Hello, my name is Robin and I own a medium sized business which is based in a suburb of Perth, Australia. Many business owners do not understand the importance of commercial law on their operations. I know that I certainly didn't when I set out. At first, this wasn't an issue but as my business grew, I realised that if I didn't teach myself about the legal rules in place and seek expert help, I would find myself in serious trouble. I got in touch with a great law firm who helped me to understand exactly what I needed to know. I decided to start this blog to help other business owners.
There are various laws that define how the financial assets and liabilities of a deceased person should be handled. These include the inheritance of businesses, business liabilities, financial securities like shares and what taxes should be paid by the beneficiaries of the estate of the deceased.
In cases whereby the deceased had debt before their death, there are procedures to be followed. The administrator is required to pay for the funeral expenses of the deceased, cater for legal expenses, pay taxes and then pay any other debtors. The funeral expenses are covered by the person who requests it.
The administrator of the estate has to wait until the assets of the deceased are available to him or her. The expenses are refunded before the estate of the deceased is distributed. The testamentary expenses are then settled at a reasonable price. Debt is settled using part of the remaining estate mostly from the assets that don't have specific beneficiaries. The remaining estate is distributed to the beneficiaries once the debt is settled.
Australian laws lay the responsibility of paying taxes to the beneficiaries. The estate of the deceased is first distributed to the beneficiaries. The tax to be paid is then calculated for each individual depending on their inheritance. There may be tax exemption or tax saving depending on how beneficiaries manage their inheritance. Investing inherited money in superannuation funds can save beneficiaries some tax.
Business partnerships are tricky to handle in deceased cases. The next of kin of the deceased become the next business partner. The beneficiary is given the shareholding of the deceased and the debts if there are any. In case of shareholding, the shares should be transferred to the next of kin. Debts are harder to manage in a business. It may be advisable to hire a good lawyer to go through the business financials and verify the claims of the business creditors.
Securities and Cash
Securities that have capital gains are subject to capital gains tax. These taxes are paid after the financial securities have been transferred to the beneficiaries. Beneficiaries that receive cash inheritances also have to pay tax. The tax is calculated based on the amount inherited. A lawyer should be consulted to find ways to reduce the total tax payable.
Having the knowledge of how to deal with inheritance is important to keep you compliant with inheritance laws. There are statutory requirements that should be fulfiled when an estate of a deceased person is distributed.