Tax Pain Points in the Estate Plan – recorded online conference

Session 1: Tax Aspects of the Executor’s Role (and the Impatient Beneficiary)

Acting as an executor of a deceased estate is not without its challenges. Time limits, complex tax matters to address and the various personalities benefitting from the legacy can significantly increase the stress levels for most. This session focuses on the tax related aspects of the executor role, and provides an understanding of why the process requires a certain amount of time and patience, including:

• The time limits an executor should be mindful of
• How to access a deceased person’s tax and super data
• The tax obligations of executors and beneficiaries during the various stages of administration of a deceased estate (IT 2622)
• What are the executor obligations if the deceased:
  • operated a business as a sole trader?
  • was a partner in a business?
• Action to take if further assets are identified that haven’t had their tax implications disclosed in previous income tax returns
• When can the executor be personally liable for outstanding tax liabilities of the deceased or their estate? (PCG 2018/4)
• A checklist to cover ATO interaction, notifications and lodgements required
• Practical examples of providing for tax liabilities, including:
  • when a beneficiary is a non-resident
  • when a super death benefit is received

Session 2: Estate Planning and the Family Home: The Tax Imperatives

A willmaker may sometimes see the need to look further than having their assets realised or transferred to intended beneficiaries. Peace of mind may be gained by ensuring that an ongoing roof over a beneficiary’s head is more important than providing an upfront legacy. This session looks into how the plan can be achieved and the tax implications of doing so as detailed in TR 2006/14, including:

• The difference between a life and remainder interest in property held on trust, a legal life and remainder interest and a right to reside
• What are the CGT consequences of creating a life and remainder interest in property on trust for:
  • the original owner?
  • the trustee?
  • the life and remainder owners?
• What if beneficiaries of a will agree to realise the property originally intended to be applied to life and remainder interests?
• What are the CGT consequences on the death of the life interest owner?
• Does PS LA 2003/12 apply to property transferred to remainder beneficiaries on the death of a life interest owner?
• Pros and cons of establishing life and remainder interests in property inter vivos or via a will
• Strategies for providing a lifetime roof over the head of a beneficiary
• Case study – parents subdividing to demolish home and build two units, one for them and one for a roof over the head of one of two siblings

Session 3: Disputes Against Estates: The Tax Issues

Combine the increasing size of estates, the death of a loved one, varying personalities, different perceptions as to entitlement and many other ingredients and you get a likelihood that disputes against an estate will likely occur while finalising an estate. This session looks at the tax issues that can arise, including:

• Does a challenge to a will affect the safe harbour approach to extend the two year period to dispose of a dwelling? (PCG 2019/5)
• Can an asset passed to a beneficiary have the CGT event disregarded where a deed of arrangement has been entered into?
• What are the implications of CGT assets passing to beneficiaries not in portions that are in accordance with the will?
• The altering tax rates applicable to a deceased estate from a drawn out dispute
• Cases involving beneficiary loan accounts and estate disputes, including:
  • Clark v Inglis [2010] 79 ATR 447
  • Fischer v Nemeske Pty Ltd [2016] HCA 11
• Are there any state and territory duty exemptions and if so, when can they be compromised?
• Case studies