In a recent interview with The Age, Suzanne Jones, Partner and Head of Estate Planning at Coote Family Lawyers explains the key steps Australians should take when they receive an inheritance.
Many of us will receive an inheritance in our lifetime, and some of us are relying on it. Yet receiving an inheritance, be it cash or other assets, often catches us off guard. Some of us – understandably – avoid thinking about the practical implications of inheriting before the event because doing so would also involve thinking about the death of a loved one.
For others, an inheritance may represent the largest sum of money or most valuable asset they have ever received, bringing with it strong and conflicting emotions, such as anxiety and excitement.
“I would strongly encourage anyone due to receive an inheritance to seek financial advice,” says Suzanne Jones, partner and head of estate planning at Coote Family Lawyers. “Everyone’s circumstances are different, so it is important to seek out information that is relevant to you.”
Consider the tax implications
There are no inheritance or estate taxes in Australia, and cash inheritances do not need to be declared as income. But many inheritances consist of other assets, such as property or shares, which may attract capital gains tax (CGT) if the inheritor sells them.
“The capital gains tax implications vary depending on your relationship with the deceased and how the asset was used during their life,” Jones says. “For some, instructing the estate’s executor to sell the asset, pay the tax and transfer the balance in cash may be preferable.
Be aware of the potential for claims
If a relative or significant person in the deceased’s life believes they have not been properly accounted for in the will, they may be able to make a legal claim for assets, known as a Family Provision Claim. If such a claim is successful, it may reduce the size of your inheritance.
The window for lodging a Family Provision Claim varies from state to state, Jones notes. “In Victoria, an eligible claimant has six months from the date probate is granted. In NSW, it’s a year from the date of death.”
Usually, an executor will not distribute the contents of an estate until the claim window has elapsed, but there is no requirement to wait. That means you may need to return assets if a successful claim is made after you receive them.
Read the full article in The Age here.
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