Interest in an estate 108-04020050

Any share in a deceased estate is disregarded until it is received or is able to be received.

Where a customer notifies that they have an interest in a deceased estate the extent and nature of the interest and the expected date of distribution is to be obtained. Inquiries concerning estates should be made with the executor or administrator of the estate. Contact with solicitors, other than in their capacity as executor or administrator, should only be made as a last resort (as the customers may be charged for any contact with a solicitor).

Where assets (other than partnership assets) are owned in joint tenancy, such assets generally pass automatically on the death of a joint owner to the survivor.

Where there are no claims against the estate, such assets can be transferred to the survivor before the grant of probate. A remainder interest also transfers automatically to the remainder man on the death of the person holding the life interest. For example, John and Mary are a couple. John owns $500 000 worth of farmland in his own name. When John dies, his will states that Mary is to receive a life interest in the farmland, with the beneficial interest in the farmland to pass absolutely to the couple's son Oliver on Mary's death. This means that Oliver will own the land in his own right when Mary passes away. Oliver is the beneficiary of the remainder interest in the property. Oliver may be referred to as the remainder man.

In cases where the deceased person did not make a will (that is died intestate), enquiries may be made with the authority in the particular state or territory responsible for the administration of the estate of such persons.

Where the estate has not been distributed after a period of 12 months has elapsed, the question of whether an interest in an estate is able to be received will need to be considered on the facts of the individual case. The grant of probate does not mean that an estate is able to be finalised. It is merely approval by the court of a person's will.

Estate debts have to be paid before an estate can be wound up. Once this has occurred as a general rule the proceeds are able to be received. In some cases the executor may set aside separate funds in the estate for payment of debts. In these circumstances it may be accepted that the remaining funds are available for distribution and, for assets test purposes, that they are able to be received by the beneficiary.

Regardless of whether or not the customer is the executor and it appears that there is nothing to prevent an estate being distributed the executor should be asked if there is any reason for the delay before including the customer's interest as an asset. Where the delegate is satisfied that the customer has contributed to the delay, the interest should be accepted as being available.

Where the customer is not the executor, or the executor has a discretionary power under the will in relation to the distribution of the proceeds of the estate and there is more than one beneficiary, the case is to be referred to the Complex Assessment Officer (CAO) for assessment of a testamentary trust under the assessment of trusts and companies post 1 January 2002 rules.

Deprivation provisions will apply if the customer:

• waives their right to their interest in the deceased estate, or
• directs the executor of the will to distribute their interest in the deceased estate to a third party, or
• gives their interest in the deceased estate to a third party after the estate has been finalised