Death and Taxes

As much as we may not wish to think about it, at some point we have to face up to our own mortality. There is a famous saying that there are two certainties in life, Death and Taxes

 

Unlike some countries, Australia doesn’t have a direct inheritance tax on the assets we may leave to our loved ones, or cat charity if that is what takes your fancy. Its your money after all.

 

However, there are some areas where it is important to ensure that you have taken the relevant advice and applied it effectively to ensure that those you leave behind don’t have any additional drama in dealing with your estate. Some of these aspects include

 

  • Wills
  • Distribution of Assets
  • Death Benefit Distributions
  • Pensions
  • Assets Distributed to beneficiaries

 

Due to the ever changing nature of life, a will is not a create and forget document. You will want to revisit it on a fairly regular basis to ensure that it still reflects your circumstances and wishes for what will happen to your assets when you are gone. It is also of vital importance if you would like things like death benefits from your superannuation fund to go to a specific person such as your spouse, or even be spread over several dependents.

 

Also, ensure that you have signed a death benefit nomination form and that it is up to date. Upon your death the trustee of the super fund must comply with this nomination ensuring that the funds go to the person you wish them to.

 

It is also important to understand the difference between dependents and non-dependents in relation to tax treatments of your death benefit distributions. For the purpose dependents include:

 

  • Spouse, de facto (including former)
  • Children, including stepchildren, adopted children and ex-nuptial children, under 18
  • Person’s financially dependent on the deceased
  • Persons in an interdependency relationship

 

Estate planning is complex as in addition to the above, CGT can also have an impact dependent upon the asset you have bequeathed, and so it pays to ensure that you take advice from licensed professionals before you make any binding decisions.