Beneficiaries of a Will are individuals or entities who receive assets from a person’s estate after their death. These beneficiaries can be named in a will or determined by law. It is important to understand the rights and obligations of beneficiaries in the estate distribution process.
Find out more about your responsibilities and rights when you become a beneficiary, the process if you want to contest the will, and what role the executor plays. When a loved one dies, and you become a beneficiary in their will, you must understand your rights and responsibilities. Understanding your legal entitlements and the administration process can help if you want to dispute the will. Let’s take a closer look.
What is A Beneficiary?
When a person dies and leaves a will, they nominate who they would like to receive their personal belongings and property. A beneficiary may receive a part or all of the deceased’s estate. As a beneficiary, it is crucial to understand your rights and obligations. What is stated in the last will can be contested, even if you are named as a beneficiary.
If the deceased has not left a will or died intestate, the beneficiaries are determined according to the state intestacy legislation. In most cases, the eligible people are the immediate family members, spouse and next of kin.
Australian law protects the rights of beneficiaries. The rules that govern the distribution of an estate fall under state legislation.
What are the Rights of Beneficiaries?
As well as the entitlements from the estate the beneficiaries of a will also have certain rights. Concerns may arise if you are unfamiliar with the process of administering an estate and the role of an executor. Executors are legally obliged to act in the estate’s best interests and carry out the deceased’s wishes as expressed in the will. They must act with due care and loyalty to the beneficiaries. As a beneficiary, you can ensure that the executor carries out the administration of the estate in a proper manner, or you can proceed with legal action.
It is essential to know your legal rights as a beneficiary. Some of the rights include:
- Receiving information about the existence of a will and that they were named as a beneficiary.
- Promptly receive a copy of the will upon request and be informed about their entitlements.
- Notification of the asset and liability position of the estate associated with their entitlements.
- Beneficiaries can only enquire about, or access information relating to a specific asset left to them and are not entitled to access information about other assets of the estate. The nature of a beneficiary’s interest will determine the amount of information they receive.
- Receive a statement of distribution with details about their entitlement and how it was determined.
- Be informed of the status of the administration, delays and expected date of distribution of assets.
- Beneficiaries who hold a residual or remainder interest are entitled to inspect the accounts as every transaction occurring in the estate ultimately affects the beneficiary’s interest. If information is withheld, they are entitled to approach the court, and the executor must provide the relevant information.
- Notification of any legal proceedings against the deceased’s estate that may affect entitlements, such as challenges to the will.
- Receive entitlements within 12 months of the deceased’s death or provide reasons for any delay.
- If the executor is acting neglectfully in their duties, an application can be made to the court.
- A beneficiary is entitled to dispute the will if they feel that they have not been adequately provided for.
Are All Beneficiaries the Same?
The rights of beneficiaries can vary. For example, residual beneficiaries rights extend to the estate in its entirety. When holding a residual or remainder interest in an estate, their access to information, estate documents, management, and administration is much broader than a beneficiary that has an interest in a specific asset, such as a bank account or item of jewellery.
The Role of the Executor
Executors are the only people legally entitled to administer a deceased estate. It is a vitally important role that needs to be treated with respect. Their legal obligations include carrying out their duties with due care and loyalty to the beneficiaries and creditors whilst also adhering to the deceased’s wishes. They are trusted with the estate’s property and must maintain a fiduciary relationship with all beneficiaries of the estate. An executor’s fiduciary obligation means that they have a relationship of trust, which is crucial when managing the deceased person’s estate. The proper administration of an estate can be a complicated and lengthy process, and an executor plays a vital role in the process.
Some of an executor’s duties include:
- Upon the deceased’s death, executors must make funeral arrangements and obtain a death certificate from the funeral director
- Locate the final valid will of the deceased person
- Provide a copy, upon request, to any person named in the will
- Establish the liabilities and assets of the estate
- Obtain a grant of probate so that they can administer the estate
- Pay the debts from the deceased’s estate
- Maintain detailed, accurate records of the estate management and distribution
- Distribute the estate to the beneficiaries
How Long Does It Take To Receive Entitlements As A Beneficiary?
In New South Wales, like most states in Australia, the distribution of an estate will take at least six months. Generally, estates are administered within 12 months.
The timing of receiving your entitlements can vary. Depending on the estate’s complexity and whether there are claims made against the will. For example, if the estate comprises property, businesses and complicated assets, it may take longer for the executor to sell. Similarly, if the will is contested, the distribution process will take longer.
Do You Have To Accept The Entitlement?
There are occasions when a beneficiary may choose to refuse to receive a distribution from the estate, particularly if the cost of inheriting the asset can outweigh the benefit.
A beneficiary is entitled to reject a distribution from the estate and must do so before receiving the asset. Once the rejection has been made, it can not be retracted.
If you are aware of your entitlement before the passing of the will maker, you can advise them that you do not wish to receive it. They can then adjust their will as necessary.
Do You Have To Pay Tax On A Distribution From A Deceased Estate?
Understanding the tax implications of your assets can be crucial. Some assets will carry certain tax obligations, such as capital gains tax, which can occur if a beneficiary sells or disposes of an asset received from the estate. Generally, a beneficiary is not required to pay tax on such items as cash, property or shares unless sold.
To fully understand the complexities of your tax implications, it is vital to seek legal advice from a team of expert estate lawyers.
Can You Dispute The Will?
Under the NSW Succession Act 2006, any eligible person who has been left out of the will or who is already a beneficiary can lodge a Family Provision claim. Only eligible people are entitled to apply for an order, and they will have to prove that they are not provided for adequately in the deceased’s will. Family Provision claims will require evidence such as your income, liabilities, and future needs to be demonstrated to the court.
An eligible person will, in most cases, be a family member, dependant person or other beneficiaries of a will.
How Much Does It Cost To Dispute A Will?
Legal fees associated with a family provision claim will generally be taken out of the deceased’s estate. In some cases, when the claim is unsuccessful, the applicant will be required to pay for all costs. If the executor is disputing the will, then all of the fees are covered by the estate.
It is essential that you understand your legal rights and obligations as a beneficiary. You are within your rights to make sure that the executor carries out the administration of the estate in a proper manner. Further rights of beneficiaries of a will include:
- Receiving a copy of the will and being promptly informed of their entitlements
- Notification of the asset and liability position of the estate
- Receive a statement of distribution with details about their entitlement and how it was determined
- Be informed of the status of the administration, delays and expected date of distribution of assets
- Receive entitlements within 12 months of the death or provided with reasons for any delay
Your rights as a beneficiary can vary. For example, residual beneficiaries rights extend to the estate in its entirety. When holding a residual or remainder interest in an estate, their access to information, estate documents, management, and administration is much broader.
Executors are trusted with the estate’s assets and must maintain a fiduciary relationship with all beneficiaries of the estate.
If you have been left out of the will or are already a beneficiary, you can lodge a Family Provision claim.
You should seek legal advice from experienced wills and estate planning lawyers for further information and clarification.
1. What Does An Executor Have To Disclose To Beneficiaries?
Executors are required to provide a copy of the will to beneficiaries upon request. They must advise their entitlements and keep them updated on the status of the estate during the administration progress. They need to notify any liabilities or claims to the estate which may affect the beneficiaries’ entitlements. They should provide a statement of distribution to beneficiaries, including details about how the entitlement was determined.
2. Can Beneficiaries challenge wills?
Under the NSW Succession Act 2006, any eligible person who has been left out of the will or who is already a beneficiary can lodge a Family Provision claim. Only eligible people are entitled to request the court for an order, and they will have to prove that they have not been adequately provided for in the deceased’s will.
3. What Is A Beneficiary Entitled To See?
Beneficiaries of a will are legally allowed to inspect or receive a copy of the deceased’s last will and be promptly informed of their entitlements. For example, in New South Wales, the law compels a person who has control of a will to provide a copy upon request to a person named or mentioned in the will.
Beneficiaries are entitled to view any information regarding any asset they are entitled to. For example, if they have been given property, they can ask for any past or current financial information, insurance, utilities etc.
A beneficiary should receive notification of liabilities and any legal action against the estate.