When Probate is necessary
An executor is personally liable for the payment of the funeral expenses and debts of the deceased, up to the value of the estate. The executor is also personally liable to the beneficiaries for payment of their entitlement (up to the value of the estate and after debts and funeral expenses are accounted for).
In NSW, estates involving real estate or large amounts of money must have sealed Probate orders or Letters of Administration from the Supreme Court of NSW before the assets can be distributed.
However not all estates must involve the courts. It is possible for the executor of a small estate (eg perhaps where the only assets are a small bank account), to distribute the assets (after debts of the deceased and funeral expenses are accounted for) to the relevant beneficiaries pursuant to the Will of the deceased.
An executor who chooses to proceed to distribution without involving the courts needs to be aware that there is a significant disadvantage when it comes to liability. Essentially the court probate process provides an Executor with protection from liability for claims. Therefore an Executor who chooses not to obtain probate may be exposed to greater risks of being sued by disgruntled potential beneficiaries or unpaid creditors of the estate.