Can I Gift My Inheritance to Someone Else?

Greg Welden — Sat, 25 Mar 2017 22:48:21 +0000

At times, as Estate Specialists, we are asked questions relating to the implications for gifting their inheritance to other family members. One such elderly couple came to us asking if they could gift their share of an inheritance to their daughter.
Obviously this couple had no need for the inheritance and wanted to provide the benefit to someone who would genuinely needs it. The amount involved was said to be about $150,000.
In such a situation it is important that all involved are aware that if they gifted this amount to anyone, including their own daughter, that Centrelink will investigate this gift and assess the couple as owning the money which may (or may not) affect their pension.
Centrelink provisions allow you to gift $10,000 per financial year with a maximum of $30,000 over a five year period.
You are free to gift as much as you like, no one can stop you, however, for Centrelink purposes the transfer of wealth beyond the amounts noted above will be assessable under a means test.
What the article in the Sunday Mail did not say (beyond the standard line of go see a lawyer), is that there are other options available to transfer or gift this wealth which will not affect a pension.
Disclaimer
A disclaimer is an effective waiver of an interest in a deceased estate.
If made too late in the administration of the estate Stamp Duty may actual be payable on the disclaimer (by way of example the disclaimer of $150,000 made too late may attract Stamp Duty of $4,830).
During the early stages of the administration of a deceased estate the executor is still gathering in assets and assessing the extent of liabilities (including tax) that needs to be paid. At this time a beneficiary has no entitlement to any fixed interest other than to demand the due administration of the estate. As such, a disclaimer made at this time will not attract Stamp Duty.
If the executor’s role has morphed into that of being trustee, holding the assets of the estate for the beneficiaries, then a disclaimer made at that time may require Stamp Duty to be paid.
Deed of Family Arrangement
If a more significant disclaimer is warranted, perhaps the Will provides for a life interest in a piece of real estate that the beneficiary does not wish to receive, then a Deed of Family Arrangement could be signed, virtually a contract between all of the people involved, including the executor, to amend or change the terms of the Will.
The Deed will then obligate the executor to act differently in regards to the distribution of the estate however, like above, the Deed may act as a formal disclaimer meaning that Stamp Duty will be payable on the benefit disclaimed.
The Time Machine
The best solution may only be possible by using a time-machine.
If the deceased (whilst still alive of course) prepared a more comprehensive Will which involved one or more Testamentary Trusts then the benefit/gift/inheritance will be found within the trust and as such can be siphoned out to those who may most need it.
Reflecting on the opening scenario discussed in the Sunday Mail the elderly couple should have been named as trustees of a Testamentary Trust of which the $150,000 is funded, being trustees the elderly couple could have determined that their daughter, a class of general beneficiary in the Will, could benefit from the fund and provide it to her – no tax – no stamp duty – no worries.
Conclusion
When dealing with clients intending to achieve certain estate planning goals, one of the major questions we ask is whether there is any inheritance they will likely benefit from (for instance, their own parents). If so, and it is common, Welden & Coluccio Lawyers strongly recommend that our client’s parents also undertake a thorough estate plan.
Quite simply, the wording of the Will of a person’s parents may affect them in more ways than they realise.
To avoid the added stress on families during an already emotional time, it may be wise to meet with an estate planning lawyer at Welden & Coluccio Lawyers to help you draw up a your estate plan.

Probate & The Role of Executor

Greg Welden — Thu, 26 Jan 2017 05:11:57 +0000

“My Great Aunt Edna just died and it seems she has listed me as her sole executor. I’m feeling quite overwhelmed and don’t know where to start.”

When a family member or close friend dies it is normal to feel a whole range of feelings ranging from grief to confusion. The news that you have been named as an executor may come as a surprise (although hopefully not), and will certainly heighten these emotions during what is already a busy time.

As a practicing Wills and Estate Specialist, it is not uncommon for me to receive telephone calls from next of kin on the very day that their beloved has died. At this time I like to reassure them that the important thing to do at this point is to spend time with family and friends, make funeral arrangements and (above all) celebrate the life of their loved one. Once the dust has settled, usually a few weeks down the track, is generally the best time to make an appointment to meet with a solicitor experienced in the management of Wills and Estates to discuss what needs to be done.

When a person dies they usually leave behind a Will that specifies what is to happen to their assets upon their death and who are executors – the person (or people) whose role it is to secure and distribute assets of the deceased and ensure the terms of the Will are carried out lawfully.

“What is my job as executor?”

An executor has many important duties when acting on behalf of the estate of the deceased person. They include notifying banks and other organisations identifying who the beneficiaries of the estate are and determining what their entitlements are, paying the liabilities of the deceased and any estate claims (from the value of assets held by the estate) and most importantly obtaining the grant of Probate from the Supreme Court of South Australia (or in another State).

“I’ve heard of Probate but I don’t really know what this is or what it entails on my behalf.”

A grant is the official recognition by the Supreme Court of what document or documents constitute the last Will and the right of the personal representative named to administer the estate of a deceased person.

There are two types of grants: Grants of Probate and Grants of Letters of Administration.

Grants of Letters of Administration are needed where there is no Will or the executor who has been appointed is not able to act for some reason.

All applications for grants must be in accordance with the Rules of Court which govern who is entitled to a grant and the manner in which the application must be made.

“When will I need to do this?”

Whether a grant is needed will depend on the assets of the estate. For example, a bank holding money belonging to the deceased will need to know who that money should be paid and the grant is proof that the person named (executor or administrator) is the person entitled to collect the money on behalf of the estate.

If the deceased owned a substantial number of shares in a company, the company will usually insist on seeing the grant before it will transfer them.

A grant will be required if the deceased owned a house in his or her own nameor held an interest with another party as tenant in common. The Lands Titles Registration Office will not transfer land to another person without a grant. However, real estate owned by the deceased as a joint tenant with another person cannot and will not form the subject of a grant or part of the deceased estate as the surviving joint tenant(s) are automatically entitled to the property.

On the other hand if the deceased had very minimal assets it may not be necessary for the executor or administrator to apply for Probate.

“Wow, now I’m really feeling overwhelmed. What else do I need to know about this process?”

Yes, the process for apply to the Probate Registry seeking a grant of probate or Administration is very complicated and difficult for most lay people. The application may become even more difficult if;

the validity of the last Will is in question,
there is uncertainty as to what constitutes the last Will
the intended last Will has been completed incorrectly (undated or signed wrong).

The list is endless. These problems may create significant delays in dealing with estate assets and finalising the role of the executor. For these reasons, it is always recommended that you speak to a solicitor concerning the Will of a deceased especially if you are named as an executor. Of course the good news is, that in the hands of a Wills and Estate Specialist, this process should seem relatively straightforward from where you stand.