When was the last time you updated your will?
Eleven years after his passing, the estate of legendary singer James Brown is still not settled. Like Brown, the late Aretha Franklin also didn’t have a will outlining what is to happen with her assets – including her $108 million estate – now expected to take decades to settle.
To plan for ones passing is a confronting task. Unfortunately, this prevents many people – including Brown and Franklin – from preparing a will. In Australia, it’s estimated that about 60% of people do not have a will. No matter the size of your estate, it is crucial to consider your financial estate and your heirs’ inheritance.
So what do you need to consider? From the funeral itself, down to who will get your signed Adelle album, a will provides clarity around finances and assets as well as your final wishes.
Some of these financial matters include any tax and superannuation. You’ll need an executor to take care of estate administration. This includes any inheritances, but even before that, the executor must take care of the tax lodging. Below are some of the things your executor will need to take care of in regards to tax lodgings:
– Obtaining probate (legal status establishing the executor as administrator of affairs)
– Lodge final tax return and notify ATO of death
-Obtain Tax File Number (TFN) for the estate
-Lodge any estate tax returns
-Determine whether business returns are required and if so, lodge them
Without a will, the state will appoint an executor to complete all financial processes on your estate and to sign documents on your behalf. Having a will ensures that this process is completed by someone you trust. For example, there are differences when lodging a tax return for a deceased person. The executor prints the words “Deceased Estate” at the top of the tax return and signs on behalf of the deceased. The executor must include any assessable income and deductible expenses up to the date of death. Any earnings or expenses after that date are included on a separate return – the trust tax return. Certain losses that would ordinarily be carried forward are also dealt with on the final tax return. When the final tax return is lodged and any tax liability calculated, the executor pays any tax liability or includes the refund in the estate.
While the state works to handle estates under best practice, if you don’t have a will, your estate is in the hands of the state instead of those of the ones you trust.
These are not easy conversations to have. At Scott Partners, we are experienced with estate planning and can offer support in setting up or reviewing your will.
We’re here to help, get in touch today.