Understanding the Risks: Payments to Families Without Probate

This is a question we frequently receive, and it’s a crucial one for operators to consider carefully. While operators generally have the option to require probate before making a payment—an option typically outlined in residence contracts (and, in Queensland, supported by legislation)—it can sometimes be difficult to justify the time and expense. This is especially true when the exit entitlement is the sole asset of an estate and the operator has a good relationship with the family. This raises the question: “Is it necessary to require probate in every case?”

The answer depends largely on an operator’s risk appetite and management approach. Some operators choose to take a more pragmatic stance. While this approach can work, it is essential that such decisions are made with a clear understanding of the potential risks involved.

Why does probate matter?

When probate is granted, it provides legal certainty. Probate is essentially a Court’s confirmation that a will is valid and that the executor is authorised to deal with the deceased’s estate. If you, as an operator, make a payment pursuant to probate, it serves as a complete defence against claims of incorrect payments. For example, if a more recent will surfaces or a dispute arises, you are protected by relying on the probate document.

Without probate, however, you may face significant risks:

• Risk of Misrepresentation: The person claiming to be the executor or beneficiary might not actually have the legal authority. This could occur if there is a more recent will or other complexities within the estate.
• Double Payment: If you pay the wrong party, you could later be required to make a second payment to the correct party, effectively doubling your liability.

How can these risks be mitigated?

While requiring probate is the gold standard for mitigating risk, there are practical steps you can take in cases where probate is not provided:

1. Request Payment to an Estate Bank Account: This provides some assurance, as banks typically perform an identification process before allowing an account to be opened in the name of an estate.
2. Pay Funds to a Solicitor’s Trust Account: By transferring funds to a solicitor, you shift the responsibility for correct payment to the legal professional.
3. Enter into a Deed: A deed formalises the transaction and includes clear representations and obligations regarding the payment. This can provide a level of legal recourse if issues arise.
4. Obtain Certified Copies of Key Documents: Request certified copies of the will, death certificate, and relevant bank statements. While not foolproof, this due diligence helps verify the legitimacy of the claim.

Practical considerations for operators

We understand that in some cases, families may be under financial pressure, and the probate process can be time-consuming. However, balancing compassion with legal prudence is essential. By implementing these risk-mitigation strategies, you can protect your organisation while still providing support to families during a challenging time.

Need further guidance?

This is a complex area with significant legal implications. If you have questions or require assistance in implementing these practices, feel free to reach out to us. Our goal is to help you navigate these situations with confidence and care.

This article is not legal advice and does not take into account your specific situation. If you would like advice, please contact us on 1300 DSL Law.