Do You Need Probate For a Small Estate?

Do You Need Probate For a Small Estate?

Do You Need Probate For A Small Estate

Find out how to establish whether a Grant of Probate is needed for small estates and under what circumstances you may avoid obtaining probate.

When dealing with deceased estates, it is crucial to understand the value of the assets and liabilities to determine whether a Grant of Probate is needed. Avoiding the probate process can save you valuable time and expense. There are circumstances when obtaining probate may not be necessary. Let’s take a closer look.

What Determines A Low Value Or Small Estate?

Administering a low valued estate can be a much quicker process than a regular estate as there is generally no need to obtain probate. As these estates may only contain small share portfolios or bank accounts, if they are the only assets in the deceased’s estate, then probate may be avoidable.

To receive permission to release the funds from the financial institution, you will need to know their low value threshold or cap. If the balance is over their limit, you may still need to apply for letters of administration to transfer ownership of the assets.

To determine a small estate, check the value cap with the relevant asset holder. It may be banks, insurance companies or a share registry. In most cases, the bank limit is around $50 000.

The deceased principal place of residence is generally excluded when calculating the cap.

To identify whether you need to obtain a Grant of Probate, you may need to seek legal advice from a lawyer who specialises in estate planning. They will help you establish the total asset value of the estate.

When Is Probate Unnecessary?

When managing an estate, an executor may need to obtain a Grant of Probate or letters of administration from the Supreme Court. This gives them the legal authority to release the estate to distribute assets to the appropriate beneficiary. The process is time-consuming and costly, and in some circumstances, it may not be required.

Joint Tenants

When a property is held as “joint tenants”, the asset will not form part of the deceased’s estate and will pass to the surviving joint tenant (not tenants in common), usually a spouse or partner. For example, a family home may be a jointly held asset, owned in joint names, and in the event of a death, the surviving spouse will receive the asset without the need for a Grant of Probate. Likewise with any other jointly held assets, including bank accounts, motor vehicles or the family home.

“Tenants in common” will need to obtain probate as the asset does not naturally pass to the other tenant or owner. As there may be multiple tenants or an uneven split of the asset.

No Will

In most cases, to manage an estate, the executor will receive probate from the Supreme court, which provides them with the power to distribute assets to the beneficiaries.

There is no need for a Grant of Probate when there is no will. In this circumstance, an application will need to be made to the Supreme court for “letters of administration”. The court will approve an appropriate administrator to distribute the estate.

If the executors listed in the will have passed, letters of administration will be issued and another person will become the administrator.

The legal term for passing without a will is intestate.

Low Value Assets

If the deceased’s assets are only of a small value, there is no need for a Grant of Probate. For example, banking accounts with a low balance or small shareholdings that fall under the low value threshold or cap.

The person managing the distribution of the estate will need to provide proof that they are the legally appointed administrator, with a copy of the will or letters of administration. They will also need to supply a copy of the death certificate to transfer low value assets.

How To Work Out If Probate Is Needed?

To establish if a probate is required for a small estate, you should thoroughly understand the financial assets held in the deceased’s name.

List All The Assets And Associated Liabilities

  • Establish ownership details, for example, individual, joint or tenants in common
  • Record the names of the relevant financial institution or share registry
  • Establish the current market value of each individual asset
  • Create a list of any liabilities

Transfer Any Joint Tenants Assets

The various registries, such as the land titles office, will need to receive a “notice of death’ lodgement to transfer an asset to the surviving owner. With property, for example, a certified copy of the death certificate will be sufficient evidence.

The deceased’s interest in a jointly held asset automatically passes onto the surviving joint tenant.

Contact Institutions For All Other Assets

When the deceased owned property individually or as tenants in common, each institution where assets are held will need to be contacted to establish their “deceased estate transfer policy”, as each institution will have a different threshold. Ask the bank or organisation what documentation is required if in doubt.

In most cases, the organisations will require a copy of the death certificate and the will (if available). An indemnity or release form may also need to be signed.

Under particular circumstances, your solicitor may be able to help release estate assets without probate by providing a cover letter explaining the specifics of the case. For example, obtaining probate would be costly if the estate is small for a borderline case.

Obtaining Probates

For property or real estate not in joint names, the land titles office will require letters of administration or probate from the Supreme court. Some entities maintain registers with records of titles to the assets and will not release property until formal approval is granted. This may include superannuation funds, an insurance company or financiers. After which time, the person administering the real estate can transfer the property to the appropriate beneficiary. This will help avoid any complications or liability in a challenge for the estate.

For retirement villages, probates will be required in most cases to release exit entitlements.

You may need to seek legal advice from a lawyer who specialises in estate law to help you identify your options.

Summary

When managing estates, an executor may need to obtain a Grant of Probate or letters of administration from the Supreme Court. The process is time-consuming and costly, and in some circumstances, it may not be required.

Administering a small or low value assets can be a lot quicker than a regular deceased estate as there is generally no need for probate. To determine the estate’s value, check the value cap with the relevant bank or share registry. In most cases, the limit is around $50 000.

In some particular circumstances, a probate may not be required. For example, if there was no will, or if a property was held in joint tenants or if the assets are small and of minimal value.

To establish if a probate is required for a small estate, you should thoroughly understand the value of the financial assets held in the deceased’s name.

List all the assets and associated liabilities, transfer any jointly owned assets and establish the deceased estate transfer policy for all other relevant assets. Property solely owned will always require probate or a letter of administration from the Supreme court to transfer the asset to the beneficiary.

To identify whether you need to obtain a Grant of Probate, you may need to seek legal advice from a lawyer who specialises in estate planning.

FAQs

How Much Does An Estate Have To Be Worth To Go To Probate?

Estate value thresholds will vary depending on which financial institutions manage the assets. Each institution and the share registry will have its low value cap, but in most cases, the amount will be between $20 000 and $50 000. The deceased principal place of residence is generally excluded when calculating the cap.

If the balance is over their limit or cap, you may still need to apply for a grant of probate or letters of administration to transfer ownership of the assets.

Can You Settle An Estate Without Probate?

If the deceased’s assets are minimal and of a low value, it may be possible to settle without probate or letters of administration. Under particular circumstances, your solicitor may be able to help release assets without probate by providing a cover letter explaining the specifics of the case. For example, if the assets are minimal and obtaining probate would be costly for a borderline case. Or perhaps the surviving children may have been left equal shares and relations are amicable.

When joint tenants hold the assets, it will naturally pass the joint interest to the surviving party without the need for probate.

In What Circumstances Is A Probate Not Required?

Probate grants the executors the power to distribute the deceased’s assets to the beneficiaries. If there is no will, you will not require a probate. Instead, you should apply for “letters of administration,” which will enable the deceased person’s estate to be administered effectively. The legal term for passing without a will is intestate.

When a property is held in joint names as “joint tenants”, then no probate is required. The joint tenant will receive the property automatically.

There is no need to obtain probate for low value assets, for example, bank accounts with a low balance or small shareholdings that fall under the value cap.

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