Changing a will after death — a deed of family arrangement can make it possible

 

There are times when the terms of a deceased’s will are not suitable and the beneficiaries involved seek to have the will varied. There are various situations where this may be the case, such as changing circumstances over a long period of time from when the will was first drafted, or an estrangement between family members is healed (or vice versa).

This is where a deed of family arrangement can be utilised, however it is an option that requires all interested parties to agree on the outcome. This can however result in settlement outside of litigation, which can tie up an estate for months or even years.

Deeds of family arrangement can be used in a number of circumstances, such as:

  • where there are doubts about the meaning of a will
  • where the beneficiaries wish to rearrange the distribution of the estate between themselves
  • to compromise a claim against the estate where there is a challenge to the will
  • to create an estate proceeds trust under taxation legislation.

On that last point, note that an estate proceeds trust (EPT) is a trust established by a deed after the death of a person for the purposes of receiving property from that person’s estate. Under the current tax legislation, a person receiving property via a will from a deceased individual has three years from the death of the deceased to transfer the property to the EPT. The distinction between an EPT and a testamentary trust is that an EPT is established by a beneficiary, but a testamentary trust is established by the deceased person’s will.

Where the will is varied through a deed of arrangement, which meets certain requirements, generally the parties may disregard the resulting capital gains or losses (and some other guidance on CGT can be found in TR 2005/14).


STAY UP TO DATE

Like what you're reading? Join our community of 15,000 subscribers and stay on top of tax and super news.


Care needs to be taken however as there can be some variation on the rules from state to state, such as stamp duty. There may be other state-based laws in this regard, so relevant sources of information need to be used.

Note also that a deed of family arrangement that would act to reduce the benefits accruing to a minor or a disabled person may require court approval.

But as with a lot of matters dealing with deceased estates, care needs to be taken with any deed of arrangement, and the advice of a professional is highly recommended.

Changing a will after death Changing a will after death Changing a will after death Changing a will after death Changing a will after death Changing a will after death Changing a will after death Changing a will after death Changing a will after death

Website Comments

  1. Neil
    Reply

    In what circumstances would the court’ approval be required to alter the benefit of a minor (the benefit is being reduced) and what form does the application take. What is the enabling legislation.

  2. Paul
    Reply

    As I live in a country where estate duty is charged, and any significant legacy from my parents’ estate would be subject to estate duty (inheritance tax) can I raise a variation on my parents’ Australian (Victorian) will to redirect my inheritance to my children?

  3. Kerrie Jones
    Reply

    My husbands sister is contesting their mothers Will on Family provision. Basically she got a loan in her mother’s name $50000 prior to their mother passing so their mum made the Will 70/30 in favour of my husband. The Public trustees are the estate trustees and are suggesting a deed of compromise so that the estate can be settled expediately. This has been dragging on for 18 months. We have previously offered 50/50 but she also want the estate to cover her legal fees. The estate is only small(will be lucky to be $100000 once mortgage (from the loan), trustees fees and then rates and maintenance of property come out. My husband has Lewy body dementia which is terminal and leads to fluctuating cognition. and he has to be deemed of capacity to sign the deed otherwise more costs. What do you suggest we do.

Post a comment