Banks and law firms create unnecessary issues and confusion by insisting that a lawyer can act for an intestate estate (where there is no will) before letters of administration are granted. This is wrong in law and wrong in practice.
Banks are willing to disclose that they hold ‘more than $15,000 which means letters of administration are required’.
They then insist on a formal letter from ‘the lawyer acting for the estate‘ before they will provide more details.
That is the error.
We then have a circular correspondence.
I point out that I am acting for someone who is applying for letters of administration where there is no will. Information about the maximum value of the estate is required for the affidavit in support of that application.
I also point out that no lawyer can ‘act for the estate’ until letters of administration have been granted and the lawyer has then been instructed by the administrator/s appointed by the High Court. (An administrator is not required to instruct a lawyer to do the estate administration. It is optional.)
I cannot guarantee that my client will be granted letters of administration, as the grant is always discretionary. The most I can do is assure the bank that, on the instructions I have, the court is expected to issue letters of administration to my client and, as far as I know, there is no dispute about my client becoming the administrator.
The bank then refers the correspondence to their legal section. Eventually an answer comes back, usually providing the information requested.
It is all a tad irritating.
I would have expected the ‘deceased estates’ sections of banks already to know this. I should not have to educate them and wait for them to check with the bank’s legal advisers and then come back and say they will or will not provide the information.
Why this matters
If the estate is worth less than $120,000, a beneficiary has the option of asking the Public Trust to take out an election to administer. That means there’s no need for letters of administration. The Public Trust then acts as administrator. (It’s only worth it if there are complications that make Kiwilaw’s options less attractive and if the estate is small so Public Trust cannot charge too much – by law, their fees cannot exceed 5% of the estate. However, in my limited experience, when there are such complications and a small estate, Public Trust often declines to act – presumably because they won’t get enough in fees.)
If the deceased left a surviving spouse or partner, it is necessary to know early on whether the estate is worth more than $155,000, to ascertain who has the right to apply for letters of administration. The spouse also needs enough information about the sums involved to assess whether to take their entitlement under intestacy or whether to claim under relationship property. If there is more than about $300,000 in the estate, those figures become important. That decision has to be made before anyone applies for letters of administration.
It would be helpful if the banks would routinely provide information as to whether they held:
- more than $15,000
- more than $50,000
- more than $100,000
- more than $120,000
- more than $155,000
- more than $200,000
- more than $500,000
Finally, lawyers sometimes hold themselves out as ‘acting for the estate’ before letters of administration are granted, or – where there is a will – before the executors have instructed them to act. This is a misrepresentation. It needs to stop.
For more discussion of the latter point, see my recent item in The Property Lawyer (August 2022) – ‘Misrepresentation by law firms in estate matters’ – available here.