Damon Mcknight
Australians are among the most generous people in the world when it comes to inheritance, with Australians bequeathing, on average, US$501,919 (AU$705,375) to their loved ones. If you believe you are entitled to an inheritance, there are several ways to find out. If a will exists, a legal entity known as the executor is appointed to act as a trustee of the estate and carry out the wishes of the deceased. The executor must inform the beneficiaries of their mention in the will, so you can wait for the executor to contact you. If there is no will, the courts may intervene, and you can challenge the inheritance under the Succession Act. Additionally, the NSW Trustee and Guardian website has a Lost Dollars section listing estates where a next of kin could not be found. It is important to note that while there is no inheritance tax in Australia, you may have tax obligations for inherited assets, such as capital gains tax and income tax.
| Characteristics | Values |
|---|---|
| Average inheritance amount | US$501,919 (AU$705,375) |
| Inheritance tax in Australia | No inheritance tax |
| Tax on inherited income | Income tax applies as usual to any dividends or rental income from shares or property inherited |
| Time to receive inheritance | Straightforward estates are often wound up in less than 6 months. Others can take more than a year |
| Executor | A legal entity appointed to act as a trustee of the estate and carry out the wishes of the deceased |
| No will | Each state or territory has its own intestacy laws which lay out who gets what from an estate. Usually, this will be an existing spouse or any children |
| Unclaimed inheritance | NSW Trustee and Guardian has a Lost Dollars section on its website that lists estates where a next of kin could not be established or found |
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What You'll Learn
Check the Lost Dollars section on the NSW Trustee and Guardian website
If you are unsure whether you are entitled to an inheritance, you can check the Lost Dollars section on the NSW Trustee and Guardian website. This webpage lists estates where a next of kin could not be established or found.
The NSW Trustee and Guardian is required to retain the proceeds from the state for six years before passing them to the Treasury. If you think you may be a beneficiary of such an estate or trust, you can check the 'Lost Dollars' page. If your search is successful, you can contact the agency on 1300 364 103.
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Understand your tax obligations for inherited assets
While there is no inheritance or estate tax in Australia, you may still have tax obligations for the assets you inherit. Here are some key considerations to help you understand your tax obligations for inherited assets:
Capital Gains Tax (CGT)
If you sell or dispose of an inherited asset, such as property or investments, and make a profit, you may be subject to CGT. It's important to note that the obligation to pay CGT arises when you sell or dispose of the asset, not at the time of inheritance. The amount of CGT payable is determined by various factors, including the sale date, the asset's cost base (typically its market value when the deceased acquired it), and the length of time the deceased held the asset.
There are certain exemptions and considerations for CGT. For example, if the deceased died before CGT was introduced on 20 September 1985, the property is fully exempt. However, any major improvements or additions made to the property on or after this date may be subject to CGT. Additionally, if the inherited property includes a dwelling, you must sell it together with the land or structure to qualify for the exemption.
Income Tax
Any income you receive from inherited assets, such as dividends or rental income from shares or property, is generally subject to income tax. This includes income earned by the deceased's estate before it is finalised. If you become entitled to income from the deceased's estate, you must include it in your tax return. The legal personal representative (LPR) of the estate should provide you with the necessary information to complete your tax return accurately.
Superannuation Death Benefits
Superannuation death benefits may have a taxable component, creating a potential tax liability. The age of both the deceased and the beneficiary can affect the tax treatment of income streams from superannuation funds. It is essential to contact the trustee of the deceased's superannuation fund to understand your entitlements and applicable taxes.
Non-Resident Beneficiaries
If you are a non-resident beneficiary inheriting assets from an Australian estate, you may face additional tax obligations. Non-residents are often subject to higher CGT rates when selling inherited property and may not be eligible for certain tax concessions available to Australian residents.
It is important to seek professional advice to ensure compliance with Australian tax laws and to avoid unexpected tax liabilities when dealing with inherited assets.
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Know your rights and how to challenge an inheritance
If you believe you are entitled to an inheritance but are not included in the will, or there is no will, you have the right to challenge the inheritance under the Succession Act. This is called a Public Family Provision Claim. The Supreme Court can even vary the will. However, no one is automatically entitled to an inheritance.
In cases where there is a spouse or de facto partner and no children, the estate goes to the partner. In the absence of a partner or children, it goes to the next closest relative as set out in the relevant Act. If there is nobody to inherit, the estate goes to the state.
If you have been excluded from a will, contact an experienced family provision claims expert to discuss what to do next.
Writing a will allows you to distribute your estate according to the specifics of your relationships with siblings, aunts and uncles, parents, grandparents or previous married partners. The administration of a planned-out estate, which distributes assets according to who will benefit from them the most, can avoid challenges to the will in court.
There are no inheritance or estate taxes in Australia. However, you may have tax obligations for the assets you inherit. Capital Gains Tax may apply if you dispose of an asset inherited from a deceased estate, and income tax applies as usual to any dividends or rental income from shares or property you have inherited.
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Learn how to act as an executor of a will
If you have been named as the executor of a will, you are responsible for administering the deceased person's estate and carrying out their wishes as outlined in the will. This includes gathering and managing the deceased's assets, paying any debts or
- Contact a wills and probate solicitor to advise you on the legal requirements and process. They can guide you through obtaining probate, which is required for estates over certain thresholds, and provide clarity on your specific situation.
- Establish a comprehensive understanding of the deceased's estate and finances, including identifying assets, debtors, and creditors. Ensure you have a list of assets and liabilities, as this will help with smoother management.
- Obtain probate by applying to the relevant court, such as the Supreme Court of New South Wales. The application typically requires a copy of the will, death certificate, and valuation of assets.
- Provide notice to all beneficiaries and creditors of the estate. Keep beneficiaries informed with regular updates throughout the process.
- Once probate is granted, begin distributing assets in accordance with the will. Ensure you remain neutral and avoid conflicts of interest. If there are any disputes or claims against the will, wait for these to be resolved by the court before distributing assets.
- Fulfil any other wishes outlined in the will, such as appointing a guardian for minor children or setting up trusts for beneficiaries.
Remember, being an executor can be emotionally challenging and time-consuming. If you are unable or unwilling to act as an executor, you can transfer the role to an independent professional executor, such as NSW Trustee and Guardian. They can provide a personal and impartial service to administer the estate and carry out the wishes in the will.
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Find out how long it takes to receive an inheritance
The time it takes to receive an inheritance in Australia can vary depending on several factors. Firstly, it depends on whether the deceased has left a will or has died intestate (without a will). If the deceased has left a will, the executor named in the will initiates the probate process. If they have died intestate, the process involves applying for letters of administration, where the court appoints an administrator to administer the estate. Intestacy can complicate and lengthen the administration process, as the distribution of assets follows the statutory order rather than the deceased's wishes.
The time it takes to receive an inheritance also depends on the nature and size of the estate. Straightforward estates are often wound up in less than six months, whereas more complex estates can take anywhere from a few weeks to over a year to finalise. Complexities may include multiple large assets, creditor claims, or disputes among beneficiaries or family members. The estate administration process may also be delayed if the liabilities exceed the assets of the estate.
In New South Wales (NSW), the administration of an estate usually takes between 9 to 18 months but can take longer depending on the circumstances. Once the grant of probate is made, the executor can start administering the estate, which can take anywhere from 6 to 18 months or more, depending on the size and nature of the estate and any complications that arise.
It's important to note that there is no inheritance tax in Australia. However, beneficiaries may need to pay tax on any income earned from an inheritance, such as capital gains tax or income tax on dividends or rental income.
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Frequently asked questions
If you are a beneficiary of an estate, you must be informed by the executor. If there is no will, each state or territory has its own laws outlining who inherits the estate. Usually, this will be an existing spouse or children.
If you believe you are entitled to an inheritance but aren't included in the will, or there is no will, you have the right to challenge the inheritance under the Succession Act. Contact an experienced family provision claims expert to discuss your next steps.
There is no inheritance tax in Australia. However, you may have tax obligations for the assets you inherit. Capital gains tax may apply if you dispose of an asset inherited from a deceased estate, and income tax applies as usual to any dividends or rental income from shares or property you inherit.
The time required to administer an estate can vary. Straightforward estates are often wound up in less than six months, while others can take more than a year.
