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How to slice up an inheritance and keep tax low

Q: I am listed as the sole beneficiary in a relative’s will and am expecting to receive an inheritance of around $300,000 in the near future. I am currently on a salary of $65,000 a year. I would like to gift $150,000 of the inheritance equally amongst my father, brother and sister. Do I need to pay any income tax on the $300,000 inheritance received? Or do I only need to pay income tax based on the $150,000 I am receiving? What would be the best way to minimise any income tax payable on the inheritance for both myself and my siblings? D.T.

A: There is no inheritance duty or gift duty in Australia. You won’t pay any tax on the $300,000 you receive as an inheritance and no tax is payable by yourself or any recipients if you give the money to other people. The only situation where you might be caught out is if the money is in fact part of a superannuation death benefit received from anyone other than a spouse, or someone classified as a “tax dependant”. In that case some tax may be payable on the Taxable Component. You haven’t mentioned this, so I won’t go into the complexities and, anyway, any such tax could be paid by the deceased estate before any money is passed to you.

Source The Age Newspaper

MEDIATION – WILL DISPUTES

Mediation is an excellent cost effective way of resolving all disputes in relation to Wills and Probate. The main purpose of mediation is to enable the parties to reach a binding agreement and save themselves the considerable emotional and financial cost of battling out their dispute in Court before a trial Judge. It gives the parties much greater control over the outcome of a  dispute than they will have if a Judge has to decide the dispute at a trial conducted a year or more after legal proceedings are commenced in the County Court or the Supreme Court.

Mediation can be conducted even before legal proceedings are commenced by agreement between the parties to the dispute. In any event it will be ordered by the Court once a legal proceeding has been commenced.

Mediation is a totally confidential process. The parties agree to appoint a qualified mediator and then meet at an agreed mediation Centre. To begin with they meet in a general session conducted by the mediator. The lawyers for each party state their case. Then each party goes to their own break out room and the mediator moves between the rooms to broker a deal or an agreement that all parties can accept. If an agreement is reached it is recorded in writing and the dispute is resolved once and for all.

At a mediation anything said cannot be disclosed to any third party or the Court if the dispute doesn’t settle and it is sent off to trial.

Trials are very costly, time consuming and emotionally draining. That’s why mediation is a such an effective way of avoiding all that expense and trouble.

In our experience more than 95% of cases settle at mediation and we do our best to have a mediation convened as early as possible once a dispute has arisen or a legal proceeding has been commenced.

By the end of a successful mediation our clients are often relieved and pleased to get on with their lives free of the cost  and hassle of litigation.

For any inquiry about our legal services, no obligation, call Probate Excellence (03) 9013 8597

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Welcome to Probate Excellence

Hello. This newly launched site, Probate Excellence, is devoted to the laws of Wills, Probate and Estate Claims in the glorious State of Victoria. Read on…