Who Pays the Funeral Costs?
According to Greek mythology, to be properly buried, a coin called an obol needed to be placed under the deceased’s tongue. This would then be presented to Charon (the ferryman of the River Styx) as payment for the crossing of the river. The entrance to Hades, the underworld, was on the other side of the river. If you were not buried with an obol under your tongue you were destined to wander the banks of the Styx until you found the paupers entrance to Hades.
So, who pays the ferryman in New Zealand? The answer it seems is your executor — if there are assets in your estate.
The High Court has considered the following situation:
Mr V had died and the Public Trustee had been appointed as the executor of his estate. Mrs V made the funeral arrangements and asked the funeral directors to forward the account for the costs of the funeral to the Public Trustee.
The Public Trustee was then faced with the problem that the only asset in Mr V's estate was a one third share of the house that he shared with Mrs V. There were no cash assets or any other assets in the estate, from which it could pay the account.
The account was not paid and the funeral directors brought proceedings in the District Court to recover payment either from Mrs V (who had arranged the funeral) or the Public Trustee as executor. The funeral directors were successful, with the Public Trustee being found liable to pay the account.
The Public Trustee appealed the decision, questioning whether they should be required to pay when there was no money available, and the only asset in the estate was a share of the house. Everybody agreed that Mrs V was not at fault and was not liable. The question for the High Court on appeal was whether in the circumstances, the Public Trustee could also escape liability.
In the High Court it was held that where there were assets in the Estate, (even if not in money form), the executor was liable to pay. The Public Trustee, (or any executor) had the power to realise the assets or raise a loan against the assets to pay if necessary, although it was clear that it was not going to happen in this case. The Public Trustee had to pay the account from its own funds.
It is still unclear whether an executor will be personally liable for costs where the estate has no assets. In fact the Judge in this case was careful not to answer that question or a number of others that were posed, including the liability of executors to dispose of the body of the deceased.
The moral of this story is — be aware of your obligations as an executor. If you are appointed as an executor, be sure to consult with a solicitor before undertaking any action on behalf of the estate, including making funeral arrangements, especially if there is doubt about the estate's ability to pay for the funeral. Be careful — for it may be you that is liable to pay the ferryman.
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