When we buy property or other assets we generally give little or no thought to the legal ownership of that asset. Often we are swept away “in the moment” and don’t consider the various options or legal implications that may arise in the future. No thinks to ask the question, have I purchased in the correct legal structure? Is there a better way?
When a person dies, their assets are transferred to their legal personal representative (LPR) or are acquired by a surviving joint tenant, where the deceased owned those assets as joint tenants with another person. As there is a change of ownership a capital gains tax (CGT) event arises.
In my previous article I mentioned that if you inherit a dwelling and later sell or otherwise dispose of it, you may be exempt from capital gains tax (CGT), depending on when the deceased acquired the property, when they died and whether the property has been used to produce income (such as rent).
This checklist will help you manage the Australian tax affairs of someone who has died. If the deceased person's tax affairs included carrying on a business, you may need to seek further advice from Paris Financial otherwise these are the steps to follow when someone has died:
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 …
Family trusts have many advantages, one of these being the ability to distribute business profits to your children. This is a popular strategy which can be used to reduce your overall tax liabilities at year end.
When we think about estate planning we often believe that if we have prepared a will then we have done enough, or at the very least we have done something!
Death itself does not create a tax liability, however what happens to the assets after you die could result in a tax bill. Creating a will or becoming a beneficiary of one may appear to be more straight than you thought, but the reality is the tax man could take a large bite out of your estate or inheritance.
Long gone are the days of preparing a will and locking it away in the safe or bottom drawer! Whether it be at the completion of this years’ tax return, or when you change the batteries in the smoke detector, every year you should dust off your estate plan and update it for the inevitable changes that most likely will be needed.