Someone left You a Gift in their Will?

Someone left You a Gift in their Will?

…but you don’t need it!

Although an unusual situation, there are times when a person has been left a substantial gift in someone’s Will but they do not want or need it! Alternately, if there is no Will, then the intestacy provisions in the Succession Act 2006 (NSW) may determine that you are entitled to receive a share of the deceased person’s assets. In either situation, you (as the beneficiary) can decide you do not want the gift left to you in the Will or your entitlement to the asset because of the intestacy rules.

There are various reasons a beneficiary might renounce their entitlements including:

  • an earlier agreement with a sibling that they will receive the whole gift
  • if the gift will affect an entitlement to Centrelink benefits.

Whatever the reason for a beneficiary choosing not to accept the gift, that decision means consideration must be given to documentation needed and any financial issues that arise.

Deed of Arrangement

Sometimes called a Deed of Family Arrangement, this Deed allows for a redistribution of assets based on the agreement between beneficiaries instead of the wishes expressed in the Will.

For example, if a person has agreed with their siblings not to receive a share of their deceased parent’s assets, the siblings would sign a Deed of Family Arrangement excluding that person from receiving the share left to them in the Will.

A Deed of Family Arrangement can also be used to redistribute assets a person might be entitled to where their is no Will and the rules of intestacy apply.

However, in both situations, there are financial consequences!

Financial Consequences – Stamp Duty

If you have bought a house, you will know the sting of paying stamp duty on the purchase price. The NSW Government uses that revenue to fund health, transport and roads, police, justice and emergency service provided to the community.

The Duties Act 1997 (“the Act”) imposes ad valorem stamp duty (real value stamp duty) on the transfer or the surrender of an interest in property unless there is a valid exemption. Valid exemptions include:

  • if a Property, or a share of it, is gifted to you in the Will
  • if you are entitled to the Property according to the rules of intestacy.

So, if you’re in the Will or are entitled because of the intestacy rules, the transfer of property from the deceased person to you would be exempt from stamp duty.

However, if Property is transferred from the deceased person to someone who is not a beneficiary under the Will or not entitled because of intestacy, then no exemption applies and stamp duty is payable on the true value of the Property! Revenue NSW may also require a formal Valuation of the Property to determine its value and the correct amount of stamp duty to be paid.

As well as stamp duty, you will have the legal costs and expenses to prepare a Deed of Family Arrangement and transferring your entitlement to a share in the Property.

Alternatives

Depending on your circumstances, there may be alternatives which may be cheaper than paying stamp duty on the transfer the Property. This could include receivinbg the Property but changing your Will to ensure it is gifted to your siblings.

Call 9744 9236 or make an appointment (Book Online) with our Estate Planning Team at Lighthouse Law Group to obtain advice for your personal situation.

Tags: , , , By Peter Fazio
Someone left You a Gift in their Will?

Someone left You a Gift in their Will?

You’re in the Will but you don’t need the gift!

Although an unusual situation, there are times when a person has been left a substantial gift in someone’s Will but they do not want or need it! Alternately, if there is no Will, then the intestacy provisions in the Succession Act 2006 (NSW) may determine that you are entitled to receive a share of the deceased person’s assets. In either situation, you (as the beneficiary) can decide you do not want the gift left to you in the Will or your entitlement to the asset because of the intestacy rules.

There are various reasons a beneficiary might renounce their entitlements including:

  • an earlier agreement with a sibling that they will receive the whole gift
  • if the gift will affect an entitlement to Centrelink benefits.

Whatever the reason for a beneficiary choosing not to accept the gift, that decision means consideration must be given to documentation needed and any financial issues that arise.

Deed of Arrangement

Sometimes called a Deed of Family Arrangement, this Deed allows for a redistribution of assets based on the agreement between beneficiaries instead of the wishes expressed in the Will.

For example, if a person has agreed with their siblings not to receive a share of their deceased parent’s assets, the siblings would sign a Deed of Family Arrangement excluding that person from receiving the share left to them in the Will.

A Deed of Family Arrangement can also be used to redistribute assets a person might be entitled to where their is no Will and the rules of intestacy apply.

However, in both situations, there are financial consequences!

Financial Consequences – Stamp Duty

If you have bought a house, you will know the sting of paying stamp duty on the purchase price. The NSW Government uses that revenue to fund health, transport and roads, police, justice and emergency service provided to the community.

The Duties Act 1997 (“the Act”) imposes ad valorem stamp duty (real value stamp duty) on the transfer or the surrender of an interest in property unless there is a valid exemption. Valid exemptions include:

  • if a Property, or a share of it, is gifted to you in the Will
  • if you are entitled to the Property according to the rules of intestacy.

So, if you’re in the Will or are entitled because of the intestacy rules, the transfer of property from the deceased person to you would be exempt from stamp duty.

However, if Property is transferred from the deceased person to someone who is not a beneficiary under the Will or not entitled because of intestacy, then no exemption applies and stamp duty is payable on the true value of the Property! Revenue NSW may also require a formal Valuation of the Property to determine its value and the correct amount of stamp duty to be paid.

As well as stamp duty, you will have the legal costs and expenses to prepare a Deed of Family Arrangement and transferring your entitlement to a share in the Property.

Alternatives

Depending on your circumstances, there may be alternatives which may be cheaper than paying stamp duty on the transfer the Property. This could include receivinbg the Property but changing your Will to ensure it is gifted to your siblings.

Call 9744 9236 or make an appointment (Book Online) with our Estate Planning Team at Lighthouse Law Group to obtain advice for your personal situation.

By Peter Fazio