Part 1
Jordan Vaka
Hello and welcome back to Life, Loss & Legacy, a podcast from PlanningSolo to help people navigating those first few years after the loss of their partner.
My name is Jordan Vaka. I’m an independent financial planner with PlanningSolo, and I’m happy to say that I’m joined today by a very special guest.
His name is David Patkin from DMP legal. Thanks for joining us today, David.
David Patkin
Hey, thanks, Jordan. Great to be here.
Jordan Vaka
Now, the reason I’ve asked David to join us to talk about today’s topic is he has a great deal of experience working in the space that we also operate in. So David has over 15 years of experience advising clients on wealth succession and the administration of their estates. He’s worked at a law firm, RB Flinders Lawyers in Melbourne. He’s also practiced as an estate planning lawyer within the NAB and then ANZ private wealth banking teams. So he’s worked with a wide variety of clients, dealing with a lot of complexity, some high net wealth clients, and dealing with that transition from what was in place to what now is needed. So I’ve asked him along to join us today to talk about the roles, the rights, the responsibilities, the risks of being an executive. So thank you, David.
David Patkin
Thank you, Jordan. Great to be here. Yeah.
Jordan Vaka
Now we’ll hop straight in because there’s a lot to cover. This is such a big topic. And as I mentioned before we started recording that, the more I learn, the more I realize, I don’t know. So we might start with the really simple fundamentals, because for the people that we’re talking to, they might be juggling a lot of new information and a lot of new processes they need to work through. So we’ll start at the very basics. What is an executor and what do they do?
David Patkin
Well, I can even go one step before that, because, as you said, a lot of people jump right into it. And once you’ve mentioned the role of the executor, you’re assuming that role needs to be fulfilled and a grant of probate is even needed. And I get this a lot. I get a lot of clients who come to me saying, got to get the grant. Got to get the grant. And I’ll say, well, hang on. Hang on a minute. Let’s have a look at the assets. Because the assets and how they’re owned will inform exactly what you need.
Because at the end of the day, the role of an executor is to stand in the shoes of the deceased person and not only stand in their shoes, but be recognized as the representative of that deceased person, by the banks, by the land titles office, by all of these sort of institutions and organizations that control the ownership, they only want to deal with the person that is officially identified as the deceased person, the representative. Now, that’s not an issue where the asset automatically transfers to a survivor. So a jointly held asset. So, for example, if you’ve got a couple, and they own all their assets jointly, the principal place, their bank accounts, they might not even need a grant of probate.
And this is something that sometimes I’ve had clients who go to a law firm saying, yeah, they said, we need a grant of probate. And I’m looking, and there’s nowhere that they need it. So that would be the first question, is that even required? And this is where we. Sorry, you were going to.
Jordan Vaka
Oh, no, that’s just fascinating. Just bursting with questions. I guess the first one I’ll hop into is, so the will. The deceased leaves the will. The will says, I nominate so and so as my executor. But you’re suggesting that even with that in the will, if the asset base doesn’t support that requirement, they do not need to become the executor.
David Patkin
Don’t need it. I mean, when you go to the bank and you waive a grant of probate at them, they’ll look at you and they might even smile and they’ll say, it’s a jointly held account. We recognize you. It’s all yours. It’s all yours. Yeah. And, and this goes back, I think, to the estate planning. And this is why the estate planning is really important, because I’ve had some people who a couple, and one of the one of the couple is undergoing I don’t know, cancer treatment or something, and if they’ve been given a a finite time, couple of years or something, and if sometimes I’ll say, get all your things in order get all your finances in order get ready.
One of those things can be, if you’ve got some salt, some accounts or assets held in your sole name. Yeah, make it a joint account or wind up that account, and that’ll leave the survivor with a lot less to have to deal with, because there’s nothing worse than having to get a whole grain of probate just for one account or some asset where you don’t have to it’s. It’s not only the expense it’s also, you got to go through the whole process when you’re you’re grieving and all of that. And assets are frozen, you can’t get them. And that can also make it worse when you’re trying to grieve. So part of the getting things in order can be to tidy up those finances, those accounts.
I mean, sometimes you don’t want to do it because, for example, if you’re going to move a share portfolio of a move property, there might be stamp duty and capital gains tax. So there might be a scenario where, no, that’s cost prohibitive because the transfer of those assets via the will won’t trigger any of those taxes. So it’s not to say that you can do it for everything, but I think the whole idea of the estate plan is to really be aware of that. That if there is something you can do to save some legal fees and then my legal fees I want to be charging, but I’m happy to. I’m happy to point people. And also, obviously, that’s from a to make the process easy.
But then also, if you’re trying to protect your estate from claims, you can do a lot in the estate plan to not prevent a claim. But what we’re trying to do there is reduce the size of the estate. So, hey, people can make a claim and they can knock themselves out, but there’s not much there to really fight over. So that’s another strategy. So just, I mean, there’s a lot we can talk about the applying for probate and all that, but.
Jordan Vaka
Yeah, I think the point you make there around the administration that follows losing somebody, there’s that disconnect between the personal grief, the emotional impact of that, and then this really dry, cold administrative process that’s required that can go for 1218 months, even longer. So if the will maker can maybe help to ease that process a little bit beforehand, within reason or within good sense, fantastic. Coming out of that maybe they can make that process of business. It’s one thing that’s really opened my eyes. I mean, each of our roles, admin’s a big part of it in every part of what we do, so it becomes normal for us.
But if you’re somebody who’s been running the household and not involved in all the day to day financial pieces, and now all of a sudden you’ve got this ream of paperwork you have to do.
David Patkin
It’s.
Jordan Vaka
I don’t know, it’s just such a jarring dissonance, I think, between what you want to do and where you are. But let’s say the will stands the executor is required.
David Patkin
Yeah.
Jordan Vaka
You mentioned earlier they stand in the shoes of the deceased. So what does that look like?
David Patkin
So the. Again, I had just last Friday, I had a husband ring me up, his wife had died. And obviously people think. They notify people, and then they think, oh, right, I’ve got to speak to the lawyer. You know, what do we do about the estate? What do we do about the estate? Nothing moves until you get the death certificate. And the death certificate is usually at least two weeks away from the date of death. So I tell clients survivors all the time. Look don’t worry about it. You just focus on grieving and that process, we can’t do anything at the moment anyway, without death certificate. Nothing moves without death certificate. So you just focus on that. So one important element you mentioned the will, of course. That is an important element.
But people are only gonna. This process only starts with a death certificate. Otherwise if that wasn’t a requirement, people would be claiming people are dead and trying to deal with their assets. So death certificate is crudal, and sometimes it can be delayed a lot longer than two weeks if there’s a coroner’s investigation into the court. Why are you touching on that?
Jordan Vaka
Because I think that’s something that people are surprised by, is that not every death involves a coroner’s investigation, but when they do it, really, it impacts the process, doesn’t it?
David Patkin
Yeah, because some, depending on the asset, I mean, I’m not sure. I think to a certain extent, life insurance can depend on this what was the cause of death? Was it suicide or what it was. So often, if you present, there’s two types of death certificates you get from birth deaths and marriages, and one just has a confirmation that they’ve died, the other one has the cause of death on it. And a lot of places will require the death certificate, a probate office included. They require a death certificate with the cause of death on it. Sometimes, if there’s a huge delay from the coroner, if you explain that to the court, they will accept that and sometimes grant the probate. But, yeah, so death certificate, we need that.
And then if we’re applying, if we’ve got a will, then of course we need the will. But if someone hasn’t got a will. It’s not to say that things suddenly grind to a halt and there’s anarchy or there’s things go crazy. Basically everyone, even people who don’t have a will, they actually do have a will, but that’s contained in the legislation of the probate Administration act. So that sets out who gets your estate. So that sets out your will if you don’t have a will. And they’re different in each state, aren’t they?
Jordan Vaka
In each jurisdiction, those rules are slightly different.
David Patkin
Slightly different, yep. And also overseas countries we don’t have to get into a lot of that now, but depending on the asset, whether it’s a real property or it’s cash, it gets treated differently if it’s overseas. So that’s a bit of a rabbit hole, but, yeah, the big difference, and you might hear these words, if people are talking about a grant of probate, they’re using that word, probate. That means we have a will. Okay. If you hear people talking about administration and letters of administration, sometimes you’ll hear that means we don’t have a will. Also, it can mean that we don’t have the executor named in the will. So the executor named in the will has died, or, you know. Yeah. So then we can be talking about letters of administration. Look, at the end of the day, it’s the same thing.
It’s basically a piece of paper stamped by Supreme Court of Victoria or the Supreme Court of the state that you’re in. And then that’s what the banks need to see to basically recognise that person as the representative of the deceased person. So that’s the grant of probate. That’s the letters of administration. That’s a document that we need to have to deal with the assets.
Jordan Vaka
And we have another episode coming up where we talk about intestacy, where you passed away without a will and you’re falling into that legal or the statutory requirements. As an executor, though, is it fair to say? I mean, this might be too general. Is life that’s a bit too glib. Is the process easier if you’re an executor?
David Patkin
It makes no difference if you’re an executor or an administrator. You know, once you’re. Once you’re recognized. When I say easier, you’re dealing with these bodies who control the asset. And banks are a classic example of this, where you front up, you’ve got your little piece of paper, your grant of probate. You go up to the bank and you say, hey, now you’ll recognize me. Let’s go. You’ve got to remember that you’re dealing with the person who is at that branch. And you’ll go into one branch and get one person who may have no experience with dealing with grants of probate and deceased estates, and they’ll get all flustered and they’ll, they’re not sure what to do. You go into another branch with someone who has a lot of experience and the. And the whole process can be so much different.
So this can be very frustrating, I think, for executors and administrators, where, depending on the person you get on the day, it can be quite smooth and helpful or it can be very unhelpful. And again a lot of the times the executor is grieving over the loss of their loved one, and to get this frustration at the bank very, very difficult.
Jordan Vaka
It’s a really good piece of feedback because I think we’re talking about the process in theory, in this episode. Really, are we, like, ideally, here’s the flow and here’s how it works. But the on the ground reality, when you’re dealing with people with different experiences, different knowledge.
David Patkin
Yeah.
Jordan Vaka
You hear about the frustration of calling superfunds or centrelink or something like that. It’s so variable. So the one, I guess, the feedback we always give to people going through is keep notes, dates, who you spoke with, where you were. I just try to keep track of it that way. But beyond that, just accept that it’s going to be a roller coaster. It’s not going to go smoothly, I guess.
David Patkin
Yeah. And of course, the more assets you have in the state, the more of these sort of discussions and frustrations you’re going to get. And look, it’s not to say that it’s always frustrating and bad. You know, some different banks, different share registries they. It’s a part of life. Okay? So it’s it’s. They have, they hold, they have deceased estate teams. Yeah, but like any in any bank or any organization, there’s always frustration. You know, you send documents in, they can’t find them in the system. You know, you’ve been on hold for half an hour or for 45 minutes or longer I’m sorry, we can’t find those documents. Did you send them in? Where did you send them? You know, and then suddenly ten minutes later, oh, here they are.
Oh, yeah, I’ve got that. And again, that’s bad enough when you’re just dealing with day to day problems with the bank that you’re having. But on top of that, if you’re grieving or you’ve got some problems with the estate, some beneficiaries who aren’t happy, and some other pressures. The classic pressure is beneficiaries wanting their money. As soon as they hear that someone’s passed away, they start making plans. Whether they start going to auctions and making plans based on the money that’s going to come in. And that can be frustrating when they’ve. I’ve had beneficiaries who have signed contracts and they’ve got days of settlement and assets this process has to go through.
And you’ve also got at in Victoria, a six month rule where you shouldn’t distribute the assets, because there’s a rule where if someone makes a claim and you’ve distributed the assets, then you, as the executor, are personally liable for those assets. So there’s a few. There’s a few things to navigate there. And again, those issues won’t arise if it’s quite a simple estate and everything is going to one person and there’s no other beneficiaries in the wings. But where you’ve got either multiple beneficiaries or you’ve got more complicated assets, things can get complex pretty quickly. And, yeah, when you’ve got a lot of money at stake and you’ve got beneficiaries who are basically demanding, where’s. Where’s my money? And why are you holding my money? What are you doing with it? That can get pretty stressful.
Jordan Vaka
Personal dynamics of the estate is a whole nother realm. Like, it’s just, it makes everything so much more difficult than sometimes it needs to be. But with executives, I’m curious, when does their responsibility begin? I mean, bluntly, is it when the person has passed?
David Patkin
Not exactly. It’s actually. And this leads to, do you have to be an executor? If you’ve been appointed by the board, do you have to do it? Are you forced to do it? The answer is no. Unless, and this is a court word, you have intermeddled with the estate. Intermeddling? Intermeddling. If you start the process. So this is a bit of a. Yeah, bit of a funny one. But if you start the process and you take steps to be the executor and you hold yourself out or you deal with some asset holders and you start the process, but you haven’t actually been given the grant. And then if you turn around and say, no, this is too hard, I want out. It’s not as easy as dropping out when you’ve taken some steps.
So the best thing that an executor can do if they don’t want to be executor is to do nothing from the outset and say, I don’t want to do it. Now, obviously, the next question is, okay, well, if that executive pulls out, what happens? If the will allows for an alternate executor? Then it’ll then default to the alternate executor. Okay. Or if you’ve been appointed as an executor together with another person, then it will be that other person who can do it, because that’s the other thing is if you’ve been named as an executor and always a will maker, you’ve named two people. It doesn’t mean that both people have to do it. Yeah, absolutely. If you don’t want to do it, you don’t have to do it. I suppose the question is, well, why wouldn’t you want to do it.
People sometimes get concerned. I don’t know what I’d have to do or how to go about it. Most people will engage a lawyer to assist them with the application.
Jordan Vaka
Sorry, David, is that only the lawyer that drafted the will generally, is that allowed?
David Patkin
It can be. Beware of clauses that lawyers drafting wills put in their wills, saying that they have to use that law firm in the administration of my state. Most of the wording, if you look at those clauses closely, most of the time they’ll be. It is my wish that it’ll be in those sort of terms, because you, the executor can take their business wherever they want to go. Absolutely. They can go back to the lawyer who’s holding the will. Often the lawyer will be holding the will and they can’t engage that law firm, but they can engage anyone they want, or they can actually, it’s set up to do it yourself. It’s the probate office especially. I can speak mostly, obviously, for the probate office in Victoria.They have a great phone line where you can ring up and they won’t give you legal advice, but they’ll definitely assist you with the application for the grant of probate because it’s set up for laypeople to do if they want, which is good.
Jordan Vaka
That’s great.
David Patkin
That’s great. Right. The only difficulty that is that when you make the probate application is actually an affidavit, which is essentially a sworn statement. Okay? Because you’re presenting this evidence to the court, and the evidence being that this person has died, that this is their will, that you should be granted the right to deal with their estate. So that is actually an application to the court. You are actually giving evidence to the court. And whenever you give evidence to the court, it has to be delivered either by way of standing in the dock saying, I swear this is the whole truth, the absolute truth and all that. Or you can give written evidence, which is by way of a sworn statement.
An affidavit for a court statutory declaration is another form of sworn statement, but the court requires it to be done via affidavit. And the requirements of an affidavit are that they have to be witnessed by a lawyer or a judge or someone. You know, it’s a very short list of people that can witness affidavits. So if you’re making your application yourself, you’ve either got to go to a lawyer to sign it in front of or a police station. And if you don’t have everything perfect, the probate office will requisition you, ask you questions, no, this isn’t correct. I knock it back and I’ll say, you need to fix this up. And that can be a frustrating process if you don’t know what you’re doing.
So it is, yeah, it is a DIY process, but I get a lot of, well, not a lot, but I do get executives coming to me saying, look, I’m over this. This has been knocked back by the Supreme Court two or three times. And they feel that. They feel that it’s the court sort of dismissing them and not being very nice to them. But there’s certain things the court can assist, but they can’t assist too much, if you know what I mean. They can’t give legal advice. They can’t really be your lawyer. So the executor most of the time, they’ll get a lawyer to help them. So being an executor, what are the, because I know that you, part of your query was, well, what are their when does the process start?
Jordan Vaka
Yeah, what are they?
David Patkin
Yeah. Yeah. So they’re like, technically they are representing the estate, which means that if someone makes a claim, they actually make the claim against the executor. You know, they sue the executor, and that can free.
Jordan Vaka
Interesting point. This is one of our bigger topics will be the risks involved. Now, in superannuation, you leave your benefit to the LPR, the legal personal representative. Is that another word for executor or.
David Patkin
Yes, administrator. Absolutely. Yeah, same thing. Yep, yep.
Jordan Vaka
So not only are you standing in their shoes for legal purposes, you’re on the hook, so to speak.
