The two certainties: death and taxes
There are two unfortunate certainties in life; death and taxes. And, unfortunately, tax cannot be avoided (legitimately) even by dying.
Australia is one of the very few countries in the world that has no death taxes. However, although there is no tax levied on the property of a deceased person, there may be tax consequences flowing from the dealings with the deceased assets.
This blog outlines some of the key considerations you must address.
The deceased estate
When a person dies, an executor or administrator takes control of their assets. The executor named under the (valid) Will is known as the legal representative. An administrator is appointed by the probate court when a will does not exist.
A deceased estate is not a separate legal entity but a relationship between the executor/administrator and the beneficiaries – much like a trust. The deceased estate would comprise of all assets owned by the deceased as at the date of death – except for any assets owned as joint tenants, superannuation and any assets held in a discretionary trust.
A Will covers matters such as how the assets should be shared amongst family members and other beneficiaries, trusts to be established subsequent to death, bequests to charities and institutions and funeral instructions.
A Will is a legal document and therefore should be drafted by a lawyer preferably one who practices in the area of Wills and Probate and has tax knowledge – or at least a lawyer who would work in conjunction with an accountant who is familiar with the tax treatment of such estates.
What if you don’t have a will?
If you die intestate, the Supreme Court will decide who will be your administered and who will benefit from your estate. Dying intestate creates a lot more work, cost and stress for the people you leave behind. It also might result in people benefiting from your estate who you don’t want to benefit. Therefore, for the sake of a relatively small cost and to ease some of the stress on your family, it is always best to have a valid and up-to-date will.
If you’re a single and have little assets and no special beneficiaries, a cheap will kit will probably sufficive. However, if you have any significant assets or liability, children, a spouse and so on, you really need personalised legal advice.
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IMPORTANT: This podcast provides general information about finance, taxes, and credit. This means that the content does not consider your specific objectives, financial situation, or needs. It is crucial for you to assess whether the information is suitable for your circumstances before taking any actions based on it. If you find yourself uncertain about the relevance or your specific needs, it is advisable to seek advice from a licensed and trustworthy professional.
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