Issues with life estates - the 2018 Death… and Taxes Symposium

With an ageing population and increasing wealth held personally and via trusts and estates, the practical matters in the event of incapacity or death have increasing importance.

Despite many holding the view that life estates should only be used sparingly, creating life and remainder estates continues to be a popular option for many will makers.

But after death, family members often wish to terminate their life or remainder interests early, and there are a range of consequences that arise from such early terminations.

Join us on the Gold Coast, 19-20 July 2018
At July’s 2018 Death… and Taxes Symposium, Michael Flynn, QC, CTA (Life) presents the session ‘Issues with life estates’. We spoke to him about what to expect from his presentation. 

Michael told us “It is still common for will makers to leave their surviving spouse with a life interest in the family home and in other assets, which will pass to their children when the spouse dies. Very often this arrangement is unsuitable by the time the will maker dies, or later becomes unsuitable, because the surviving family members need full ownership of the family home or other estate assets.  If that happens the children and the surviving parent can agree to cancel the life interest, but unfortunately doing so can create a large tax liability.”

In his session Michael will explain the consequences of terminating life and remainder estates prematurely and explore the options available for minimizing the tax payable when doing so. 

Covering the treatment of equitable life and remainder estates under TR 2006/14, he will look at the CGT consequences of surrender of life and remainder estates, of varying life and remainder estates, and of assigning life and remainder estates, as well as the main residence exemption.

“I’m hoping to provide some clarity around when tax liabilities can arise, who is liable to pay it, and suggest some strategies for avoiding or dealing with such liabilities. Practitioners who attend this session should come away with a better understanding of how the Commissioner applies CGT to life estates.  They should also be better equipped to advise clients making wills who propose to leave life interests, and beneficiaries of deceased estates who wish to cancel a life interest.”

Michael Flynn QC, CTA (Life)
Michael Flynn, QC CTA (Life), is a Barrister at Owen Dixon Chambers West, specialising in taxation and was President of The Tax Institute in 2014. He is the author, with Miranda Steward, of Death and Taxes, and with James Kessler, QC, of Drafting Trusts and Will Trusts in Australia. He has appeared before the Federal Court and the High Court in many cases on behalf of both taxpayers and the Commissioner.

Michael has been a member of various committees of The Tax Institute for over 20 years, including our Victorian State Council and National Council. He lectures in the postgraduate program at Melbourne University and is President of the Tax Bar Association.

The 2018 Death… and Taxes Symposium also features a session looking at tax liabilities and just who is responsible for them, presented by Lyn Freshwater (ATO), with David W Marks QC, CTA (Queensland Bar) providing commentary.

Other sessions look at common practical tax problems advisers face in the administration of an estate, including income tax, CGT and other relevant litigation, superannuation and death, and a keynote address from David W Marks QC, CTA, on ethical issues facing advisers.

Find out more about the program on our website, and join us 19–20 July 2018 on the Gold Coast.


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