Estate Planning & Wills Newsletter – November 2015
Published on November 12, 2015 by Josephine Heesh and Patricia Monemvasitis
Welcome to the November issue of our Newsletter.
In this issue we include:
An article on intestate administration and determination of the order of death amidst the tragic circumstances in Trustee and Guardian v State of New South Wales [2015] NSWCA 1121.
Some principles concerning land tax and capital gains tax in estates administration.
A brief review of the continued relevance of the test for testamentary capacity.
We trust you will find the material useful and interesting.
The Carroll & O’Dea Wills, Estates, Trusts and Superannuation Law Team
Intestate administration and order of deaths: the tragic circumstances in NSW Trustee and Guardian v State of New South Wales [2015] NSWCA 1121
This was a case arising out of the tragic death of both mother and a son who died under unclear circumstances in their shared home on or around 18 September 2005. Both died intestate without immediate family – the only family in Australia being a niece of the mother (cousin of the son), and possible but unconfirmed relatives in Egypt, including siblings of the mother.
Neither the mother nor the son left Wills.
The Court was asked to determine the order of the deaths in relation to the application of the relevant statutory provisions being 61A-61F of the Wills, Probate and Administration Act 1898 (NSW) (“WPAA” or “the Act”). As the son had no relevant beneficiary relatives under the Act (cousins not being a listed beneficiary under Section 61B WPAA), his estate would have gone to the State of New South Wales if it was deemed that his mother had died first and therefore it could not have first passed to her.
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Authors: Patricia Monemvasitis & Kim Leontiev
Oh Those Deadly Taxes!
It can be a surprise for executors and beneficiaries, that the issue of tax is raised when administering the assets of the estate. Many clients tend to assume that all the assets upon transfer to a beneficiary are exempt from many forms of tax such as stamp duty, land tax, capital gains tax (CGT) and GST. This is not the case.
Land Tax
On death of an owner, the rule is that where a parcel of land is eligible for the principal place of residence exemption under Clause 9 of Schedule 1A of the Land Tax Management Act 1956 (NSW) (LTMA), then unless the land is generating income from rent, an executor is allowed 2 years from the date of death of the deceased within which to sell the principal place of residence or to transfer it in specie to the beneficiaries, to avoid that real estate attracting land tax in the hand of the executor.
After 2 years, if the property is gifted to the beneficiaries, the beneficiaries would need to occupy it as their principal place of residence for the real estate to retain exemption from land tax liability. Equally, if the Will allows a right of residency to any person, then the exemption continues during the residency period. If the property is not used as the principal place of residence, then the exemption is lost from the date income is generated from the use of the property.
If the land was formerly treated by the deceased as only partially their principal place of residence, then, the non residential part that would not be exempt, unless the deceased secured another exemption, for example the primary production exemption, for that part.
Author: Josephine Heesh
Testamentary Capacity – an old rule continues to hold true
Wills have always been changed and updated as circumstances in life change, but with increasing longevity and a significant elderly population, there are more and more wills being executed and altered late in life when illnesses or cognitive disabilities including Alzheimer’s or dementia may be affecting the testator’s capacity. Capacity is also a fundamental issue to address when appointments of enduring power of attorney and superannuation binding death benefit nominations are being made.
Authors: Josephine Heesh & Kim Leontiev
