Estate Planning & Property

Estate Planning & Property

Deceased estates and Stamp duty

The transfer of property in accordance with the terms of a will or codicil is subject to stamp duty unless an exemption is available and section 42 of the Duties Act in Victoria exempts certain transfers of dutiable property where the transfer is by the legal personal representative of a deceased person (the executor) to a beneficiary and is not made for valuable consideration as long as the transfer of dutiable property is made under, and conforms strictly with, the trusts contained in the will of the deceased person.

No duty needs to be paid on a Joint Tenant survivorship application, however, you do need to complete a notice of acquisition for land tax purposes and lodge this with the Land Registry, together with your transfer of land.

Testamentary trusts

A testamentary trust is a trust which is specified in the testator’s will and arises on their death. The trustee(s) holds the property in accordance with the terms of the testamentary trust for specified beneficiaries and at some future time, the trustee will distribute the property to those beneficiaries.

Where a testator leaves dutiable property to the trustee(s) of a testamentary trust, there will, in effect, be two dutiable transfers of property:

  1. From the deceased estate, i.e. from the executor of the will, to the trustee of the testamentary trust (the first transfer), and
  2. From the trust at a future date, i.e. from the trustee of the testamentary trust, to the beneficiaries of that trust (the second transfer)

We will treat the first transfer as if it were a transfer to a beneficiary, so long as the transfer conforms to the trust(s) contained in the will of the deceased person and is not for valuable consideration. As such, it will be exempt from duty. The second transfer may be dutiable.

Where the will states the executor and the trustee of testamentary trust are the same person, the executor’s role changes to that of the trustee of the testamentary trust when administration of the estate is complete. In this instance, there are no duty implications.

 

Jason Beare, Managing Partner, MBA Business Solutions