In the event of the death of a person, their property (including real estate and financials) is distributed among the beneficiaries. The Law of Succession in Australia deals with the distribution of property from a deceased’s estate. And, the Supreme Court of each State and Territory has the jurisdiction to deal with all matters concerning succession.
The primary objective of laws pertaining to wills and estates is to ensure that the deceased property is distributed according to the wishes of the deceased person. This is to avoid the risk of fraud and to minimise mismanagement. The Sydney-based estate lawyers at Owen Hodge Lawyers are here to help you begin dealing with a deceased estate.
What is a deceased estate?
A deceased estate consists of all of the property, assets, liabilities, and debts that belonged to the person when they died.
Distribution of a deceased estate
In the instance that someone dies without a Will or a named executor, the estate must first go through the process of probate so that someone can be named to distribute the assets via the intestacy law.
Hence, a grant of Letters of Administration must be obtained from the court. Once this letter is obtained, and an executor is named, the assets of the deceased can be distributed in accordance with the laws of intestacy.
Administration of the deceased estate
The personal representatives are assigned the responsibility to deal with administering a deceased estate. In many instances, the executors of the will have been nominated in the will of the deceased. The Supreme Court can also appoint an administrator to deal with the deceased estate in situations where there is no valid will, or the person nominated to be the executor is unable to discharge his duties.
Beneficiaries
The beneficiaries of an estate are determined via a Will, hence the assets in the deceased estate are distributed to the various beneficiaries in the administration of the deceased estate.
In the absence of a Will, the beneficiaries of your estate will be determined by the law and hence will distribute the assets in the order presented below:
- Spouse
- Children and Grandchildren
- Parents
- Siblings
- Grandparents
- Aunts and Uncles
- Cousins
- The State
Grant of probate
Again, the Will must go to probate. However, under these circumstances, it is merely for the Will to be found valid and allow for the named executor to begin properly distributing the assets. This is called receiving a Grant to Probate. From this point forward, the assets can be distributed.
Administration of intestate estate without a will
Intestacy may occur in case you die without a Will or the Will fails to properly dispose of all the assets of the estate or the Will is invalid because it has not been signed and witnessed as per the legal requirements. Generally, in every State, the assets are distributed according to a predetermined formula with certain family members receiving a defined percentage of the assets.
In the instance that someone dies without a Will or a named executor, the estate must first go through the process of probate so that someone can be named to distribute the assets via the intestacy laws.
The Succession Act 2006 (New South Wales Consolidated Acts) (the Act) provides the Order and the pre-decided formula in which the eligible relatives of an intestate inherit the deceased’s estate. In case there are no eligible relatives of the intestate, the State takes over the estate. Section 103 of the Act provides that a person is entitled to his/her share from the deceased’s estate only after the funeral, administration expenses and liabilities of the deceased have been paid off.
How long can a deceased estate live?
The three-year rule applies if there is no named beneficiary for the property. In this case, the property will remain with the executor and taxes will need to continue to be paid on the property per the current tax laws. During this time, it will be important for a decision to be made regarding the distribution of the property. If no decision is made, the tax rates will change after the three-year period expires.
Paying tax on a deceased estate
When selling a deceased property, there can also be tax implications. These issues can be complex and, as such, it is highly recommended executors seek advice from a lawyer or accountant. You can also learn more about these taxes from the Australian Tax Office.
When selling deceased property, the types of taxes that could be due include:
- Capital Gains Tax (CGT)
In its simplest form, Capital Gains Tax is paid when the beneficiary sells the property. Hence, once the executor has completed the sale of the property, the CGT will become due out of the proceeds of the sale. Subsequently, the balance of the monies can be distributed to the rightful beneficiaries.
- Inheritance Tax
As Australia does not have an inheritance tax, this issue need not be confronted. However, it is possible that other tax issues could arise and, as such, it is important to be aware of those that might apply in each specific situation.
Making a claim against a will
A person can transfer their estate to whosoever they wish (through their Last Will and Testament), but the freedom of disposition of an estate is partly true.
In some cases, family provision legislation seeks to rectify injustice caused by any Will. The amended Succession Act, 2006 (NSW) (“the Act”), which came into force on 1 March 2009, significantly extended the range of people capable of making claims against a Will. Family members can contest a will and legislation provides that there are six “eligible persons” who can make family provision claims.
A claim should be made soon after the death and before the assets in the deceased estate are distributed to various beneficiaries provided in the Will. The 2009 amendment to the Succession Act 2006 reduced the period of bringing a family provision claim from 18 months to 12 months from the date of expiry of the testator. However, the time period for contesting a Will varies from one State to another.
Turn to the experienced lawyers at Owen Hodge
You only have one chance to get your Will or Estate Planning right. Once you have passed away, the Will cannot be changed without the intervention of the Supreme Court. Furthermore, the legal fees associated with contesting a Will far outweigh the cost of seeing your solicitor early on. It is therefore important that you get it right the first time.
Contact our Will and estate lawyers at Owen Hodge today for a cost-effective solution to your estate planning. We also have experienced Power of Attorney lawyers and can assist with any other matters regarding deceased estates, grant of probate, letters of administration, and estate law. Contact us online or schedule a consultation now at 1800 770 780.
FAQs
If you’re dealing with a deceased estate, the administration process will typically include:
- Find out whether the deceased has a will
- Arrange a funeral for the deceased
- Acquire the death certificate
- Obtain details on personal assets
- Apply for a Grant of Probate (only if required)
- Obtain Letters of Administration
- Gather the deceased’s assets and ensure debts are discharged
- Issue the estate assets to each beneficiary
The process of settling a deceased estate can take anywhere from 6 to 9 months. However, this can sometimes take longer, depending on the complexity of the situation.
According to the ATO in Australia, you must lodge a trust tax return in the same year if these apply to you:
- The deceased estate’s income is more than the tax-free threshold for individuals.
- A beneficiary is listed to receive any of the deceased estate’s income in that income year.
- A beneficiary listed on the estate is not an Australian tax resident.
In most cases, executors and beneficiaries of the will do not need probate when an asset has less value than $50,000.