General Estate Planning issues (Wills, PoA, AHDs)

[Flyfrequently]

I know that UK son has written his will. He mentioned that he has left assets to his brother in Aus. He is only currently an AU citizen. Do you hold dual? Given that we have only written an Aus will and are leaving son in UK half our estate and have not written a UK will then maybe same applies.

Not sure why you'd do a joint will or if that's even possible. We haven't because we have stipulated some different beneficiaries. Son hasn't in the UK either.

As far as your inheritance from any Au relatives, this is what our lawyer sought advice from someone within the practice who knows. This must not be taken as legal advice for you. . A is son overseas and B is son living in Aus.

Generally, inheritance of assets following a death does not trigger a liability for Capital Gains Tax (CGT) in respect of any capital gains on the asset. CGT will apply only when an executor or beneficiary disposes of an asset. Your estate will not be liable for CGT, and at the time of inheritance, neither will A or B, unless there is a disposal, such as a sale.

In some instances, a foreign resident will incur CGT on inherited assets. However:

• cash is not a CGT asset, and therefore a distribution of cash to A will not be impacted by any CGT event; and
• the passing of real property from your estate to A will not give rise to any CGT consequences at the time of his inheritance.

However, the sale or disposal of real estate will always give rise to CGT in Australia. This also applies to any real estate inherited via a Will (unless that property is your main residence and is sold with settlement occurring within two years of the date of death (with some time extensions possible), in which case it will be CGT exempt).

If, as a result of your Will, B inherits your main residence and it then becomes his main residence and he then sells or disposes of it, he would be entitled to the main residence CGT exemption. A as a foreign resident would not be entitled to the main residence exemption.

As per your current instructions, both A and B are to receive your real estate equally on the death of the last of you. Depending on when they sell the inherited property, they are likely to incur CGT. There are some distinctions in how that CGT event would be treated between A and B.

Foreign Resident Capital Gains Withholding

A may one day wish to sell any property he may inherit. As a foreign resident, when he does so, a 12.5% withholding tax will be payable at the time of settlement. This means that 12.5% of the purchase price, should the property be sold for more than $750,000, must be withheld by the purchaser and paid to the ATO. This tax applies to any Australian property, regardless if A is the sole owner or has only a part interest. In addition, A would have to put in a tax return and pay the remainder of the CGT calculated at the applicable tax rate. As a foreign resident, A would not be able to claim a 50% discount available to Australian residents.

The 12.5% withholding tax would not apply to a sale by B as an Australian resident, but he would nevertheless be liable for CGT, which would have to be disclosed in his tax return.

Main Residence Exemption

You have instructed that the XX property is your main residence for tax purposes. You have also instructed that the property, as part of the residue of your estate, will be left to B and Ben A on the death of the last of you.
(Discussion of property sale and CGT for an Aus resident so irrelevant to you)

A as a foreign resident, is not entitled to the Main Residence Exemption for sale of our home.

In any case, as noted above, A and B can avoid a CGT event on the sale of inherited property that was your main residence if settlement occurs within two years (or permitted extension period) of the date of death.

The take out of all of this is that cash is king for families who have family and friends overseas. I think @VPS may have some experience in this for UK inheritance issues.

I knew you would be on point @Pushka

 

[Pushka]

Yes, I was working on the basis that just a Will written in the UK should be sufficient, there's no point/purpose in writing one in Australia.

The next puzzle I'm trying to solve is how to search for lost Superannuation (in AU); as I can create a myGov account but I can't link it to the ATO.

I'm going through the process of creating myID now and I think I can get it past basic identity strength...... or maybe not. Passport, sorted.

Birth certificate? Won't accept the registration number.

Update: had to add in some 0's - 1 in front of district, 1 in front of reg number.

Standard strength now set. However, I don't think that's going to help me link ATO still!

Son in UK can do this link but he has to use his Aus phone number to gain access. I think to get a text to the number he'd registered? He had to pay HELP debt last year. He's now waiting on a refund as we paid the whole thing when the Govt upped the rate and now they are refunding. So he keeps logging in. I think the ID thing can be problematic for all so I'd keep trying.

 

[Flashback]

Son in UK can do this link but he has to use his Aus phone number to gain access. I think to get a text to the number he'd registered? He had to pay HELP debt last year. He's now waiting on a refund as we paid the whole thing when the Govt upped the rate and now they are refunding. So he keeps logging in. I think the ID thing can be problematic for all so I'd keep trying.

The problem is though, I haven't been tax resident since 2010, so have never been registered at all. All the ways of registering, require things I don't have....... Medicare card (expires 5 years after you leave and can't be renewed), Driver Licence (WA has an expiry code on the back; one of only 2 states!).

 

[VPS]

So I inherited some money from a UK estate but that was fairly straight forward. The fact she had a house in France and didn't have a will was an effing nightmare and made the lawyers a lot of money.

I'm always nagging my younger friends that they need to do a will especially as one is estranged from his parents - they think it's his fault he is gay . A couple of them who listened to me went to a lawyer in Adelaide who was originally from England and was well versed in what you need to do if you are dual citizens. A lot of the issue is where you are domiciled for tax. You may just need to hunt around for someone who is up to speed with everything.

 

[Pushka]

The problem is though, I haven't been tax resident since 2010, so have never been registered at all. All the ways of registering, require things I don't have....... Medicare card (expires 5 years after you leave and can't be renewed), Driver Licence (WA has an expiry code on the back; one of only 2 states!).

I've been doing some chatGPT. Does this help any?

 

[Solid]

The rationale behind having a will in each jurisdiction is that it is easier to administer if you have assets that will require the grant of probate in the jurisdiction in order to distribute them. An example of that would be where you hold real property in both jurisdictions in solely in your name. Some banks will also require it to release funds for individual accounts where they are above a certain threshold.

It is an easier process to get a local will admitted to probate than an overseas one which often requires you to get probate in the overseas jurisdiction and then get that resealed in Australia.

It also reduces risk of inheritance tax in one jurisdiction that has it (such as the UK) being applied to assets outside that jurisdiction.

Ideally you would have a will in each jurisdiction which is stated to apply to only assets in the jurisdiction.

However if you don’t have assets that require probate then you ought not to.

 

[Pushka]

The rationale behind having a will in each jurisdiction is that it is easier to administer if you have assets that will require the grant of probate in the jurisdiction in order to distribute them. An example of that would be where you hold real property in both jurisdictions in solely in your name. Some banks will also require it to release funds for individual accounts where they are above a certain threshold.

It is an easier process to get a local will admitted to probate than an overseas one which often requires you to get probate in the overseas jurisdiction and then get that resealed in Australia.

It also reduces risk of inheritance tax in one jurisdiction that has it (such as the UK) being applied to assets outside that jurisdiction.

Ideally you would have a will in each jurisdiction which is stated to apply to only assets in the jurisdiction.

However if you don’t have assets that require probate then you ought not to.

So unless you have assets in both countries it's not needed independent of where the beneficiaries are.

 

[Flashback]

The rationale behind having a will in each jurisdiction is that it is easier to administer if you have assets that will require the grant of probate in the jurisdiction in order to distribute them. An example of that would be where you hold real property in both jurisdictions in solely in your name. Some banks will also require it to release funds for individual accounts where they are above a certain threshold.

It is an easier process to get a local will admitted to probate than an overseas one which often requires you to get probate in the overseas jurisdiction and then get that resealed in Australia.

It also reduces risk of inheritance tax in one jurisdiction that has it (such as the UK) being applied to assets outside that jurisdiction.

Ideally you would have a will in each jurisdiction which is stated to apply to only assets in the jurisdiction.

However if you don’t have assets that require probate then you ought not to.

Sounds like I may as well make use of the free will I get via Mercer (Super) which is done by Safewill.

 

[Solid]

So unless you have assets in both countries it's not needed independent of where the beneficiaries are.

That’s right.

Although in particular in Australia the tax residency of the beneficiaries (citizenship irrelevant) and the type of property needs to be considered as it can lead to unwanted tax issues.

There are also practical issues of where the beneficiaries are when planning who does what - for example if an executor is overseas it makes the administration process harder as often things still need to be wet inked in front of notaries when you are overseas.

 

[Flashback]

There are so many factors that contributed to my "retirement". The first was that my NSWG defined benefits scheme started paying at age 60 regardless of work status. This allowed me to put the max in SGC. And then there was the transition to retirement arrangements with my other Super fund that let me cut back to 3 days a week at 65.

There was also the grumpy old man syndrome when you know certain people in the firm are no longer really listening to you, but your clients are. This led me to the final "retirement" and my re-emergence as a sole trader at age 67, working with the same broad group of clients.

I know that eventually the invitations will stop, but last year at age 74 was my biggest yet.

We have been travelling overseas regularly since 2006 as a consequence of my UK father-in-law allowing the girls to easily obtain work visas. And one of them is still in London, so we are back and forth funded solely by my post retirement gig. We depart London in a few days after our latest trip, and health permitting will be back in the middle of next year.

Mrs FB has some interesting things going on with her pension, which I've spent the best part of a day looking at and understanding. The Civil Service pension here changed, and was done incorrectly (age discrimination) so had to be recalculated from 2015-2022. In any case, Mrs FB has the ability to trigger both her original one at 60, then the replacement scheme at 67 (or whatever the pension age is deemed to be at the time). The way I understand it, she'll have the ability to actually drop down to part-time when she turns 60 (if still working) and then start taking the pension to cover the gap.

The superannuation guarantee only started in 1992 and for first few years you couldn't choose your fund, your employer decided how to invest it, many of us lost lots (multiple negative returns) before we were able to move the money to better options.

Defined benefit never been available to me, nice privilege for the politicians and govt employees.

Don't trust Keating (he didnt even mamage to finish high school), He was the one who gave employers the investing decision, something that should have been with the individual from day 1. I expect he will be long dead before im 70 so will have no further say as to what my retirement is like, thank goodness.

Im not sure my super will be enough, hence I will work as long as possible and keep investing outside of super fund where i have more control.

Can you not setup a SMSF instead? I have a SIPP in the UK, which is the same concept as I understand it.

I've been doing some chatGPT. Does this help any?

Yes and no. I've been able to get mine to a Standard Identity, not Strong Identity though. I've had a small win since my earlier post, and got the link to ATO function to validate a bank account. So, just a super account to validate now....... I can't find any digital records of super accounts (which is unusual for me..... but not so uncommon for pre-2010 when it comes to pension as I didn't give 1 iota!), so all I can rely on is my current one. That doesn't work, though. I did note that no TFN was listed in it, I guess it didn't transfer over when BT shut the scheme I was on and migrated to Mercer. No contributions to it either, so that wouldn't have triggered the info. I've added today, so have reached out to them and asked them to confirm when (or if) that will then allow me to link ATO to myGov using the details of that super account. Slowly, slowly......

Then, if/once that is done - I can search for any other small potential lost super amounts!

 

[VPS]

Mrs FB has some interesting things going on with her pension, which I've spent the best part of a day looking at and understanding. The Civil Service pension here changed, and was done incorrectly (age discrimination) so had to be recalculated from 2015-2022. In any case, Mrs FB has the ability to trigger both her original one at 60, then the replacement scheme at 67 (or whatever the pension age is deemed to be at the time). The way I understand it, she'll have the ability to actually drop down to part-time when she turns 60 (if still working) and then start taking the pension to cover the gap.

Can you not setup a SMSF instead? I have a SIPP in the UK, which is the same concept as I understand it.

Yes and no. I've been able to get mine to a Standard Identity, not Strong Identity though. I've had a small win since my earlier post, and got the link to ATO function to validate a bank account. So, just a super account to validate now....... I can't find any digital records of super accounts (which is unusual for me..... but not so uncommon for pre-2010 when it comes to pension as I didn't give 1 iota!), so all I can rely on is my current one. That doesn't work, though. I did note that no TFN was listed in it, I guess it didn't transfer over when BT shut the scheme I was on and migrated to Mercer. No contributions to it either, so that wouldn't have triggered the info. I've added today, so have reached out to them and asked them to confirm when (or if) that will then allow me to link ATO to myGov using the details of that super account. Slowly, slowly......

Then, if/once that is done - I can search for any other small potential lost super amounts!

I'm presuming you know about this

Searching for lost super | Australian Taxation Office

Search for lost super online using myGov, phoning our lost super search line or by completing a paper form (NAT 2476).

www.ato.gov.au

 

[Flashback]

I'm presuming you know about this

Searching for lost super | Australian Taxation Office

Search for lost super online using myGov, phoning our lost super search line or by completing a paper form (NAT 2476).

www.ato.gov.au

Yes, trying to avoid having to sit on the other end of the phone and/or sending in a paper form. MyGov I'll be able to do when I can link to ATO. Also, I can initiate the search through Mercer's portal but currently that fails on needing 2x ID from here and I can only do 1x.

Before we can find your super we need to verify your identity. To do this, you will be asked to provide the details for two of the below IDs:

• Australian passport
• Australian driver licence
• Australian visas
• Medicare card
• Centrelink concession card
• Citizenship certificate

 

[Flashback]

The rationale behind having a will in each jurisdiction is that it is easier to administer if you have assets that will require the grant of probate in the jurisdiction in order to distribute them. An example of that would be where you hold real property in both jurisdictions in solely in your name. Some banks will also require it to release funds for individual accounts where they are above a certain threshold.

It is an easier process to get a local will admitted to probate than an overseas one which often requires you to get probate in the overseas jurisdiction and then get that resealed in Australia.

It also reduces risk of inheritance tax in one jurisdiction that has it (such as the UK) being applied to assets outside that jurisdiction.

Ideally you would have a will in each jurisdiction which is stated to apply to only assets in the jurisdiction.

However if you don’t have assets that require probate then you ought not to.

OK, well the thing that drove this for me - was the 'free' ($160 saving) I was being offered by Safewill, as a Mercer super member, however it's already fallen over at the first hurdle! It only lets me select being a resident of Australia or NZ and won't progress with anything else. Guess I'm back to my original plan then, seek advice and get one sorted here in the UK.

 

[Happy Dude]

I'm currently navigating this quigmire that is have (some, small) assets in Australia as well as (reasonable) assets in the UK. I currently live in the UK and at this stage, no plans to relocate back to Australia.

I know I need to pull together a will in the UK, that much is certain. Do I additionally need to also write an Australian will? Or will the UK one be able to deal with everything. All beneficiaries will be in AU, regardless of where the wills are written, although if I end up doing a joint will then there may be some beneficiaries in Ireland too.

I suspect very few (if any) will have any experience with this, or even know who to suggest going to for advice (i.e., known quantity rather than contact Legal Firm X who I've heard are good with this)?

There is a talkback lawyer (David Whiting) segment on ABC Melbourne 774am every Tuesday at 10am AEDST. I reckon he would be able to give you a push in the right direction regarding what wills are needed and where. He'll take it on as homework for the next week if he can't. There was a similar question recently but for Germany.

But in regard to who, he doesn't give specifics and he'll just say contact one listed with wills/estates as an area of professional practice in whatever the legal registry is of your state.

 

[Seat0B]

I'm currently navigating this quigmire that is have (some, small) assets in Australia as well as (reasonable) assets in the UK. I currently live in the UK and at this stage, no plans to relocate back to Australia.

I know I need to pull together a will in the UK, that much is certain. Do I additionally need to also write an Australian will? Or will the UK one be able to deal with everything. All beneficiaries will be in AU, regardless of where the wills are written, although if I end up doing a joint will then there may be some beneficiaries in Ireland too.

I suspect very few (if any) will have any experience with this, or even know who to suggest going to for advice (i.e., known quantity rather than contact Legal Firm X who I've heard are good with this)?

I’m not a lawyer @Flashback, but SeatSon is and I know he says that it’s not about where the beneficiaries are, but rather where the assets are. You technically need a will for every jurisdiction where you have assets that will be part of your estate or else you will be intestate in relation to those assets.

So, yes if you have assets in AU, then you would be best protected by having an AU will. When you die, your Australian assets can’t be dealt with until you have a grant of probate . If you have a will, granting of probate is usually just a formality and your executor applies for it. If you don’t have a will, it takes time and money to get a grant of probate and is a right pain for your next of kin as there is not even an executor appointed if you don’t have a will. It’s just a complication at a time of grief. If your assets are not many and your will is not complicated (eg I leave everything to my spouse, failing that equally to my children sort of simple) you should be able to use a will kit to write a valid AU will. If it’s more than that, probably best to get a lawyer.

 

[Flashback]

I’m not a lawyer @Flashback, but SeatSon is and I know he says that it’s not about where the beneficiaries are, but rather where the assets are. You technically need a will for every jurisdiction where you have assets that will be part of your estate or else you will be intestate in relation to those assets.

So, yes if you have assets in AU, then you would be best protected by having an AU will. When you die, your Australian assets can’t be dealt with until you have a grant of probate . If you have a will, granting of probate is usually just a formality and your executor applies for it. If you don’t have a will, it takes time and money to get a grant of probate and is a right pain for your next of kin as there is not even an executor appointed if you don’t have a will. It’s just a complication at a time of grief. If your assets are not many and your will is not complicated (eg I leave everything to my spouse, failing that equally to my children sort of simple) you should be able to use a will kit to write a valid AU will. If it’s more than that, probably best to get a lawyer.

Thanks, that's exactly as simple as it is for my AU assets (they're few now), so I ended up using the option that was available for me. All in order then! Now to sort my UK bits and bobs...

 

[Solid]

No will at all.

Which leads to other issue. What if something happens to me? Wife doesn't want to stay here. There are points in her QFF account. Need to explain how she can book an economy award flight to go back to Thailand.

Since this thread is coming up to its sixth birthday I am curious as to whether you ever did anything @JohnK about this.

 

[cove]

We had friends with the public trustee in WA for their wills. Now that would be unfortunate as they have quite a few real estate assets that would earn the public trustee a truckload of commissions for doing almost nothing.
They had a family meeting and now have appropriate documents for their circumstances.

 

[Pushka]

We had friends with the public trustee in WA for their wills. Now that would be unfortunate as they have quite a few real estate assets that would earn the public trustee a truckload of commissions for doing almost nothing.
They had a family meeting and now have appropriate documents for their circumstances.

Why do people use the Public Trustee? Do they create wills for free so people think they are saving legal fees? And then of course, how predictable, likely encouraged? to nominate the public trustee as executor. Maybe they think it would be a burden for the kids?

 

[Ansett Nostalgic]

Why do people use the Public Trustee? Do they create wills for free so people think they are saving legal fees? And then of course, how predictable, likely encouraged? to nominate the public trustee as executor. Maybe they think it would be a burden for the kids?

For people who don't trust any family members or friends to act as executor, I suppose.