The UK citizen living and working in Australia who appointed
another UK citizen living in England as his trustee, had no
idea that in so doing he was exposing his estate to payment of UK
death duties. Deceased estates are taxed as trusts and
therefore by the location of the trustee.
Similarly, patriotism can come at a high price. Take the case of
a US citizen who was resident in Australia, with Australian
born children, who had not lodged a US income tax return since the
1960s when he migrated to Australia and who, for patriotic
reasons, took out US citizenship for his children. It was only
after his death that his family discovered the expensive
consequences of his patriotism. The United States taxes on the
basis of citizenship, not residence or domicile, so the estate
was presented with substantial US tax bills.
It is a little known fact that holding a US Greencard exposes an
Australian resident to US inheritance tax. Or that there are
time limits on persons arriving in Australia to rollover offshore
superannuation before it is taxed in Australia as income.
Australians are global citizens with 1 in 5 Australians being
born overseas, and with 14% of Australians and a staggering
42.9% of Sydney residents being born overseas from non-English
speaking countries. So it is common for their estates, their
trustees and their beneficiaries to straddle legal jurisdictions.
It is folly to ignore the implications which flow from
If a person has worked overseas, there may be pension or
insurance entitlements payable on death.
In some countries a willmaker is not free to choose who will
receive his assets. Many European countries such as Germany
have forced heirship laws directing who the beneficiaries of the
estate will be. In other countries there is no separation
between the Church and the State. If you have property, family, or
business connections in these countries, you need specialist
advice and now is the time to seek such advice, before the tax
man pays a visit to your family. Thorough estate planning with
competent legal and financial advisors is a very worthwhile
If you have an overseas inheritance path, have you established a
global estate management plan? The distribution of your estate
is as much a matter of lifetime administration as it is a
consequence of your death.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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The income tax treatment of any property lease incentive will vary, depending on the nature of the inducement provided.
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