Good to Great: How to Scale With an Outsourced CFO

Many people believe that when you pass away you escape all taxes.

Unfortunately, this is not the case.When a person dies, their nominated executor (the person responsible for dealing with the deceased’s assets and liabilities) must deal with any last tax returns and may face charges that could trigger significant Capital Gains Tax.Understanding the implications of death, taxes and assets is an important consideration when figuring out your succession plan.

The 2 biggest assets the standard estate may have to deal with are:

The Family Home

The Principal Place of Residence (PPR), otherwise known as the family home or ‘The Castle’, does not automatically trigger tax consequences if passed through the children. A former main residence still carries its CGT exempt status for a period of two years after your death, which gives time for somewhat hard decisions to be made.In some instances, the family home may have been purchased a long time ago. If it was purchased before 1985, there may be no CGT to pay at all.

Superannuation

Superannuation can be dealt with outside someone’s Will (think Binding Death Nomination) and may have significant tax consequences depending on who the proceeds are paid to.If it goes to your spouse, the proceeds Will generally be received tax free. However, in the event of any super benefits being paid to your adult children, up to 16.5% tax may be trimmed.

For those over the age of 60, with only adult children, withdrawing superannuation tax free, prior to death and bequeathing cash may save a large sum of money otherwise payable to the ATO. Although, this can be a hard strategy to get the timing right without a crystal ball.

There are a number of factors to consider when thinking about death and taxes. Estate Planning is not just about Wills. It may involve decisions about ownership and beneficiaries of an insurance policy, who is nominated as beneficiaries on your superannuation interests and whose name (or indeed structures) certain assets are held in.

What should I do?

You should look at your plan for your Estate (your Will) and seek professional help to ensure the right strategies are in place. This may reduce the overall tax payable in the event you die and will ensure appropriate succession of your assets.