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Tax Management for Beneficiaries of a Deceased Estate

Tax management for beneficiaries of a deceased estate is an important consideration in estate planning. If a beneficiary sells property or shares received through the estate, they may be subject to capital gains tax (CGT).

There are potential income tax implications as well. If a beneficiary receives an income from their inheritance, either through –

an investment property; or

share dividends

it is usually considered part of their taxable income.

For high income earners, the additional income derived from estate property/assets may cause them to be taxed at a higher marginal rate than they might otherwise be taxed, increasing their overall tax burden. Proper estate planning, including the use of a testamentary trust, can assist in limiting what might otherwise be a higher tax burden on your family members.

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