Probate duty was abolished in the early 1980s for the estates of all individuals who died after that date. Prior to this, the Federal Estate duty was also abolished.
The estate is liable to pay income tax on the deceased person’s taxable income up to the date of death. If the estate continues to accrue income after the death date, the estate is liable for income tax on that accrued income.
Capital gains tax could be levied on the estate if the estate of beneficiary liquidates an asset and there is a capital profit on that sale.
The law around taxes is complex and often case specific, and as such it is recommended that one enlist the services of a qualified professional or the team at What do I do? to help navigate the convolutions of this process.
There are a variety of sources of expenses that may be involved in the administration of the estate
- Executor’s commission – A commission may be awarded to executors and trustees
- Legal Fees – Solicitors will likely charge fees for the work they do with regard to the estate, whether it be consultation or the filing of legal documents.
- State Trustees – State trustees can charge up to 5.5% of the total value of the estate, and 6.6% on gross income received by the estate each year.
- A private trustee company can charge comparable fees to an individual trustee
- Private Executor – An individual who is appointed as executor/trustee of as awarded letters of administration is within their rights to apply to the Supreme Court for a commission up to but not in excess of 5% of the deceased’s gross assets. The usual rate of capital commission that is awarded by the court is considerably lower, averaging around 2-3% of the gross assets of the estate. The amount awarded is decided primarily based on the complexity of the case and the amount of time that the executor has dedicated to the affairs of the estate. An executor may also be granted a commission on the income of the estate during the time that they are serving as executor for said estate.
In order to minimize costs associated with the administration of the estate, it is highly recommended that you reach out to the team at What do I do? We can point you in the right direction to assure that you are not incurring unnecessary ancillary costs with regard to the estate.