Why do Australian Expats need to review their Wills?
Why do Australian Expats need to review their Wills?
It is crucial to prepare for the worst in a modern world, even though we hate to think about the inevitable for us all.
Death is not a cheerful subject; therefore, we push it to the backs of our minds and put off updating or even writing a Will.
Australian Expatriates face a more significant challenge than Aussies living nationally, as families are scattered across the globe. Potentially, You are also living abroad and have property and assets in Australia and possibly scattered across the world as much as your family. A Will; must be written correctly to avoid heartache for those left behind and avoid unnecessary tax bills.
One unintended consequence of nominating a foreign tax resident as a beneficiary of a will may trigger a capital gains tax (CGT) event called CGT event K3.
Importantly, this means that if the asset passes to a beneficiary under the Will who is a foreign resident, CGT event K3 occurs if the deceased was an Australian resident for tax purposes just before dying. The asset is not Australian taxable property, with the exemption being the principal residence which CGT event K3 now captures.
There are exemptions:
- A CGT asset does not pass to a beneficiary if the executor transfers it under a power of sale;
- If the non-resident beneficiary acquires the assets under an application of survivorship (i.e., joint tenancy) concerning real property.
As we edge closer to tax time, it may be time to do those important but often parked life administration tasks that we avoid when time gets away from us around Christmas and New Year and start 2022 off on the right foot. A Will can help you set your family up for the future. They can also highlight the complexity of tax rules and how they may tie in with your intergenerational wealth transfer goals. It is essential to seek advice from tax, legal and financial professionals when assessing what is important to you in terms of your legacy goals. We believe it is important to look at a Will as a positive and a great opportunity to protect your family for the future.
If you’d like to chat with Cris Abellar Principal Finance Adviser, from Stanford Brown you can contact her directly via her Specialist Page.
The Expatriate always tries to make sure all information is accurate. However, when reading our website, please always consider our Disclaimer policy.
