Chapter 2. Vesting of Estate
Updates and background for this project (Digest)
2.1 The provisions in this chapter ensure that a deceased person’s property will always have an owner from the moment of death onwards.
200 Initial vesting on death
(1) If a person dies leaving a will appointing 1 or more executors who survive the person, the person’s estate vests, on the person’s death—
Drafter’s note: Individual jurisdictions may need to amend their trust legislation to deal with the vesting of trust property. [R 10-2]
(2) However—
(a) if any, but not all, of the executors lack legal capacity to act as executor—the estate vests in the executor or executors who have legal capacity and, if more than one, as joint tenants; or
(b) if the executor or all of the executors lack legal capacity to act as executor—the estate vests in the [public trustee].
Drafter’s note: Public trustee as used in the Bill is in [square brackets]. In Victoria the reference will need to be to State Trustees. Public trustee is in the dictionary for definition as appropriate for each jurisdiction.
(3) If a person dies—
(a) without leaving a will; or
(b) leaving a will appointing 1 or more executors none of whom survives the person;
the person’s estate vests, on the person’s death, in the [public trustee].
(4) Subsections (1), (2) and (3)(b) apply despite a testamentary disposition to the contrary.
(5) In this section—
estate, of a deceased person, means property to which a person was entitled at the time of his or her death, but does not include—
(a) property of which the person was a trustee; or
(b) an interest in property that ceased on the person’s death.
2.2 This provision is based on s 45(1) of the Succession Act 1981 (Qld). It deals with the initial vesting of the estate upon the death of the deceased. Questions of vesting at other times, including the doctrine of relation back,1 are dealt with in subsequent provisions in this Chapter.
2.3 Currently, in NSW, upon the deceased’s death, the estate is “deemed to be vested in the NSW Trustee2 in the same manner and to the same extent as aforetime the personal estate and effects vested in the Ordinary in England”.3
2.4 In adopting the model provision, the National Committee considered that an estate should vest in the public trustee (or equivalent), a public official, only as a last resort.4 The Queensland Law Reform Commission, in proposing the original provisions, in 1978, considered that vesting the deceased’s estate in a public official was “a departure from the existing policy favouring the private administration of deceased estates”.5
2.5 The model provision departs from the current Queensland provision in some aspects. The National Committee considered that the “intermediate position”, where only some of the named executors are able and willing to act, should be clarified in the model legislation.6 The National Committee also considered that the current Queensland formulation, in requiring that a named executor be “willing to act”, led to uncertainty and recommended that the executor must simply have “legal capacity” to act so that no investigation need be made into any executor’s willingness to act before the estate vests.7 The National Committee also noted that renunciation8 is available to any executors who have legal capacity but are unwilling to act.9
Property of which the deceased was trustee
2.6 Sub-clause 200(5), which derives from part of s 45(1) of the Succession Act 1981 (Qld), expressly excludes from the vesting provisions property of which the deceased was trustee at his or her death. The National Committee considered this desirable because, even though trust property could be vested initially in a personal representative, this would not, of itself, constitute the personal representative as a trustee of the property in question because “a person cannot have powers authorities and discretions of a trustee unless that person has been appointed trustee by the person creating the trust or has been pointed to in some way as a person proper to exercise those powers authorities and discretions”.10 The Committee considered it more appropriate that the relevant trustee legislation should deal with the vesting of trust property,11 as is already the case, for example, in Queensland.12
2.7 By contrast, in NSW, s 45 of the Probate and Administration Act 1898 (NSW) currently provides that real estate that the deceased held in trust vests in the deceased’s personal representative “subject to the trusts ... affecting the same”. This provision, in so far as it relates to trusts, should, therefore, be included in the Trustee Act 1925 (NSW).13
201 Property subject to a general power of appointment exercisable by will
A deceased person is taken to be entitled at his or her death to any interest in property in relation to which a disposition contained in the deceased’s will operates as an exercise of a general power of appointment.
2.8 This provision states that a deceased is entitled to property that passes to a beneficiary as a gift under the deceased’s will granted pursuant to an exercise of a general power of appointment. A general power of appointment gives a person the right to distribute property to any person at all, including him or herself. The instrument giving the power will usually specify when it is to be exercised, for example, during the person’s lifetime or by will.14
2.9 It is based on s 6(2) of the Administration and Probate Act 1935 (Tas). However, the model provision differs from the Tasmanian provision which only operates in relation to real property.
2.10 At common law, appointed property does not vest in the executor of the deceased’s estate. However, in equity the appointed property can become liable to satisfy any debts that the deceased’s estate is unable to satisfy.15
2.11 Currently, in NSW, property that passes under a gift in a will in exercise of a general power of appointment vests in the personal representatives of the estate as if the deceased had been entitled to it at his or her death.16
2.12 The National Committee considered that the model provision is necessary because it “clarifies the basis on which a personal representative is entitled to call for the appointed property” when the personal representative must sell appointed property in order to satisfy the debts of the estate.17
2.13 The model provision is also consistent with the provisions in Chapter 3 of the Succession Act 2006 (NSW)18 that allow the court to designate property as “notional estate” where the deceased held a power of appointment over the property but failed to exercise that power before his or her death.19
202 On the making of a grant of representation
(1) On the making of a grant of representation of a deceased person’s estate, the estate that vested in the deceased’s executor or the [public trustee] under section 200(1), (2) or (3)—
(2) If any grant of representation (the relevant grant) of a deceased person’s estate is revoked, ends or ceases to have effect—
(a) on the revocation, ending or ceasing of effect of the relevant grant, the deceased person’s estate that is vested in the person to whom the relevant grant was made is divested from the person; and
(b) on the making of a subsequent grant of representation, the deceased person’s estate vests in—
(i) the person to whom the subsequent grant is made; or
(ii) if the subsequent grant is made to more than 1 person, the persons to whom it is made as joint tenants.
Example for subsection (2)—
Assume the relevant grant is a grant of representation of a deceased person’s estate made by the Supreme Court and endorsed under section 305.
On the making of an interstate grant of representation as mentioned in section 335(1), the relevant grant ceases to have effect under section 335(2)(c)(i). Paragraph (a) of this subsection operates to divest the deceased person’s estate from the person to whom the relevant grant was made. Further, because, under section 335(2)(a), the interstate grant of representation has the same force, effect and operation in this jurisdiction as it would have if it had been originally made by the Supreme Court, paragraph (b) operates to vest the deceased person’s estate in—
(a) the person20 to whom the interstate grant of representation is made; or
(b) if the interstate grant of representation is made to more than 1 person, the persons to whom it is made as joint tenants.
(3) If there is an interval between the revocation, ending or ceasing of effect of a grant of representation and the making of a subsequent grant of representation, the deceased person’s estate vests in the [public trustee] until the making of the subsequent grant.
2.14 This provision deals with three distinct situations:
1. Where the personal representatives that the Court appoints are not the executors named in the will, or alternatively the public trustee, in whom the estate initially vested under cl 200. In this case the estate divests from the original holders and is vested in the appointed personal representatives. (Sub-clause 202(1).)
2. Where the Court subsequently appoints new personal representatives to replace the earlier appointed representatives who have ceased to operate as such. In this case the estate divests from the final remaining personal representative and vests in the new appointees. (Sub-clause 202(2).)
3. Where there is a gap between a subsequent appointment and an earlier appointment ceasing to have effect. In this case, the estate vests in the public trustee until the subsequent appointment is made. (Sub-clause 202(3).)
2.15 It is based on s 45(2) and (3) of the Succession Act 1981 (Qld). However, unlike s 45(3) of the Queensland Act, cl 202(2)(b)(ii) makes provision for the appointment of more than one personal representative for the sake of consistency with cl 202(1).
2.16 Sub-clause 202(1) will replace s 44(1) of the Probate and Administration Act 1898 (NSW) with amendments necessary to accommodate the new provisions relating to initial vesting in cl 200. NSW legislation does not currently deal with the vesting of an estate upon or between subsequent appointments of personal representatives.
203 On death of personal representative
(1) This section applies if, on the death of a deceased person’s last surviving, or sole, personal representative, the deceased person’s estate is unadministered.
(2) On the personal representative’s death, the unadministered estate that is vested in the personal representative vests in the [public trustee].
(3) If, after the unadministered estate is vested in the [public trustee], the Supreme Court makes a grant of representation of the deceased’s estate, on the making of the grant the unadministered estate—
(4) This section applies despite [insert local equivalent of the Trusts Act 1973 (Qld), section 16].
2.17 This clause makes provision for the vesting of any estate property that is left unadministered after the death of a sole, or last remaining, personal representative. The property initially vests in the public trustee and, subsequently, in the person or people to whom the Court makes a grant of representation. This clause applies notwithstanding provisions dealing with the vesting of property of which the deceased was trustee.21
2.18 The provision, which has no current counterpart in any Australian jurisdiction, is intended to deal with the consequences of the National Committee’s recommendations in relation to executors and administrators by representation.22 At the death of the sole or last remaining personal representative, the Court will not yet have appointed anyone as personal representative of the deceased personal representative’s estate and may never appoint someone who is prepared to be an executor by representation or administrator by representation of the original estate.23
204 On becoming an executor or administrator by representation
If, under section 338, a person becomes an executor or administrator by representation of a deceased person’s will or estate, on the happening of that event the deceased person’s unadministered estate—
(a) is divested from—
(b) vests in—
(i) the executor or administrator by representation; or
(ii) if there is more than 1 executor or administrator by representation, the executors or administrators by representation as joint tenants.
2.19 This provision deals with the vesting of an estate where a person becomes an executor or administrator by representation under cl 338.24 This would normally follow on from a vesting under cl 203(2). The unadministered estate is divested from the public trustee or another person and vests in such executors or administrators by representation as the Court may appoint.
205 On executor or administrator by representation ceasing to hold office
(1) Subsections (2) and (3) apply if—
(2) If the representative stops holding office under section 341, on the happening of that event the unadministered estate vested in the representative—
(3) If the representative stops holding office under section 342, on the happening of that event the unadministered estate vested in the representative—
(4) Subsection (5) applies if—
(5) On the happening of the event mentioned in subsection (4), the unadministered estate vested in the representative—
(6) Subsection (7) applies if—
(7) On the happening of the event mentioned in subsection (6), the unadministered estate vested in the representatives—
(8) If the unadministered estate of a deceased person vests in the [public trustee] as provided under subsection (5) or (7), on the making of a grant of representation of the deceased’s estate to another person the unadministered estate—
(9) If 1 or more, but not all, of the executors or administrators by representation stop holding office for any reason (the outgoing representatives), on the happening of that event, the unadministered estate, to the extent it is vested in the outgoing representatives—
2.20 This clause deals with the vesting of any unadministered estate when one or more of the executors or administrators by representation (in whom the estate vested under cl 204) ceases to hold office. These include where:
- the executor by representation ceases to hold office because the Court has made a further grant of probate, under cl 341, to a previously non-proving executor under the deceased’s will (cl 205(1) and (2));
- the executor or administrator by representation ceases to hold office because the court has granted letters of administration under cl 350 or cl 351 (cl 205(1) and (3));
- all of the executors or administrators by representation (including the sole or surviving executor or administrator by representation) cease to hold office because the grant of representation is revoked, ends or ceases to have effect under cl 34325 (cl 205(4)-(7));
- all of the executors or administrators by representation (including the sole or surviving executor or administrator by representation) cease to hold office because they have renounced the executorship or administratorship by representation under cl 344 (cl 205(4)-(7));
- the public trustee, in whom the unadministered estate has vested under cl 205(5)(b) and (7)(b), ceases to hold the estate because representation has been granted to another person (cl 205(8)); and
- some, but not all, of the executors or administrators by representation cease to hold office for any reason (cl 205(9)).
2.21 When the Court makes a new grant of representation, the unadministered estate vests in the new appointees (cl 205(2)(b), (3)(b) and (8)(b)). When the Court has not yet made a grant, the unadministered estate vests in the public trustee (cl 205(5)(b) and (7)(b)). Where only some of the administrators or executors by representation cease to hold office, the unadministered estate vests in the remaining office holders (cl 205(9)(b)).
2.22 The above provisions have the effect of vesting in the person to whom the Court has granted representation the unadministered property of any other deceased person of whose estate the deceased was personal representative or administrator or executor by representation.26
2.23 This clause currently has no counterpart in any jurisdiction. The National Committee has recommended it because cl 202, which is based on s 45(3) of the Succession Act 1981 (Qld), only covers situations where a grant of representation is revoked or otherwise ended and does not cover estates held by executors or administrators by representation since they are not subject to a direct grant.27
206 Title relates back
2.24 This clause states that the title of a personal representative in an estate, once vested, dates from the deceased’s death rather than the date of vesting. The doctrine of relation back of title allows a personal representative in whom the estate has subsequently vested to sue in respect of matters occurring between the deceased’s death and the subsequent vesting.
2.25 It is based on s 45(4) of the Succession Act 1981 (Qld) but, unlike s 45(4), which deals only with relation back of the title of administrators, it deals with relation back of the title of executors and of administrators and executors by representation.28 Under the proposed scheme, an executor would normally derive his or her title from the will and the question of relation back would be unnecessary.29 However, the National Committee has added an executor to whom a grant of probate has been made to the list because an executor who may have lacked capacity to act at the deceased’s death, for example, because of age, may obtain a grant of probate upon attaining or recovering the capacity to act.30
2.26 The current NSW provision31 deals with the relation back of title of both executors and administrators simply because, upon the death of the deceased person, property initially vests in the NSW Trustee. This will only be the case in some circumstances under the model legislation.32
207 Role of [public trustee]
2.27 This provision deals with the uncertainty surrounding the nature of the public trustee’s role when an estate vests in the public trustee pending a grant of representation, especially in relation to litigation affecting an estate.33 The issue has been litigated extensively in NSW,34 which does not have a provision setting out the role of the public trustee beyond stating that the estate “shall be deemed to be vested in the NSW Trustee in the same manner and to the same extent as aforetime the personal estate and effects vested in the Ordinary in England”.35
2.28 Sub-clause 207(1), which states that the public trustee is not required to do anything in relation to a deceased estate that vests in him or her by reason of the operation of cl 200, 202, 203 or 205, is based on s 45(6) of the Succession Act 1981 (Qld). This is consistent with the view of the National Committee that the model legislation should not impose any positive obligations on a public trustee to do anything in relation to property that has vested as a result of the provisions in this Chapter.36 The National Committee had previously considered framing a provision that allowed only for a “notional vesting”, but noted that there might be circumstances where a public trustee would need to act, for example, to maintain the estate, especially in emergency situations.37
2.29 Sub-clause 207(2), which provides a legal basis for any acts performed by, or done to, the public trustee, is based on s 45(4A) of the Succession Act 1981 (Qld) but extended to refer to other holders of grants of representation in addition to administrators. The National Committee recommended its inclusion to deal with the uncertainty surrounding the legal status of acts done by, or in relation to, the public trustee before an estate vests in a personal representative.38
FOOTNOTES
1. See cl 206; para 2.24-2.26.
2. In NSW, the reference to the public trustee should now be read as a reference to the NSW Trustee or the NSW Trustee and Guardian: NSW Trustee and Guardian Act 2009 (NSW) s 5.
3. Probate and Administration Act 1898 (NSW) s 61. The Ordinary, or Judge Ordinary, was a judge with original, or “ordinary”, jurisdiction over ecclesiastical matters (including probate matters). The Ordinary was an ecclesiastical judicial function annexed to the office of Bishops in England, who had inherent authority to adjudicate on those ecclesiastical matters that arose in the territory of their diocese.
4. Queensland Law Reform Commission, Administration of Estates of Deceased Persons: Report of the National Committee for Uniform Succession Laws to the Standing Committee of Attorneys General, Report 65 (2009) (“QLRC, Report 65”) [10.48]. Note, especially, the concerns expressed about the trend towards the “commercialisation” of public trustees in some jurisdictions: New South Wales Law Reform Commission, Uniform Succession Laws: Administration of Estates of Deceased Persons, Discussion Paper 42 (1999) (“NSWLRC, DP 42”) [12.25].
5. Queensland Law Reform Commission, The Law Relating to Succession, Report 22 (1978), 30.
6. See cl 200(2)(a).
7. QLRC, Report 65 [10.52]-[10.53].
8. See Chapter 3 part 6; para 3.51; para 3.53-3.56.
9. QLRC, Report 65 [10.54].
10. H A J Ford and W A Lee, Principles of the Law of Trusts (Thomson Reuters online service) [8600].
11. QLRC, Report 65 [10.64]-[10.66].
12. Trusts Act 1973 (Qld) s 16(2).
13. Note that Trustee Act 1925 (NSW) s 9 currently deals with vesting of trust property on the appointment of a new trustee or the retirement of a trustee where there are continuing trustees. Trustee Act 1925 (NSW) s 101 deals with the vesting in a new trustee of trust property that has been vested in the NSW Trustee by virtue of the Probate and Administration Act 1898 (NSW).
14. See H A J Ford and W A Lee, Principles of the Law of Trusts (Thomson Reuters online service) [5080] and [5090].
15. O’Grady v Wilmot [1916] 2 AC 231.
16. Probate and Administration Act 1898 (NSW) s 46B.
17. QLRC, Report 65 [10.164].
18. Succession Act 2006 (NSW) s 75(1), (3), s 76(2)(a) and s 80.
19. QLRC, Report 65 [10.166].
20. For example, where the appointment ceases to have effect under cl 335(2)(c).
21. See cl 200(5); para 2.6. In NSW, these provisions, in relation to real estate, are currently contained in Probate and Administration Act 1898 (NSW) s 45.
22. See Chapter 3 part 8; para 3.148-177.
23. QLRC, Report 65 [10.91] and [10.92].
24. See para 3.160-3.161.
25. Except where the grant ceases to have effect because a court in another jurisdiction endorses a grant in that jurisdiction to effect that the deceased died domiciled in that jurisdiction: see cl 335(2)(c)(i) and QLRC, Report 65 [10.112-10.114].
26. See QLRC, Report 65 [10.102], [10.108], [10.114], [10.117].
27. See QLRC, Report 65 [10.99].
28. QLRC, Report 65 [10.81].
29. QLRC, Report 65 [10.30].
30. QLRC, Report 65 [10.79].
31. Probate and Administration Act 1898 (NSW) s 44(1).
32. See cl 200; para 2.4.
33. QLRC, Report 65 [10.126]-[10.131].
34. See Darrington v Caldbeck (1990) 20 NSWLR 212, 218.
35. Probate and Administration Act 1898 (NSW) s 61. The Ordinary, or Judge Ordinary, was a judge with original, or “ordinary”, jurisdiction over ecclesiastical matters (including probate matters). The Ordinary was an ecclesiastical judicial function annexed to the office of Bishops in England, who had inherent authority to adjudicate on those ecclesiastical matters that arose in the territory of their diocese.
36. QLRC, Report 65 [10.145].
37. NSWLRC, DP 42 [12.26].
38. QLRC, Report 65 [10.146].
