Tax Aspects of Estate Planning – a series of 5 on-demand video webinars

Program 1: Trust Deed Powers and the Tax Consequences

Part of your estate planning may include considering changes to your trust, such as who are to perform the roles of trustee, appointor and guardian in the future. However, doing so without actually having the power to do so can result in nasty tax consequences and disputes down the track. This session aims to assist in ensuring you are acting within your capacity, including covering the following:

• What powers do the various roles have?
• The importance of reading the specific deed
• Changing roles of trustee, appointor and guardian:
  • when can changes be included in the will?
  • when is it prudent to make changes prior to death?
  • what if an Appointor is incapacitated?
• Will the succeeding Appointor protect beneficiaries?
• Are the proposed changes matching your intention of who is to control the trust?
• When is a deed of variation legally valid?
• The tax consequences of getting it wrong, including:
  • invalid resolutions
  • potential for section 99A to apply
  • trust losses and the control test
• Resettlement issues to consider (TD 2012/21)
• Cases where disputes can arise, including:
  • Mercanti v Mercanti [2016] WASCA 206
  • Owies Family Trust [2020]VSC 716

Program 2: Testamentary Trusts and Minors: Are Favourable Tax Rates Now Out of Reach?

As a result of recent legislative reforms, only the income derived by a testamentary trust from assets directly sourced from a deceased estate will be eligible to have concessional rates of tax apply. This session will assist in your understanding of the implications of this law change, including:

• What is the new definition of excepted trust income?
• What are the benefits of having income defined as excepted trust income?
• How does acquiring assets using borrowed money in a testamentary trust affect the calculation of excepted trust income?
• What if my testamentary trust:
  • already has assets not directly sourced from the deceased estate?
  • derives income from assets held in the testamentary trust prior to 1 July 2019?
• How do the rules apply for dividend reinvestments?
• First partner dies leaving a testamentary trust. Second partner subsequently dies leaving assets to TT set up under partner’s will. What are the issues to consider?
• Case studies

Program 3: Main Residence CGT Exemption: Deceased Estates

It is well known that a CGT main residence exemption applies to the family home. However, throw in a deceased estate and all of a sudden complexities emerge. This session will aid your understanding of the rules for dwellings and deceased estates, including:

• When can the main residence exemption still apply on the sale of a dwelling previously owned by the deceased?
• The Commissioner’s concession to extend the two year period under PCG 2019/5, including:
  • the safe harbour approach
  • applying for Commissioner’s discretion
  • worked examples for both of the above
• What if a surviving joint tenant sells the dwelling?
• Main residence exemption and foreign resident beneficiaries
• Treatment where a right to occupy is included in the will (ATO ID 2004/882)
• Case studies, including the life cycle of a pre 20/9/85 jointly owned dwelling eventually being sold by beneficiaries of the most recently deceased’s estate

Program 4: Tax Effective Dealing of Superannuation as Part of the Estate Plan

As superannuation is increasingly becoming a substantial amount of a person’s net worth, it is important that it be given a high priority in the estate planning process. This session examines the key issues, with a focus on the tax effective use of superannuation proceeds trusts. It covers:

• The tax consequences of paying out superannuation (dependants/non dependants)
• When is it beneficial to consider a superannuation proceeds trust?
• Does it matter if superannuation proceeds go via the deceased estate to a superannuation proceeds trust under a will or direct from a superannuation fund?
• What are the tax benefits?
• Have the changes in section 102AG ITAA 1936 had an effect on superannuation proceeds trusts?
• Does it make a difference if the death benefit is coming from an SMSF or an industry fund?
• How does the binding death benefit nomination fit in if the intention is to set up a superannuation proceeds trust?
• Case studies

Program 5: The Deceased Estate: Who Pays the Tax

During the stages of administration of a deceased estate, a beneficiary may become presently entitled to the income. It is important to recognize this to determine who is responsible for the payment of income tax on that income. This session covers the various stages of administration, including:

• Can a beneficiary be presently entitled to estate income prior to the estate being fully administered?
• What if payments of income are paid to the beneficiaries whilst the estate is in administration?
• When is a deceased estate fully administered?
• Does the estate have to be wound up for beneficiaries to be presently entitled to the income?
• How is the income of a deceased estate taxed in the financial year it is fully administered (IT 2622)?
• Deceased estates and CGT assets (TR 2004/D25):
  • when does a beneficiary have absolute entitlement
  • CGT event E5 and the Division 128 exclusion
  • the fungible asset test
  • worked examples
• The taxing of a deceased estate:
  • for the first three income years after death
  • more than three years after death