By Phillip Mortimer

Apparently, the only certainties in life are death and taxes. One of these is inevitable but the other can be managed with careful consideration. We can’t help you avoid death but we can reduce your trauma of dealing with a difficult time. We are here to help prepare for and deal with a death in the family.

Once the funeral is over and the final goodbyes have been said the focus will turn to dealing with the deceased’s estate. Today we outline the important things you need to consider when dealing with a deceased estate.

Wills

Hopefully, there is a recent Will available. We cannot stress enough the need for all those with a family or in business to have a current Will. A binding Will sets the agenda in dealing with your worldly goods as you wish. Please engage a good solicitor to assist in preparing the Will. They will know all the various legal difficulties that can occur when death calls. This will also reduce immensely the stress for those you leave behind.

The Death Certificate

With every estate there will be the necessary paperwork to deal with. The first document to attend to is a Death Certificate. This is issued to the next-of-kin and usually arranged by the funeral director. This may take 2-3 weeks before it is available and, in the case where there is an autopsy or coronial enquiry of any kind, it may take up to 6-8 weeks.

Probate

Probate is a legal process that is sometimes required to validate a deceased person’s Will and confirm the executor(s). The executor is the person responsible for administering the deceased person’s estate, ensuring debts are paid and remaining assets are distributed. If there is no Will, then applying to the court for letters of administration may be required to appoint an executor. When a couple owns a house together as Joint Tenants, Probate is not required when transferring to the surviving spouse.

Tax

As to the tax man, there are certain rules regarding a deceased estate. In the year of a death two tax returns may be required to be submitted. The first an individual tax return up until the date of death. The second a trust return for the estate from date of death until the end of the financial year and this will be treated as if it were an individual for tax owing but without the Medicare Levy. For two financial years following the year of death if there is income and capital gains of the estate these will continue to be treated this way. Though I’m not wanting to sound disrespectful, for some, this can be a handy tax planning tool over this period.

For the beneficiaries where an asset has been willed the cost base will carry forward if purchased after 20 September 1985. If the asset was purchased prior to this date then the cost base will be the value of the asset as at date of death. This information will need to be recorded for when sold in the future.

If assets aren’t specified to be willed to a beneficiary once they are sold capital gains tax may be applied to the estate. This will depend on the date of purchase.

The family home will be tax free if sold within two years after date of death.

Superannuation

Superannuation, as always, has its peculiarities. It does not automatically form part of a deceased estate so it needs be dealt with via the Will or Binding Death Benefits Nomination (BDBN) held by the superannuation fund. If the deceased is a member of a self-managed superannuation fund (SMSF) the trust deed will also include instructions with dealing with a member’s balance upon death. To avoid one document conflicting with another, take the time to review these when preparing your Will.

If the superannuation balance is going to a financial dependent, such as a spouse or child under 18, then there may not be any tax implications. To a spouse it may even be transferred to their superannuation balance. Again, the correct documentation to allow this needs to be in place.

If superannuation is going to non-financial beneficiaries, such as adult children, then tax may apply. When passed to such a beneficiary the portion which had previously been taxed within the superannuation fund will be added to their taxable income the year they receive it. A 15% percent tax offset will then apply but a tax bill to the beneficiary is the most likely outcome.

Residential Aged Care

For those who were in an aged residential care facility any refundable accommodation bond (RAD) can only be paid back to the estate. The facility has within 14 days after receiving probate or letters of administration to refund the RAD.

As you can see there is much to consider before we shuffle off this mortal coil. In a perfect world you will have the time to get your things in order but that may not always be the case. We are here to help prepare your affairs before your time has come and helping those you leave behind to sort your legacy. And we will even make sure we put the kettle on and have a box of tissues handy.

A Coffee With... Don Boyle

We asked Don Boyle to join us for our Coffee With… series for this month. Farmer in Broomehill, gun shearer, stalwart of the wool industry.

Don sat down with one of our Managers, Amy Sims, and our Receptionist, Kate Wilson (who also happens to be his granddaughter) to tell us his story.

2022 Federal Budget

With the first post-pandemic Federal Budget handed down last week, Tom and Kym took a dive into the details in a live webinar. Together they did the research so that you didn’t have to.

Head over to our Business Resources page to grab a copy of our Federal Budget information Guide or to watch the recording of our webinar.

Lincolns Lappers at the MSWA Albany Swim

Huge congratulations to our swim team, “Lincolns Lappers”.

On Saturday 15 May the team swam 965 laps in 8 hours in the 2021 MSWA Albany Swim. They raised $1,943 towards the grand total of $34k at this year’s event!!! Thank you to everyone who donated, jumped in and swam some laps AND those that came down to cheer us on. See you next year.

Death and Taxes