge.
The executor is called upon to balance discharging legitimate debts against protecting the estate from invalid claims. Paying the debts too quickly, before the proper time for claims has run, can create problems if additional creditors appear later. However, delaying payments unnecessarily will damage the estate’s relationships with creditors as well as create further interest charges.
Tax Complications
Death creates many tax problems which may surprise the executor. A final income tax return for the deceased can be required, covering the period from the first day of the tax year until death. The estate itself might have tax returns to file during its administration if income is earned. Depending on the size of the estate, either capital gains tax or various other taxes might apply.
Superannuation death benefits have their own tax treatment, depending upon to whom they are paid and the form of payment. Investment assets might create tax consequences when sold. In some cases, a transfer of property might create stamp duty implications.
It is the executor’s responsibility to see that all taxes are paid. Errors and omissions can cause penalties and interest, and in some cases, executors may become personally liable if they distribute estate assets before satisfying estate tax obligations.
Access to Assets
Accessing assets can be complicated legally. Banks, investment houses and other institutions will refuse to release funds or transfer title without the proper authority. Obtaining the necessary authorization requires navigating the rules prescribed by these institutions, which generally require submission of death certificates, identification, proof of authority to act, as well as various forms.
Some assets have beneficiary designations which may override the will, creating confusion or conflict with the expressed wishes of the deceased in the will. Life insurance and superannuation often pass directly to the named beneficiaries and not to the estate. This can mean that the distribution intended by the will does not correspond to the final result, particularly if the beneficiary designations are outdated.
Any assets held as joint tenants automatically vest in the surviving owner, irrespective of what the terms of the will may provide. This may be exactly what was intended by the deceased, or it may not be, but the result is prescribed by law.
Digital assets present their own challenges. The passwords and authority necessary to access emails, social media accounts, online financial accounts and digital files cannot always be obtained by the family. The legal framework for access to digital assets after death is still developing in many jurisdictions.
When Legal Assistance is Needed
Some estates are straightforward enough that families are able to manage administration without extensive legal assistance. Small estates in which the will is clear, the beneficiaries are cooperative, and the estate consists of simple assets may not require continuing legal assistance apart from some initial advice.
However, many situations benefit from legal assistance, especially estates with considerable assets, complicated family situations, business interests, disputed wills, and particularly when beneficiaries are minors or have disabilities. The cost of legal assistance often prevents larger problems from developing which would in the end be more expensive to resolve.
The earlier legal problems are discovered and dealt with, the easier they are to manage. Executors who arrive at the conclusion that they are out of their depth after they have made mistakes can find their situations both more difficult and expensive than if they had secured advice at the beginning. Legal responsibilities and time limits do not adjust for executors who are learning on the job, and mistakes can have consequences for both the estate and the executor that may be long lasting.
The period after the death of a person is legally complex in ways that are not always obvious to grieving families. Administration of estates, family disputes, claims by creditors, tax responsibilities, and asset access problems all require attention during an already difficult time.
Understanding these challenges assists families in preparing for what is involved, or in recognizing when circumstances warrant professional legal assistance to navigate the process properly. The combination of grief and legal complexity makes this one of the most challenging periods families face, and knowing when to seek help can make a significant difference in how smoothly the process unfolds and how well the deceased person’s wishes are ultimately honored.
