Legal Tip 325: Joint Offset Accounts and Death

Discussion in 'Wills & Estate Planning' started by Terry_w, 1st Feb, 2021.

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  1. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    When a person dies their assets pass via the will or the intestacy laws. Where there are bank accounts involved the cash in these will pass also. But bank accounts will generally be held as joint tenants. This will mean the cash in joint bank accounts will not pass via the will or the intestacy laws but go to the other surviving account holder.

    This will change the estate planning outcome.



    Example

    Homer and Marge have 3 young children and $1mil in an offset account attached to their investment property. The property is held 50/50 as tenants in common. But the offset account is held as joint tenants.

    Homer dies.

    50% of the property passes to a Testamentary Discretionary Trust (TDT) – which is good in this situation as half the rent can end up with the kids tax free.

    But the cash will all go to Marge and will not be able to get into the TDT. This means the interest or income generated by investing this money could not end up in the hands of children as excepted trust income and taxed at adult rates.
     
    Terry_w, 1st Feb, 2021
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