Dying interstate with kids in ACT - is a post death testamentary trust necessary?

Hello everyone,

A close friend of mine tragically had her 39 year old husband die suddenly overseas. English is not her native language so I am trying to assist her as best I can with the admin processes (although I have only been an executor once before).

They have two small children, were ACT residents with Australian citizenship, were renters and had one investment property in Townsville (was their home residence 5 years ago, worth around 280K). He didn't leave a will so we are working through the Letters of Adminstration documents. She will be the administrator but I intend to assist her as best I can with the processes.

She is still overseas so I haven't got a full grasp of their debts and assets yet but from what I can understand, they had minimal debts other than a few bills and the mortgage (in joint names - mostly paid off), simple assets (around 200K cash in a joint bank account, think tied to the mortgage), some other cash and his super (unknown, but working full time in a 100K job about 6 years). She didn't work, was a stay at home mum, and left all the financial decisions up to her husband. His work has also just raised around 40K cash for her and the children through one of those online charity sites (I think it is deposited to their joint bank account). I think she would like to sell the Townsville property they have, although with the market as it is there it might be pertinent to hold off a bit on selling..

I have read the forums here and elsewhere (thank you Terry_w and others!) and I am concerned that his cash assets will be transferred to his wife and then she will lose 30% in tax upon receipt. I am wondering whether it is worth setting her up with a solicitor and/or a post death testamentary trust for the kids to reduce this. However I don't want her to spend thousands on a solicitor if it is not really necessary for these for these sorts of amounts or it is something that I could reasonably help her with.

Would any of you be able to advise?

 

Why would she pay tax?
There are no death duties.

Legal advice would be a good idea so she can understand who gets what. Some may have to go into trust for the children. With no will there are regulations as to the distribution of monies, a solicitor will know.
Marg

 

AFAIK unless his will (which he didn't have) includes a TT, you can't establish one after he's died.

She will need immediate legal advice - her joint bank account/credit cards etc may be frozen leaving her without access to money, investigating any overseas or other children that he may have fathered (knowingly or unknowingly), releasing the insurance in his super policy, etc all will take time.

 

There are no taxes on death. Assets will pass via the intestacy laws.

If the estate is not huge a post death testamentary trust may not be worth the costs to set up and administer. I am not sure of the intestacy laws in the act but the beneficiaries of the trust must be limited to those who could benefit under the intestacy laws. Act law may also not be the relevant jurisdiction either.

Your friend should seek legal advice.

Scott see s102AG itaa36

 

One thing you will need to follow up is the super. Depending on the type of super account he was enrolled in there is likely to be life insurance policy associated with the super fund.

I have just been through the process and the super was with an industry fund which insures it's member and the cover is based on the the number of units that the super member is entitled to. With Care each unit was worth $50k. The units will be based on length of time in the fund, age of the member and also life events that have been recorded. Likely to be 4+ units of cover, so $200k+ of life cover. If he was enrolled in a private super fund than there may be even greater cover. These days it's not unusual to have $1mil of cover.

The super amount and the life cover is outside of the estate arena and as such needs to be claimed separately and as soon as possible after the death certificate is available. The super payout is solely at the discretion of the trustee of the super fund. Hopefully there is a binding nomination in place and your friend is nominated.

You mention that the bank accounts are in joint names. If that is the case than she should be able to continue to operate those accounts. Regardless any bank accounts remains operation until you advice the bank and as such you can just transfer all funds to a new account which is just in her name. Not necessarily what the legal beavers would advice but from an expedience point of view is something I would do and worry about any other beneficiaries later (how do they prove it's not her money as it is a joint account). Not dealing with the bank directly will save you a whole lot of unnecessary paper work.

Eventually you will need to advice bank as there is a mortgage. If the life insurance payout is sufficient and the mortgage is small enough it may be worthwhile paying out the mortgage and avoid any further discussions with the bank re refinancing. She will still need to deal with state authority to transfer title of the property ones letters of admin is issued.

Expect to spend substantial if you seek legal advice. My belief is that the estate dealings are money for jam within the legal fraternity with a total loss of control and lots of useless letters exchanged. Even to terminate the solicitor we had engaged cost the estate heaps with absolutely nothing to show for it as I subsequently still had to deal with the estate and all the additional transfer of property and shares. They don't tell you that all the additional management of the assets is at extra costs.

Would suggest that you get yourself (or her) a DIY probate legal kit which will give you a thorough understanding of the process. Even if you decide to seek legal help than at least you have a good understanding. I used AusieLegal who provided excellent phone assistance.

()This is not advice but just ramblings from someone who has been through the process)

 

Estates

Public Trustee will administer a estate with no will, not the spouse. Super is NOT governed by a will but may be in some cases. It is essential that a claim be made by the spouse direct to the fund to have the benefit paid to her NOT TO THE ESTATE. Very important. PT will charge a fee and take a chunk and will delay payment etc. They dont care.

1. Find all super account/s incl lost (ATO have a tool)
2. Identify insured benefits
3. Claim process ? A certified translation and death cert will be required and is best understood now so she leaves with it in her hands. Hard to co-ordinate later.

Travel insurance, rental car, health fund, credit card (travel insurance ?), clubs and associations etc may all have some death benefit. Check all paperwork for options. A recent client found $1K death benefit for funeral expenses through a football club she joined this way.

 

This is not correct.

 

The opposite may be true.

If the spouse is administrator of the estate she would be breaching her fiduciary duties by not making efforts to maximise the estate of the deceased. McIntosh v McIntosh [2014] QSC 99.

If a postdeath testamentary trust is to be formed then paying to the estate would also maximise the trust assets.

It is very important that legal advice is sought from a lawyer.

 

A salutary lesson to everyone reading.
Ensure you have a will and review it as often as circumstances change. And an enduring power of attorney while you are at it.
Don't leave a mess for loved ones already reeling from a sudden death.
Marg

 

Thank you so much everyone for this advice. It's really appreciated.
Yes our friend was only 39, in apparently great health, died unexpectantly on holiday from a pulmonary embolism in his sleep whilst on holidays.
New Years resolution for all family now - make/update a will.

 

Thankfully hubby survived a pulmonary embolism due to symptoms and early diagnosis. Another friend died of one while she was doing the ironing. Sometimes you get no warning.
Marg