Particularly during the early stages of the administration of an estate there are often a number of expenses that need to be paid.
Some examples often mentioned by advisers to us include funeral expenses, credit card payments, loan repayments, regular utility bills and the costs associated with applying for probate or otherwise administering the estate.
Often there will either be insufficient funds in the estate or even if there are sufficient funds, the executors may not have legal authority to access them, pending the granting of probate (which generally takes at least 3 months following the death certificate being obtained).
Some of the strategies executors use to manage payment of costs before estate funds are available include:
- Paying the costs personally and keeping receipts, before then being reimbursed by the estate once funds are available;
- Some financiers allow some flexibility for executors to continue to access funds of the deceased, particularly to pay expenses such as the funeral and wake;
- If a bank account is in joint names, the surviving joint account holder can normally transact on the account solely, simply by providing the bank a copy of the death certificate (noting that as the account is not an estate asset, the estate should reimburse the surviving account holder for all expenses they pay);
- In some instances, will makers are proactive about establishing an ‘estate funding’ account for the specific purpose of managing cashflow in the early stages of the estate administration. This is self funded prior to death by the will maker, or funded by way of an insurance policy, designed to be fit for purpose (for example a policy of $50,000 that pays out very quickly following death).
Another FAQ you may find helpful in this area is: