May 18, 2017 Steve Wildes

Estate Planning & Land Tax

Steve Wildes

Steve Wildes

Partner
Steve Wildes has years of small business tax experience and is adept with Estate Planning matters, bringing a practical approach to dealing with family wealth protection and succession.

Deceased estates and Stamp duty

The transfer of property in accordance with the terms of a will or codicil is subject to stamp duty unless an exemption is available and section 42 of the Duties Act in Victoria exempts certain transfers of dutiable property where the transfer is by the legal personal representative of a deceased person (the executor) to a beneficiary and is not made for valuable consideration as long as the transfer of dutiable property is made under, and conforms strictly with, the trusts contained in the will of the deceased person.

No duty needs to be paid on a Joint Tenant survivorship application, however, you do need to complete a notice of acquisition for land tax purposes and lodge this with the Land Registry, together with your transfer of land.

Life estates and estates in remainder

A life estate is one type of freehold estate arising by grant or operation of law for the benefit of a person for the rest of their life. The key difference between an estate in fee simple and a life interest is that the life interest exists for the duration of the person’s life whereas a freehold estate is not limited in duration. Life estates and estates in remainder are dutiable property under the Act and as such a transfer of an existing life estate or estate in remainder will be liable to duty since it is considered to be a change in beneficial ownership.

Life estates are most commonly created by will and need to be distinguished from a ‘right to reside’ granted under a will.

Testamentary trusts

A testamentary trust is a trust which is specified in the testator’s will and arises on their death. The trustee(s) holds the property in accordance with the terms of the testamentary trust for specified beneficiaries and at some future time, the trustee will distribute the property to those beneficiaries.

Where a testator leaves dutiable property to the trustee(s) of a testamentary trust, there will, in effect, be two dutiable transfers of property:

  1. From the deceased estate, i.e. from the executor of the will, to the trustee of the testamentary trust (the first transfer), and
  2. From the trust at a future date, i.e. from the trustee of the testamentary trust, to the beneficiaries of that trust (the second transfer)

We will treat the first transfer as if it were a transfer to a beneficiary, so long as the transfer conforms to the trust(s) contained in the will of the deceased person and is not for valuable consideration. As such, it will be exempt from duty. The second transfer may be dutiable.

Where the will states the executor and the trustee of testamentary trust are the same person, the executor’s role changes to that of the trustee of the testamentary trust when administration of the estate is complete. In this instance, there are no duty implications.

Steve Wildes, Partner, Paris Financial

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Steve Wildes

Steve Wildes

Partner
Steve Wildes has years of small business tax experience and is adept with Estate Planning matters, bringing a practical approach to dealing with family wealth protection and succession.

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