Determining Deceased Estate Assets & the Residuary Estate

15.1.1 What Forms Part of the Deceased Estate
15.1.2 What assets are not considered part of an Estate
15.1.3 Find Deceased Estate Assets & Liabilities

15.1.1 What Forms Part of the Deceased Estate

Based on the aforementioned discussion on what comprises the Estate, the answer to the question 'what is an Estate asset?' may seem straightforward.

However, there are instances when it's not so easy to know what assets form part of an Estate. Besides, some Estate assets of the deceased may not be located in one place. Or, in the course of your investigation, you may find out about the existence of assets located in another state/territory or even Deceased Estate foreign assets.

Also, there are certain assets that may seem to be part of the Estate, but in reality, are not. Moreover, as you go about your duty of locating assets, you may also discover certain Deceased Estate liabilities – crucial items you need to be aware of during Estate Administration.

Therefore, it's important to understand certain key points, so you'll be better equipped to navigate the complex journey of Estate Administration. After all, this role requires knowledge of certain laws, financial understanding, commitment and patience to ensure a fair distribution of Deceased Estate assets.

• Liabilities: Liabilities such as debts, leases, loans, and mortgages are also part of the Estate. As an Executor or Administrator, it's your duty to settle these liabilities from the Estate assets before distributing the remaining wealth to beneficiaries.
  Note: It is important to know if you are dealing with an insolvent Estate as different laws and activities come into effect for bankruptcy.
• Estate Tax Liability: While Australia doesn't have a specific Estate or inheritance tax, there's a 'hidden' tax to be aware of – capital gains tax or CGT. This tax applies to certain assets upon the owner's death, including investment properties and shares, both domestic and foreign. Any taxes (e.g., deceased person's income tax) or tax liability that are due from the Estate must be paid prior to finalising and distributing the residuary Estate to Beneficiaries.
• Interstate Assets: Assets located in another state/territory are considered part of the Deceased Estate, however may be subject to those state/territory laws. To be lawfully recognised as Executor or Administrator in that state to manage assets located there, you may need to apply for Grant of Probate or Letters of Administration, obtained in the state/territory where most of the Deceased Estate assets are located, to be resealed.
• Foreign Assets: Assets held abroad are still considered part of the Deceased Estate under Australian law. However, this can create complexities as different jurisdictions have their own legal and tax implications. We recommend seeking legal advice from a probate lawyer.

15.1.2 What assets are not considered part of an Estate

Certain assets that are not considered part of a Deceased Estate include assets that are held jointly (which generally pass to the surviving joint owner), assets held in trusts, and life insurance policies with nominated Beneficiaries.
Since these assets do not form part of the Estate, they are untouchable by Estate liabilities and CGT.

Note: A common asset that does not by default form part of the Deceased Estate is superannuation. Only if the nominated Beneficiary is the Estate, then claiming the deceased's superannuation death benefit will be the Executor's responsibility and needs to be recognised as a Deceased Estate assets.

15.1.3 Find Deceased Estate Assets & Liabilities

Locating the assets and liabilities of a deceased person's Estate is a crucial part of the Estate Administration process.

There are some key steps involved to find Deceased Estate assets and liabilities efficiently:

• Review personal documents. Start by looking through the deceased person's personal documents, including Wills, bank statements, tax returns, and other financial documents. These items can provide valuable information about the deceased person's assets and debts.
• Contact financial institutions. Part of locating the assets of the deceased is getting in touch with banks, credit unions and other relevant financial institutions to find out if the owner held accounts, safe deposit boxes, stocks, bonds, and mutual funds with them. Refer to Step 12 – Notification of Government Departments & Service Providers of the Death for more detail.
• Get in touch with superannuation funds. While the super may not form part of the Estate, you still need to do this to determine whether the deceased had any superannuation and whether there's any insurance claim payable.
• Check for insurance policies. Look for any life insurance policies or accidental death and permanent disability policies, as the proceeds from these may be considered assets of the Estate.
• Find out about real estate ownership. Obtain the land title record from the land titles office in the state or territory where the deceased owned property to confirm ownership (see details by state below). If there's a property that's mortgaged, contact the lender to get details of the outstanding debt.

• Ascertain the deceased person's personal property. . Personal belongings such as vehicles, jewellery, artwork, and furniture should also be considered part of the Estate assets.
• Identify business ownership or interests of the deceased. If the deceased owned a business or had an interest in one, you'll need to identify and value those interests as well. Refer to Step 20 – Dealing With Businesses, Trusts & Shares After a Death for more detail.
• Review recent mail and tax returns. Going through the deceased person's mail can also help to identify any debts or assets. Also, reviewing the deceased's recent tax returns can reveal valuable information about interests, dividends, and other income that might point towards unknown assets. Find out how to redirect post in Step 21 – Check Post & Organise Mail Redirection After Death.
• See if the deceased held digital assets. Don't forget about digital assets, which could include cryptocurrency, online bank accounts, PayPal accounts, email accounts, social media profiles, online photos, blogs, domain names, and more.

Aside from finding assets after the death of the owner, you also need to ascertain whatever liabilities there may be that need to be paid for by the Estate.

Liabilities may include:

• Mortgages
• car leasing
• personal loans
• credit card debts
• unpaid bills
• Deceased's final income tax liability

Some of this information can be found by reviewing the deceased person's personal documents and mail. Also, if you find that there's an outstanding tax liability, the Australian Taxation Office will need to be informed of it as outlined in Step 12.1 – Notifying the Australian Taxation Office (ATO) of the Death.

It's worth noting that it may take some time to locate all the assets and liabilities of an Estate, and it can often feel like a detective's job. Therefore, it's a good idea to use an inventory to keep track of all belongings, assets and liabilities as soon as one is located.

This process is a fundamental aspect of Estate Administration as it ensures all debts of the Estate are paid and that the Beneficiaries receive their rightful inheritance.

Download the Assets & Liabilities Inventory for Probate to capture all Estate items by state and ownership to automatically calculate the Deceased Estate value.

Download Here

What is residuary Estate?

The term 'residuary Estate' refers to what remains of a deceased person's Estate after all debts, taxes, specific bequests (gifts) per the Will, and expenses related to administering the Estate have been paid or distributed.

The remainder is then divided amongst the Residuary Beneficiaries of the Estate as directed in the Will, which may be mentioned as equal Beneficiaries, Beneficiaries in equal shares or with specific percentages.

Here's a breakdown of what items may need to be paid or distributed prior to determining the residuary Estate:

• Debts and Expenses: Before any assets are distributed to Beneficiaries, the Executor or Administrator is responsible for settling any outstanding liabilities. This may include any loans, bills, funeral expenses, legal fees, and tax obligations.
• Specific Bequests: These are gifts of particular assets or fixed sums of money left to certain Beneficiaries, as specified in the deceased person's or Testator's Will. For example, someone might leave or bequeath their house to one child, a piece of jewellery to another child, and a set amount of cash to a friend.

If there is no Will (or the person died Intestate), the residuary Estate will be distributed according to the laws of intestacy in the relevant state or territory.

The valuation of Estate assets is another crucial step in the Estate Administration process. The valuation of Estate assets should be as accurate as possible to ensure fair distribution among the Beneficiaries and accurate tax reporting.

Here are some key elements of Estate asset valuation:

• Identification of assets: As previously discussed, the first step is to identify all the assets that are part of the Estate. These could include real estate, financial investments, superannuation, vehicles, personal belongings, business interests, and digital assets.
• Real estate valuation: For property assets, it's usually best to engage a professional real estate appraiser to determine their current market value. The appraiser will assess the condition of the property, its location, and recent sales of comparable properties in the area to establish its value.
• Valuation of financial investments: Stocks, bonds, and other financial assets are generally valued based on their market value on the date of the owner's death. You can contact the financial institution or a stockbroker for this information. For interest in a private company, partnership, or trust, a valuation may need to be done by a business valuation expert.
• Superannuation valuation: Contact the superannuation fund to determine the value of the deceased's superannuation at the date of death and who the nominated Beneficiary is (if nominated by the deceased person).
• Valuation of vehicles: You can use resources such as the Red Book (an Australian vehicle valuation guide) for a general idea of a vehicle's value. Alternatively, you can seek an official valuation from a licenced motor vehicle dealer.
• Valuation of personal belongings: For valuable personal items (like artwork, jewellery, antiques), it's a good idea to get a professional appraisal. Less valuable items can generally be valued based on a reasonable estimate of their current sale value.
• Business interest valuation: If the deceased owned a business, a professional business valuator would typically be engaged to determine its value.
• Valuation of digital assets: The valuation of digital assets like cryptocurrency can be complex and might require assistance from a professional experienced in this field.
• Document valuation: Keep a thorough record of how each asset's value was determined. This is important for Estate tax returns and for any potential disputes among the Beneficiaries.
• Reviews and updates: It's important to remember that the valuation process may need to be repeated or updated, particularly for long-running Estates or for assets that fluctuate in value.

Note: Bear in mind that these steps are a general guide, and the complexity of the valuation process can vary depending on the nature and extent of the assets involved, if they will be sold and how they will be distributed.

Before launching into this Step, it's important to understand why this part of the Estate Administration process is so critical. As the Executor or Administrator administering the Estate, you’re responsible for accurately and truly reflecting the Estate's financial situation.

Imagine the situation where the Estate is finalised, the known liabilities have been paid, and the remainder is distributed to the Beneficiaries as inheritance.
Now, after a few months, it turns out that the deceased person had taken a loan and owes money that was not identified as a liability during this process and a claim is made for the money to be repaid.

As the Executor or Administrator, you are responsible for identifying all Estate assets and liabilities, and serve the necessary notices before distribution as described later in this Guide.

If you do not follow the required tasks for your specific situation carefully, you may be personally liable to pay the debt if you cannot collect parts of the distributed inheritance back from the Beneficiaries.

The above example should not discourage you about having taken on the role as Executor or Administrator. It aims to highlight how important it is to take the time needed to work through the Deceased Estate in careful detail and seek experienced support when in doubt.

To stay organised and keep your records updated, it is recommended you use an Estate asset and liabilities spreadsheet. You can simply add or remove items as you identify what assets are excluded from the Estate, and make a detailed inventory of assets for Estate Administration purposes.

The spreadsheet can also serve as a key document in making a statement of assets and liabilities of the Deceased Estate and the details will need to be provided when you apply for Grant of Probate or Letters of Administration.

It's also important to frequently communicate with the family of the deceased person and Beneficiaries to educate them, to receive as much information as possible, validate your findings and ensure there is agreement to avoid any disputes later.

Note: You will complete the Statement of Assets and Liabilities as you work through Steps 15 – 26 of this Deceased Estate Administration Guide. As you progress, you will gain access to information privy to the Executor(s) and Administrator that will allow you to determine the Estate assets, liabilities and value necessary to then finalise and distribute the residuary Estate.

15.5.1 Overview
15.5.2 Home Contents
15.5.3 Real Estate
15.5.4 Rental Bonds and Nursing Home Deposits
15.5.5 Vehicles
15.5.6 Cash and Other Assets
15.5.7 Possible Claims

15.5.1 Overview

At this point, it will be important to list all the Estate assets you know of or think may exist. You will confirm each item (after differentiating between Estate and non-Estate assets) and its exact value as you work through the following steps, so it is fine not to be perfect at this stage.

The following are some key assets to help you with investigating and compiling a complete inventory:

15.5.2 Home Contents

The most immediate step is to capture all contents in the home or in the last place of residence of the deceased person before clearing these, using the Home Contents & Personal Belongings Inventory (part of the Light Executor Checklists & Tools Package). The Will (where available) may specify items that will be handed to certain Beneficiaries; you should take note of these as a priority.

Especially, where you have identified possible conflict between Beneficiaries and you're concerned that someone will try to gain possession over certain items, it's important to immediately take stock of all items including the following that may have a resale value:

• furniture
• personal belongings
• jewellery
• valuables
• antiques
• collections
• pieces of art
• computers
• mobile phones
• clothes
• white goods and other equipment (washing machine, dryer, fridge, dishwasher, kitchen aids, gardening equipment etc.)
• crockery and cutlery (especially if deemed of high monetary or sentimental value)

Some items may have great sentimental value to the family or individuals, but do not have a resale value. If this is the case, you should record these items separately without a dollar value.

Read Step 16 – Deceased Estate House Clearance for more details on how to clear the home or residence and value contents.

Download the Home Contents & Personal Belongings Inventory to capture all items of value, which will from part of the Estate assets, and bequests. This document is part of the Light Executor Checklists & Tools Package.

Download Here

15.5.3 Real Estate

In most Estates, real estate and property make up the largest assets.

As you progress through the Estate Administration process, you will value each asset including Deceased Estate property. Take note of all known real estate in the inventory and follow Step 17 – Deceased Estate Property Valuation & Preparation for Rent or Sale to complete the value in the inventory.

15.5.4 Rental Bonds & Aged Care Accommodation Bonds

If the deceased person rented a house or apartment, the rental bond refund should be requested. This is described in more detail in Step 16 – Deceased Estate House Clearance.

If the deceased person lived in a nursing or aged care home, it is likely that a deposit (also called aged care accommodation bond, or refundable accommodation deposit (RAD)) was paid at the beginning of the residency, which can be requested back.

You should refer to the contract or contact the nursing or care home to understand how much was paid as a deposit and how to make the RAD refund request. It is very likely that Grant of Probate or Letters of Administration will be needed by the nursing or care home to release the funds. This topic is further discussed in Step 27 – Grant of Probate Application or Applying for Letters of Administration.

15.5.5 Vehicles

Once you've made a record of the home contents, it's also important to note all vehicles owned by the deceased. This may include:

• cars;
• motor bikes;
• boats;
• jet-skis;
• bicycles; and
• any other vehicles.

Read Step 18 – Value, Sell or Transfer Car From Deceased Estate for more details on how to deal with the car and other vehicles.

15.5.6 Cash and Other Assets

As you progress through the Estate Administration process, you will request final bank statements from all the banks you have notified in Step 12 – Notification of Government Departments & Service Providers of the Death.

Read Step 19 – What Happens to a Bank Account When Someone Dies for more details on how to deal with banks.

If you are aware of other assets, such as Deceased Estate shares, bonds or other investments, you should note these in the inventory immediately and find about how you can obtain a statement of the current holdings and value. Step 20 – Dealing With Businesses, Trusts & Shares After a Death discusses this in more detail.

15.5.7 Possible Claims

You may be able to make certain claims from insurance companies or other organisations depending on the level of planning and cover put in place by the deceased person.

You can enter some assumed items on the simplyEstate Assets & Liabilities Inventory that you can confirm as you work through the Estate. Read Step 25 – Claiming Life Insurance & Other Benefits for more details on how to deal with insurance claims.

The deceased person may also be owed money or have items lent to friends or relatives. It may be more difficult to get a complete picture of such situations. However, it may be worthwhile looking for large bank transactions out of the deceased person's accounts once you get access to these as discussed in detail in Step 19 – What Happens to a Bank Account When Someone Dies.

As you continue with Estate Administration, you will obtain final bank statements from all the banks you have notified in Step 12 – Notification of Government Departments & Service Providers of the Death.

All liabilities will need to be deducted from the assets to understand the total value of the Deceased Estate. Liabilities can be:

• mortgages;
• bank loans;
• personal loans;
• credit card debts;
• unpaid bills; and
• any other form of obligation resulting in future claims.

The deceased person may also owe money or items borrowed from friends or relatives. Again, it may be more difficult to get a complete picture of such items.

However, it may be worthwhile looking for large bank transactions into the deceased person's accounts once you get access to bank statements as discussed in detail in Step 19 – What Happens to a Bank Account When Someone Dies to understand what may need to be listed under the liabilities.