It can be a difficult time when a loved one passes away and is often made more difficult dealing with their assets in line with their wishes.
But what happens when the deceased owns assets overseas?
Unfortunately, the answer is not always so straight forward and our multi-cultural country sees many Australian citizens born or working overseas.
Australians born overseas may be collecting an overseas pension. International pension agencies need to be notified of their death as soon as possible to avoid repaying overpaid amounts. In most cases, notification needs to be made via post and this can add delays to the distribution of the estate if not dealt with promptly.
Assets held in other countries are subjected to that country’s estate and tax laws. Australia has many tax and estate treaties with other countries which assist in limiting the amount of taxes due on cashing in or transferring an asset to a beneficiary.
For example, Australia has a treaty with the United States which allows for certain assets to receive the US citizens tax exclusion rate of around US$12 million as opposed to nontreaty countries with an exclusion limit of US$60 thousand.[1] Requests for the treaty to apply need to be made by the executor and are not automatically applied. There are also time restrictions to deal with assets and applying tax exclusions. In most cases there is no step-by-step guide and can be a laborious task to the executor of the estate.
To add another layer of complexity, the country of residence and death, regardless of citizenship can be deemed the country that the treaty deals with and may not receive the same benefits as an Australian treaty if the deceased was living overseas at the time of death.
Overseas assets are either deemed ‘movable’ or ‘non-movable’. The laws of the deceased’s country of residence usually applies to movable assets such as shares and bank accounts. Non-movable assets, such as real estate are generally dealt with by the relevant overseas law.
Our knowledgeable estates team at Mal Ryan & Glen can assist you in navigating though the paperwork and requirements of overseas agencies with experience in dealing with both overseas pensions and tax treaties.
[1]Correct at time of posting
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This article is general in nature. It does not constitute legal advice and should not be taken as such.
AUTHOR
Stacey Cook Estates Clerk
EDITED BY
