Being an Executor: Your Money Duties Step by Step

🏛️ Notifying, Gathering and Protecting Assets

Once you know whether you need probate, the next job is to tell the right people and pull the estate together in one place where you can see it and protect it.

Step three: notify banks and organisations

Contact every organisation that held money for the person or is owed money by them. Each will have its own process for a deceased customer. Typically you notify:

• Banks and any KiwiSaver or investment providers
• Inland Revenue, so tax matters can be finalised
• Work and Income or the person's superannuation provider
• Insurers, utility companies, and any lenders or creditors
• Their employer, and any landlord or tenant if they rented or let property

Notifying a bank usually freezes the individual accounts, though the bank will often still pay the funeral account directly from the estate on sighting the invoice. Notifying Inland Revenue early matters, because tax is one of the debts you must settle before you distribute.

Step four: gather in and safeguard the assets

Your duty is to gather the estate together and protect it while you administer it. That means making a full list of what the person owned and what they owed, and keeping the assets safe and insured until they are dealt with. Practical tasks include:

• Listing all assets: bank accounts, KiwiSaver, shares, vehicles, the home and its contents
• Listing all debts: mortgage, loans, credit cards, rates, power and any unpaid bills
• Keeping property insured and secure, and redirecting mail
• Getting valuations where they are needed, for example for a house or a share portfolio
• Cancelling subscriptions, memberships and services that are no longer needed

Your legal duties as executor

An executor is a type of trustee, and since 30 January 2021 the duties in the Trusts Act 2019 apply to executors and administrators as well. In plain terms, you must act honestly and in good faith, act in the interests of the beneficiaries, keep the estate's property separate from your own, keep proper records, and not profit from the role beyond any fee the will or the law allows. You are expected to act with reasonable care, not to guess.

💰 Debts, Tax and Distributing Safely

This is the part where care matters most. You pay what the estate owes, deal with tax, keep the books, wait out the claim period, and only then hand out what is left.

Step five: pay the debts, funeral and tax

Before any beneficiary receives a cent, the estate's liabilities must be paid. That includes the funeral costs, the person's outstanding debts, and any tax owing. If the estate does not have enough cash, you may need to sell assets to pay what is owed. Only what is left after all of this, the residue, is available to distribute.

The two tax returns to think about

There are usually two separate tax jobs:

• A final personal return for the person who died. This covers their income from 1 April up to the date of death, and it uses their own IRD number, the one they had during their life.
• An estate return for any income the estate earns after the date of death, such as interest or rent while the estate is being wound up. The estate is a separate entity, so it needs its own IRD number, and returns are filed for it each year until the estate is fully distributed.

Step six: keep proper accounts

Throughout the job you must keep clear records of every dollar that comes into the estate and every dollar that goes out. Good accounts let you show the beneficiaries exactly what happened, satisfy Inland Revenue, and protect you if anyone questions how you handled things. Keep receipts, bank statements, valuations and a running record of payments made and assets sold.

Step seven: distribute, but not too early

Only once the debts and tax are paid, and the time for claims has passed, do you distribute the residue to the beneficiaries named in the will. The timing matters. People can bring claims against an estate, for example under the Family Protection Act 1955, and a court can order money to be paid out of the estate even after you think the job is done.

Rough timeframes

People talk about the executor's year, the idea that you should aim to complete a straightforward estate within about a year. A simple estate might be wound up in six months or so, while an estate with a house to sell, a business, overseas assets or a dispute can take much longer. There is no prize for rushing, and the risks of going too fast are greater than the cost of taking your time.

If there is no will

When someone dies without a will they are said to die intestate. There is no executor, so a close family member usually applies to the High Court to become the administrator, through a grant called letters of administration. The administrator does much the same job as an executor, but the estate is shared according to the intestacy rules in the Administration Act 1969 rather than a will. Those rules set a fixed order and fixed shares for a surviving partner, children and other relatives, which may not match what the person would have chosen. This is one more reason to have a valid will.

Getting help: a lawyer or Public Trust

You do not have to do it all yourself. A lawyer can prepare the probate application and guide you through the tricky parts, with reasonable costs paid from the estate. Public Trust can either act as the executor if it is named in the will, or support you as much or as little as you need if you are the executor, including applying for probate. Their fees come out of the estate and are based on the work involved, so a simple estate costs less than a complex one. For a large, contested or complicated estate, professional help is often money well spent.

🔢 Worked Examples

These four examples show how the steps come together. The names and figures are illustrative, and every estate is different.

Related guides and tools

• Probate explained
• Wills, EPAs and your estate
• How inheritance works in New Zealand
• Estate value calculator
• Inheritance split calculator
• Net worth calculator