When a person dies assets can be sold by the estate or passed on in-specie to beneficiaries, depending on the terms of the Will and/or decisions made by the executor.
Tax implications can arise from either a sale or a transfer of assets to a beneficiary. When a person is deciding which beneficiaries are to receive which assets the tax implications (including capital gains tax - CGT) are important to consider to determine whether:
- The tax liabilities are passed onto the beneficiary with the asset
- The estate needs to pay any tax liability, or
- The asset is tax exempt
Clients should always be advised to seek individual tax advice when drafting a will.
Executors may also need to seek advice when administering the estate to ensure they have correctly discharged their obligations to the Tax Office as the executor can be liable for any shortfalls or tax obligations of the estate which are not paid.
The ATO has issued Practical Compliance Guide 2018/4 on the liabilities of a Legal Personal Representative.
The information contained in this publication is based on the understanding KeyInvest (ABN 74 087 649 474 AFSL No. 240667) has of the relevant Australian legislation as at the date shown in this publication.
The information contained in this publication is of a general nature only and is intended for use by financial advisers and other licensed professionals only. It must not be handed to clients for their keeping nor can any copies of sections of this publication be given to clients. KeyInvest is not a registered tax agent under the Tax Agent Services Act 2009. We recommend that your client be referred to their registered tax agent or legal adviser prior to implementing any recommendations that you may make based on the information contained in this publication.