Unfortunately, many people will need to manage deceased estates. However, it is possible to be more prepared.
Remember that the law governing the assets and income of a deceased person is largely determined by the state or territory in which they lived at the time they died. This information focuses primarily on tax responsibilities, which are a federal obligation. You may need to consider any state or territory legislation.
What is the estate?
A person’s property and assets, also known as their deceased estate, can include real estate, money from bank accounts, shares and personal possessions. You may also include income from certain sources. Some assets may not be included due to arrangements made by the deceased for distribution or ownership as joint tenants.
The assets of the deceased estate are held in trust by the deceased estate until the death of the individual concerned and the transfer to their beneficiaries, as specified in their will. It can be administered by:
- An executor is a person named in the will of the deceased
- An administrator is a person appointed by the Supreme Court.
The deceased estate may include superannuation or life insurance payments. The payments can be made directly to beneficiaries if the policies have specified beneficiaries.
Being an executor
You will manage the tax affairs of the estate if you are appointed executor or administrator.
- Executing (or executing) the will of the deceased.
- Respecting the applicable inheritance laws where there is no will
This information applies equally to both executors and administrators. They are responsible for managing the estate in the best interests of beneficiaries named in the will or, if there is no will, of the next of kin or any other person as required by law in their state or territory.
The executor takes on the role of the decedent and manages their personal affairs. Executors may perform the following tasks, although they might not always be required:
- Finding the will
- Arranging the funeral
- Apply for probate
- obtaining a death certificate
- Notifying investment bodies of the death – this could include banks, building societies and share registries
- Notifying Centrelink and other government agencies, such as Tax Office
- Locating assets and having their value evaluated
- Paying debts, income taxes and funeral expenses
- Transfer assets and payment of stamp duty
- Distributing the surplus to beneficiaries
Tax responsibilities
Australia generally does not have any death duties. Tax may be due on certain capital or income transactions resulting from a person’s death.
Your tax liability is not affected by any tax liabilities that you may incur as an executor. You should not include income from the deceased person’s estate or deceased person in your tax return, except for income you receive as a beneficiary. Any executor fees charged to the estate may also need to be reported.
