When A Creditor Wants Control

13 MAY 2025 ESTATE DISPUTES
When A Creditor Wants Control

A recent case in the NSW Supreme Court displayed the challenges which arise when a person dies without a will. When a person dies without a will, they are said to have died intestate. When this happens, someone needs to be appointed to manage and distribute their estate. This person is called an administrator. The law prioritises specific family members including the spouse and the children of the deceased to be appointed an administrator. Dean passed away in November 2019, without a will. His estate had a net value of $250,000. Dean had four children who were to receive his estate. They were not applying to be administrators. Instead, his mother, Janice, applied to the Court to be the administrator. She applied as a creditor. This means she claimed that the estate owed her money. Under the Probate and Administration Act 1898 section 63, the law would prefer to appoint Dean's spouse or his children as administrator rather than a creditor. This is due to a conflict of interest. The Court said that a creditor's main interest is to recover the amount they are owed from the estate. However, an administrator's duty is to manage the estate for the benefit of the beneficiaries. This would put Janice, as both a creditor and the proposed administrator, in a position of competing interests. The Court decided that a creditor's claim to be administrator, although weaker than the children's, is still valid. This is because the children were reluctant to become administrators. The Court noted that it could have appointed an independent administrator to avoid these conflicts of interest, but the estate was too small to justify the costs. Janice was appointed administrator of the estate but with conditions to manage the conflicts of interest. The orders stated that Janice must not distribute the estate without approval from the Court or Dean's children. She was also required to keep Dean's children informed about the administration regularly. Crucially, she was to provide 21 days' notice to Dean's children before paying or settling any claim against the estate, including her own. This case shows the difficulties that can arise when administering an estate with no will, especially when family members are not cooperative. It demonstrates the value of having a will. This saves the time of all parties involved.