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Do you need help with Probate?

Our expert legal team is ready to take your call

Mitchell is the Managing Principal of Sharrock Pitman Legal. He is an Accredited Specialist in Commercial Law (accredited by the Law Institute of Victoria). He also deals with areas of Employment Law, Wills & Estate Planning and Probate and can answer all your questions related to probate.

For further information, contact Mitchell on his direct line:


CALL: (03) 8561 3318

What is bankruptcy?

Bankruptcy is a process where a person (‘debtor’) who cannot afford to pay their debts, gives up their assets and control of their finances, either voluntarily or by court order, in exchange for protection from legal action by their creditors who are pursuing payment.

By way of definition, bankruptcy is a legal status that a person has under the Bankruptcy Act 1966 (Cth) where, once they are declared bankrupt:

  1. with some exceptions, creditors are prevented from further pursuing them for payment,
  2. certain restrictions are placed on them, and
  3. their property (with some exceptions) is made available, through a trustee, for distribution among creditors.

A person can enter into voluntary bankruptcy. It is also possible that someone who is owed money (a creditor) can make a person bankrupt through a court process, known as a sequestration order.

Who can be subject to bankruptcy proceedings?

Any person can be subjected to bankruptcy proceedings. The only exception to commencing bankruptcy proceedings is where a person is already bankrupt and has not been discharged from that bankruptcy.

Purpose of bankruptcy

The two main purposes of bankruptcy are:

  1. to give the debtor a fresh start by releasing them from most of their debts, and
  2. to fairly distribute the debtor’s assets among creditors.

Obligations under bankruptcy

If made bankrupt, there are obligations that must be upheld. These include that:

  1. The debtor must provide details of debts, income and assets to the trustee,
  2. The trustee notifies creditors that the debtor is bankrupt which prevents most creditors from contacting the debtor about the debt,
  3. The trustee can sell certain assets to help pay the debtor’s debts, and
  4. The debtor may need to make compulsory payments if their income exceeds a set amount.

Commencing bankruptcy proceedings

Applications for Bankruptcy Notices are governed by the Bankruptcy Regulations 1996, which requires that an application be lodged in the approved form along with:

  • a copy of the sealed or certified judgment order,
  • a certificate of the judgment, or
  • order or a copy of the entry of the judgment sealed by the court or signed by a court officer.

A final judgment or order for a debt must be obtained in the Magistrates’, County or Supreme Courts against the debtor by the creditor prior to bankruptcy proceedings being commenced.

Once judgment is obtained, the creditor can prepare a Bankruptcy Notice against the debtor. Once a Bankruptcy Notice is filed electronically with the Australian Financial Security Authority, it must be personally served on the debtor. Service must be done within six months of filing.

If a debtor is unable to be served within this timeframe, the Bankruptcy Notice will lapse and need to be refiled. Once the Bankruptcy Notice is served, the debtor has 21 days to comply. The debtor can opt to pay the full amount of the debt or enter into a payment arrangement. If the debtor fails to comply with the requirements within the 21-day period, an act of bankruptcy has occurred.

A bankruptcy case may be heard by the Federal Court or the Federal Circuit Court. Most bankruptcy cases are heard by the Federal Circuit Court. The rules, forms and procedures are the same in each court for bankruptcy cases.

How can Sharrock Pitman Legal help?

If you require advice on whether you should be considering bankruptcy or you have been served with a Bankruptcy Notice, we have legal practitioners who specialise in and can assist in personal insolvency and sequestration legal proceedings. Contact our Accredited Specialist Commercial Litigation team on 1300 205 506 or by email at litigation@sharrockpitman.com.au.

The information contained in this article is intended to be of a general nature only and should not be relied upon as legal advice. Any legal matters should be discussed specifically with one of our lawyers.

Liability limited by a scheme approved under Professional Standards Legislation.

Written by one of our lawyers

,

.

Lynda Lim

For further information contact

Lynda Lim

Lynda is a Senior Associate of Sharrock Pitman Legal. She is part of our Litgation team. For further information, contact Lynda Lim on her direct line (03) 8561 3330.

More on

Litigation [Courts & Tribunals]

However, in this article we will set out the factors that influence how long it will take to obtain a Grant of Probate and to administer an estate in Victoria.

The basics

First things first: what is a Grant of Probate? A Grant of Probate is effectively a document issued by the Supreme Court of Victoria which formally authorises an executor to manage the estate of a deceased person in accordance with their Will. Without Probate, the asset holders (say a bank or share registry) cannot be satisfied as who has the correct authority to receive the deceased's assets and may refuse to pay out.

Sometimes, for smaller estates or if assets are mostly jointly owned with a surviving spouse, asset holders might agree to release payment without requiring a Grant of Probate. This is usually on the basis that the person who receives payment promises to repay (or Indemnify) the asset holder if it turns out they paid to the wrong person.

If there is no Will, then you cannot obtain a Grant of Probate. Instead you obtain Letters of Administration. This is effectively the same, in terms of authorising someone to administer the estate, and would usually be obtained by the person who is the closest next-of-kin to the deceased.

“A Grant of Probate is effectively a document issued by the Supreme Court of Victoria which formally authorises an executor to manage the estate of a deceased person in accordance with their Will.”

Timeframes for Probate in Victoria

In order to obtain a Grant of Probate, the Supreme Court needs to be given information about the assets and liabilities of the estate, the deceased person, the witnesses to the Will, the executors and the Will itself. An advertisement of your intention to apply for Probate must also be published on the Supreme Court website for at least 14 days prior to any application being lodged.

Often, making enquires to obtain all the necessary information can take a number of weeks. Also, you will need the Death Certificate for the application for Grant of Probate and possibly for making proper enquires regarding the assets and liabilities. Waiting for the Death Certificate to issue can therefore add a few more weeks to the process. Overall, if you have your application for Grant of Probate lodged within 1 to 2 months from the date of death, you are making timely progress.

The Court itself usually does not take long to process the application (maybe another 1 to 2 weeks) and this is completed using the electronic Supreme Court filing system. This means you do not have to go to a Court hearing. The timeframe for processing applications for Letters of Administration is even less, given that there is no Will document for the Court to consider. There is also a general discretion for the Court to raise a 'Requisition' asking for more information before they review the application - this can sometimes delay matters.

“Overall, if you have your application for Grant of Probate lodged within 1 to 2 months from the date of death, you are making timely progress.”

So, here we are a few months after death and you finally have a Grant of Probate or Letters of Administration. It is important to remember that this is the start of the estate administration and not the end. For a very simple estate, you might only need a further month or so to cash the assets and pay them to the correct beneficiaries. However, it can often be more complex than that. Factors that determine the timeframe to administer the estate include:-

  • Some assets will take time to cash or transfer. For example, if selling a property, final settlement might be 60/90/120 days from the day of sale.
  • There is a 6 month period for challenges to be brought against the estate and executors must wait until this period expires before distributing the estate, if there is any risk that a disgruntled family member might come forward.
  • There might need to be final tax returns for the deceased or for the estate. Failing to wait for the ATO to process these could leave the executor personally liable for a tax bill.
  • You might need to advertise for creditors to come forward and wait for a period of months while this advertising timeframe expires. This protects the executor if they are unsure of all of the deceased's financial dealings and creditors.
  • It might not always be a good time to immediately cash estate assets. For example, the shares just took a nose-dive, do you still sell regardless of available price?

There is a general rule that executors have an 'executor's year' to complete the estate administration. This means that you should be aiming to have the estate finalised and distributed within 12 months from the date of death.

The information contained in this article is intended to be of a general nature only and should not be relied upon as legal advice. Any legal matters should be discussed specifically with one of our lawyers.

Liability limited by a scheme approved under Professional Standards Legislation.

Need help with Probate?

Our expert legal team is ready to take your call!

Mitchell is the Managing Principal of Sharrock Pitman Legal. He is an Accredited Specialist in Commercial Law (accredited by the Law Institute of Victoria). He also deals with areas of Employment Law, Wills & Estate Planning and Probate and can answer all your questions related to probate.

For further information, contact Mitchell on his direct line:

DIRECT LINE: 
(03) 8561 3318

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About Sharrock Pitman Legal

For fifty years Sharrock Pitman Legal has made a significant and long term contribution to meeting the legal needs of business owners and residents in the City of Monash and greater Melbourne area.