It is a fact of life that not all family members get along or are able to agree on every joint decision – particularly when it involves money and the division of financial assets.
An inheritance can, unfortunately, be the perfect platform for a family dispute – especially if the contents of a will are less than clear or not well thought through.
Grounds for dispute
Marc Romaldi, tax partner at Kelly & Co Lawyers, says it is not unusual for a beneficiary to challenge a will on numerous grounds including on the basis that he or she hasn’t been adequately provided for within the will.
Another ground for dispute may be where specific assets are left to specific beneficiaries and this results in one beneficiary suffering a much higher tax liability on ultimate disposal of the gifted asset(s) compared to other beneficiaries, thereby skewing the true value of the comparative gifts.
A possible solution
Romaldi says that depending on the size of the estate a person may decide to start court proceedings against the estate.
This may result in protracted litigation or may result in the aggrieved beneficiary agreeing to an out-of-court settlement and entering into what is known as a deed of family arrangement.
Romaldi says that from a capital gains tax perspective, the benefit of a deed of family arrangement is that it can effectively amend the will of the deceased (although there may still be stamp duty and other implications).
And it is especially important that self-managed super funds make provision for what happens after the death of a member.
Depending on the nature of the assets being left it may be possible for the beneficiaries to restructure the bequeathed assets into another structure so as to minimise any on-going tax implications.
“Ultimately, it is as much a planning issue as anything. Generally, the better the estate plan, the better it is for the beneficiaries,” says Romaldi.