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.
For further information or enquiry on the above, please contact us.