There is no rule requiring an Executor to obtain Probate of a Will. Often, it will be strongly recommended.
Obtaining the courts seal of Probate on a Will protects not only the Executor but also anyone who deals with the assets of a deceased person.
Usually, where the deceased had money in a bank account, the bank’s risk minimisation process will require the Executor to provide a certified copy of the Probate document.
Today’s short article is an example of what happens when proper process isn’t followed.
In March 2018, the Supreme Court of South Australia handed down its decision in a matter where the Public Trustee had commenced proceedings against the Commonwealth Bank of Australia and the Bank of South Australia.
The Public Trustee was acting as the Executor of a Will, and brought an action against the banks alleging that the banks were liable in debt to the estate.
The deceased lady was 90 years of age when she passed away in October 2008. The deceased held bank accounts with the Commonwealth Bank of Australia and the Bank of South Australia.
The deceased had prepared a Will in 2002. The lady’s son, Michael, produced another Will document dated 27 April 2008. Michael claimed that the 2008 Will was the last Will of his mother. Little surprise that Michael is named as the Executor in the 2008 Will.
It appears that Michael did not attempt to obtain Probate of the 2008 Will. At Michael’s request, the banks waived their usual requirement of sighting the Probate document. The banks paid the balance of the bank accounts (a total of $177,752) to Michael as Executor of the 2008 Will.
The problem is that the Banks had not taken any action to verify that Michael was the Executor and more importantly that the 2008 Will was the true and correct last Will of the deceased.
The Public Trustee applied to the Supreme Court and Probate of the 2002 Will was granted to the Public Trustee in May 2013.
The Public Trustee then requested that the banks pay the money that was held in the deceased’s bank accounts on the day that he passed away. The banks’ response to this demand was that they had already made the payment and had received a release and an indemnity from Michael.
The Public Trustee commenced court proceedings against the banks. At the date of the court hearing, Michael’s whereabouts and what he had done with the money were unknown !!
The Judge made the following findings:
• the Public Trustee, as executor, had a claim in debt against each of the banks pursuant to contracts between customer and banker.
• without a probate grant, the banks could not obtain a valid release from Michael.
Michael was still liable to account for the assets of the estate – but the Banks would have to find him to recoup the cash.
The case dealt with other issues, however the short and simple takeaway is the need for all interested parties to follow a careful and prudent process. Even where you are acting lawfully and honestly as the Executor of a Will, you take a risk where you have not obtained the court’s declaration that the Will is the true and correct last Will of the deceased.
Disclaimer: The above is to be considered as general education. This is not advice and it is not to be acted upon without advice from a qualified professional who understands your personal circumstances.
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