Jeff* receives an Age Pension and has been named as the sole beneficiary in a relative’s will. He asks estate planning lawyer Rod Cunich to explain any ramifications if he were to share the inheritance with siblings.
Q. Jeff: I am an age pensioner and have been named as the sole beneficiary in an aged relation’s will. The will is unlikely to be challenged, but I have the following questions.
Is it possible to advise the solicitor that as the sole beneficiary and executor, I want a certain percentage of the inheritance diverted to my two siblings, so that they, too, can enjoy a benefit?
A. Theoretically, the answer is yes, but the solicitor may require you to execute a Family Settlement Deed that sets out your wishes to avoid any dispute in the future. If the inheritance is paid to you in cash, you can then pass it on to your other family members without the need for this arrangement. If the inheritance involves property, then there could be capital gains tax and stamp duty implications to consider.
If so, to what extent will that affect the siblings for tax purposes?
A. If they receive cash which is a gift from the deceased or you it has no taxation implications for them. If the assets involve a transfer of property or shares (anything that may attract Capital Gains Tax then the answer to your question can only be determined by a lawyer who has all the information.
Will there be any negative impact on me by opting to share the inheritance with my siblings? The inheritance will, as I see it, allow me to buy a new home and a few more comforts in life, but I really want my siblings to enjoy some of the benefits as well.
A. If you receive an Age Pension and other entitlements, it is important that you consult a financial expert to find out what effect an inheritance might have. (Ed: Information here.)
I have heard there is an option for a ‘secret bestowment’ where the sole beneficiary feels it only fair to share some of an inheritance? Is that right?
A. That is a moral, social and family issue, not a legal one.
Will gifting rules come into play?
A. If you mean for the purposes of assessing your Age Pension, the answer is yes. (Ed: General information here.) I recommend you see a specialist estate planning solicitor who can provide tailored advice.
*Not his real name
These answers are general information only, not specific legal advice. You should not rely on these answers without specific advice from an expert who can review all the relevant documents and circumstances.
Rod Cunich is a lawyer with more than 30 years’ experience in estate planning. If you have a question for Rod, email it to [email protected].
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Disclaimer: This information has been provided by Rod Cunich and should be considered general in nature. Seek legal advice before acting on this information.