(Feedsy Exclusive)

Being appointed as the executor of an estate is a significant responsibility that requires careful consideration.

While it may be an honour to be entrusted with this important role by a loved one, the reality is that estates can be quite complex.

Acting as an executor can often be stressful, time-consuming, and physically taxing. It can even harm family relations and friendships when expectations are not met.

Complications executors may face

Executors may be required to deal with various third parties, such as banks, real estate agents, utility providers, the deceased person’s superannuation fund, the taxation office and impatient beneficiaries.

They also need to carry out a million tasks — from making funeral arrangements, applying for the death certificate, informing family, friends and other loved ones of the deceased person’s passing, to locating the will and beneficiaries, sourcing hundreds of documents, paying off estate liabilities, taking an inventory of estate assets, claiming insurance and superannuation benefits and so on.

While carrying out their responsibilities, executors may also face the following problems:

• Exposure to personal financial risk and liability if they make any mistakes in the estate administration process.
• Challenges and delays in receiving superannuation death benefits and dealing with the fund trustee.
• Personal responsibility for losses resulting from the mismanagement of estate assets, including their failure to locate, secure and prudently invest estate assets, give proper notice to creditors, identify and pay all legitimate debts of the deceased, collect all debts owed to the deceased, etc.
• Financial penalties for taking too long to administer an estate or for distributing an estate too quickly.

Ensure a smoother estate administration process

If you’re the one leaving a will and appointing an executor, there are things you can do to help ensure your estate is administered properly.

• Write your will with the help of a probate lawyer or solicitor experienced in or who specialises in wills and estate administration. It’ll also help if they’re familiar with family and inheritance laws in your state or territory.
• Relationships and circumstances may change, so make sure you update your will, insurance policies and superannuation death benefit details.
• Note that your superannuation is not part of your estate, so you cannot include it in your will. However, you may reaffirm your intentions and whatever arrangements you’ve made in your super death benefit nominations in your will.
• Talk to your financial adviser and super fund about making death nominations that’ll make it easier for your beneficiaries to get the benefits allocated to them.
• Consider withdrawing your entire death benefit from the super fund while you’re still around, so you can distribute it yourself or put it away in a bank account that your executor can access faster should you pass away.

If you’ve been tasked to act as executor by a living relative or loved one, you would do well to discuss the above with the testator (the one who has appointed you as executor) and their solicitor (and financial adviser if they have one) to go over the above details.

By covering the legal bases, you can avoid costly mistakes and shield your loved ones from any potential liability and complications that may come with settling the estate and claiming death benefits.

If this article has inspired you to think about your own unique situation and, more importantly, what you and your family are going through right now, please contact your advice professional.

This information does not take into account the objectives, financial situation or needs of any person.

Before making a decision, you should consider whether it is appropriate in light of your particular objectives, financial situation or needs.

Andrew Brown and Poppy Johnston
(Australian Associated Press)

Treasurer Jim Chalmers is confident Australia is not heading towards a recession despite some economists warning the path to a soft landing from soaring inflation is narrowing.

He says the Australian economy might stutter as interest rates lift, but neither the Reserve Bank nor Treasury are anticipating a recession.

“We do expect the Australian economy to slow considerably,” the treasurer said.

“This is the inevitable consequence of the interest rate rises that began before the election and continued after, and also the substantial slowdown in the global economy.”

Mr Chalmers said the Australian labour market was outperforming international peers, leaving the nation in a strong position to withstand economic challenges.

Reserve Bank governor Philip Lowe also maintains Australia is on its “narrow path” to return inflation to a two-to-three per cent target range with a growing economy.

But in his most recent public appearance, Dr Lowe conceded there were significant risks to this pathway.

Some economists are also growing more worried about a recession in Australia, including HSBC’s Paul Bloxham.

“A recession is not our central case, but despite the helpful support of strong population underpinning GDP, we see a 50-50 chance that Australia tips into a recession,” he wrote in a note.

Mr Bloxham said the risk was high inflation started to embed itself in the system as the sharply rising cost of living prompted workers to ask for pay rises.

“And that if wages growth picked up too much, it would become more difficult to get inflation back to the central bank’s target,” he said.

Under this scenario, there would need to be a much steeper fall in demand and a marked rise in unemployment to cool off wages growth.

But separate analysis by St George economists suggests goods inflation will ease quickly as wholesalers start discounting to get rid of excess stock, which could help take pressure off the RBA’s interest rate tightening cycle.

Businesses have scrambled to restock their warehouses after the COVID-19 pandemic disrupted supply chains.

Wholesale business inventories have shot to record highs, well above pre-pandemic levels.

Retailers have also rebuilt their supplies to pre-pandemic levels.

Under these conditions, St George economist Jameson Coombs said it was likely wholesalers would start lowering their prices as economic activity slowed.

“The sheer volume of inventories coupled with softer consumer demand means that more discounting than usual is likely to be necessary,” he said.

Mr Coombs said high industrial property rents were making it expensive to store goods, adding another incentive to unload stock.

The economist said the discounting would accelerate the disinflationary process already under way in goods prices.

Goods prices, as measured in the consumer price index, were rising at a rate of 7.6 per cent in the March quarter, down from 9.5 per cent in the December quarter.

Mr Coombs said the findings highlighted the importance of services in the fight against high inflation.

(Feedsy Exclusive)

The significance of choosing the appropriate structure to make the protection and maintenance of your assets possible cannot be overstated. This is necessary regardless of whether you have acquired your fortune on your own or through inheritance.

In this instance, you may want to consider estate and succession planning to protect your assets and ensure some tax benefits for the beneficiaries of your estate.

One of the most effective estate planning strategies today is the use of a testamentary trust in a will.

When your estate is distributed to your beneficiaries, a testamentary trust can help with minimising capital gains tax, stamp duty, and other taxes that may be due. It can also help protect your assets from creditors, unscrupulous individuals, and the like.

Testamentary trusts—the basics

A testamentary trust (aka will trust) is, in simple terms, a trust that’s created according to the terms set in a will. It typically takes the form of a discretionary trust.

However, unlike inter vivos (facilitated or done between living persons) discretionary trusts, which allow for the transfer of assets and gifts while the grantor is still alive, testamentary trusts are only activated after the grantor’s demise.

Each beneficiary under your will may have a testamentary trust that is most appropriate to their circumstances. There are different sorts of testamentary trusts that can be established, such as:

• Beneficiary-controlled testamentary trust
• Capital-reserved testamentary trust
• Protective testamentary trust

Benefits of testamentary trusts

Compared to typical wills, a testamentary trust offers the grantor more discretion over estate planning and distribution to beneficiaries.

Among the key benefits of testamentary trusts are:

• Flexibility: A testamentary trust functions in a similar way to a discretionary family trust. A trustee may choose which beneficiaries get trust income as long as they are nominated in the trust. With this freedom, the trustee can choose to distribute income, capital and dividends in the most tax-efficient way. Also, in the event that superannuation funds are paid to the estate, trustees will have plenty of discretion in how to handle them.
• Asset protection from third parties: Testamentary trusts can shield assets from possible court cases, bankruptcies, and legal actions because the trustee has the title to the trust assets (not the beneficiaries directly). A testamentary trust can offer you extra asset protection if your surviving spouse or your adult child runs a business that carries a large financial risk. For adult children, it might offer family law protection as well.
• Tax advantages: Testamentary trusts give trustees the option to divide and distribute the trust’s income for tax planning purposes. Also, distributions from a testamentary trust will be tax-free up to the standard full exemption amount. Beneficiaries who have children aged below 18 can significantly profit from this tax planning benefit because they can use pre-tax income to pay for their children’s expenses. Moreover, any capital gain made by the executor (the person chosen to carry out the will) is disregarded by law when a capital gains tax asset is transferred from the executor to a beneficiary.

So, is a testamentary trust for you?

When it comes to estate and succession planning, it’s always better to get the input of your financial advisor and a solicitor specialising in wills and trusts.

If this article has inspired you to think about your own unique situation and, more importantly, what you and your family are going through right now, please contact your advice professional.

(ATO)

Be wary of emails, phone calls and text messages claiming to be from the ATO.

If you think a phone call, SMS, voicemail, email or interaction on social media claiming to be from the ATO is not genuine, do not engage with it. You should either:

• phone us on 1800 008 540
• go to Verify or report a scam to see how to spot and report a scam.

Stay up to date on the latest scam alerts by subscribing to our general email updates. You will also receive updates on all new general content on our website.

Latest scam alerts

• January 2023 – ATO social media impersonation accounts scam
• July 2022 – tax refund SMS scams
• June 2022 – 2022 tax lodgment email scam
• April 2022 – fake TFN/ABN application scams
• February 2022 – SMS and email scams – cryptocurrency
• November 2021 – phone and email scams – superannuation
• November 2021 – phone scam – fake tax debt
• October 2021 – email scam – update your financial information
• August 2021 – phone scam – new payment methods

January 2023 – ATO social media impersonation accounts scam

We’re seeing an increase in fake social media accounts impersonating the ATO, our employees and senior executive staff across Facebook, Twitter, TikTok, Instagram and other platforms.

These fake accounts ask users that interact with the ATO to send them a direct message so they can help with their enquiry. The people behind these fake accounts are trying to steal your personal information, including phone numbers, email addresses and bank account information.

Our only official accounts are on FacebookExternal Link, TwitterExternal Link and LinkedInExternal Link.

The best way to verify that it’s really the ATO is to:

• check how many people follow the account. Our verified Facebook and LinkedIn accounts have over 200,000 followers, and our Twitter account has over 65,000 followers
• check activity on the accounts. Our social media channels have been operating for around 10 years – if it’s a newly created account, or only has a few posts, it’s not us
• look for the grey tick next to our username (@ato_gov_au) on Twitter and the blue tick next to our name (Australian Taxation Office) on Facebook
• make sure any email addresses provided to you end with ‘.gov.au’.

If you’re approached by an impersonation account, do not engage with them. Take a screenshot of the account, email the information to ReportScams@ato.gov.au and block the account through the social media platform’s reporting function.

July 2022 – tax refund SMS scams

We’re concerned about a high volume of SMS scams pretending to be from the ATO.

These scams tell you that you’re owed an income tax repayment and ask you to click a hyperlink and complete a form.

Clicking the link takes you to a fake ATO webpage that asks for your personal identifying information, including your credit card details.

If you receive an SMS like this, don’t click on any links. Report the scam to us.

The image below shows one example of what this scam can look like.

The real ATO will never send you an SMS with a link to log in to our online services. We’ll also never ask for your credit card details.

If you’re ever unsure whether it’s really the ATO, don’t reply. Phone us on 1800 008 540 to check.

Paul Osborne
(Australian Associated Press)
 

WHAT WE KNOW ABOUT THE 2023 FEDERAL BUDGET SO FAR

Treasurer Jim Chalmers will deliver his second federal budget on May 9, focusing on cost of living relief while ensuring spending does not add to inflation.

BUDGET POSITION

* Deficits likely over the next four years. Treasury says persistent deficits of around two per cent of GDP are projected. The deficit for 2022/23 was $11.2 billion at the end of March, against the October budget prediction of $33.4 billion.

* Government debt is sitting on just under $900 billion.

* Treasury expects to see a small increase in real wages in 2023/24, reflecting the combination of rising wages and falling inflation.

* Growth to slow to 1.25 per cent in 2023/24 as cost-of-living pressures and rising interest rates increasingly weigh on consumption.

* Net overseas migration numbers are being boosted by international students and working holiday makers.

* Several payments are growing faster than the economy including interest on government debt, and growing spending on the NDIS, health, aged care, and defence.

* Expecting to see initial work on improving the cost effectiveness and productivity of government services and government-funded services, to help the budget bottom line.

SPENDING

* Defence funding reshuffle following the Defence Strategic Review and AUKUS submarines deal.

* $3 billion in energy bill relief, including deals with each of the states and territories. This will be helped by the gas market intervention which Treasury expects to ease price rises to 18 per cent and four per cent over two years (rather than 20 per cent in both years).

* Possible boost in support for single parents and the older unemployed.

* Large investment in clean energy.

* Support for small businesses.

* Aged care budget to rise from $24.8 billion to $29.6 billion, with the figure hitting $35.8 billion by 2025/26.

* Child Care Subsidy to cost $55.31 billion over four years.

* $535.3 million towards the nine National Collecting Institutions – such as the National Library and National Gallery of Australia – over four years.

* $163.4 million for the Australian Institute of Marine Science.

* Medicines changes – from September 1, general patients will be able save up to $180 a year if their medicine is able to be prescribed for 60 days, concession card holders will save up to $43.80 a year per medicine.

* $2.2 billion for Medicare reforms, including incentives for after-hours doctors.

* $737 million for programs to deal with harm caused by tobacco and vaping products.

* Extra $262.3 million for national parks, including Uluru.

* $3.7 billion extra for the five-year National Skills Agreement, taking total spending to $12.8 billion.

* $2 billion for more social and affordable housing via the National Housing Finance and Investment Corporation.

* $400 million for defence force retention bonuses.

* Funding for the new National Anti-Corruption Commission and a standalone privacy commissioner.

* Review of $120 billion infrastructure project list.

TAX

* $3.3 billion increase in tobacco taxes over three years, to pay for health programs.

* Expected changes to bring in more petroleum resources rent tax revenue.

* Multinational tax avoidance crackdown continues.

* Commodity price estimates to be upgraded, having been set at a very conservative $55 a tonne for iron ore.

* Income and company tax receipts to be higher than expected.