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Step 33 - Inform Beneficiaries of Assets & Liabilities, Implications and Investment Options

Last updated: June 2019

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Why is this important?

This step’s objective is to discuss with the Beneficiaries the total value of the estate (subject to final changes) and their likely inheritance. It also emphasises the importance to discuss the impacts the inheritance will have on each Beneficiary and how it could be invested for long-term benefit.

 

simplyEstate is here to help with the process. Contact us via email or book a first free phone appointment.

Approximate Effort & Cost

Reading: 30 mins
Preparing: 1-3 hrs
Completing: 2-5 hrs
Total: 3:30-8:30 hrs
Cost: $0

Effort and cost are general estimates only and are based on the assumption that you complete this step without specialist help.

Instructions

To find out how this Process Guide works, access the instructions here.

Glossary

To find out what the capitalised words mean, access the glossary here.

33.1 Overview

Before finalising the estate and making the final distributions to Beneficiaries covered in the next and final Step, you should:

  • inform Beneficiaries what the total assets and liabilities are, subject to any final changes to the estate;
  • discuss with the Beneficiaries how they intend to utilise their inheritance;
  • encourage Beneficiaries to seek financial advice; and
  • encourage Beneficiaries to seek tax advice.

It is highly recommended that you work through each of the following topics prior to progressing with the final Step of the deceased estate administration process.

 

Contents
33.2 Inform Beneficiaries of their Expected Inheritance
33.3 Determine Beneficiaries’ Financial Risk Exposure
33.4 Beneficiaries Taking on Assets they Cannot Service and Maintain
33.5 Seek Professional Advice
33.6 Investment Options for Beneficiaries
33.7 Pressure by Beneficiaries for Immediate Distribution
33.8 Actions and Decisions to Complete Step

33.2 Inform Beneficiaries of their Expected Inheritance

Now that you have nearly finalised the deceased estate for distribution, you may already have a good idea what assets and liabilities of the deceased estate will be transferred to which Beneficiary.

 

If a Will is in place and the administration process thus far has been supported by family members and Beneficiaries, you should have a good idea of the eligible Beneficiaries, their particular inheritance and the total value.
If no Will is in place, you have determined the likely Beneficiaries and what their estimated inheritance value is in Step 13 – Determine the Beneficiaries using the simplyEstate Intestate Beneficiary Assessment Tool.

 

If claims were made against an estate or there has been some hostility or animosity between family members and Beneficiaries, you should seek legal advice before making any commitments and stating specifics to individual Beneficiaries.

 

Make sure you do not overstate the inheritance at this stage if still unsure as you want to manage the Beneficiaries’ expectations.
Even if you are unable to derive at a figure just yet, it is still worthwhile speaking with each Beneficiary or their legal guardian about the concept of inheritance and which assets and liabilities are available for distribution.

33.3 Determine Beneficiaries' Financial Risk Exposure

By speaking to each Beneficiary, you fill get a good sense if they have a clear understanding and plan of how the money or assets will be used once inherited.

 

You will encounter Beneficiaries that have a solid understanding of finances and will be able to make good decisions about how the inheritance is used or invested to benefit over long periods of time.

 

Others who may not be so familiar with their options, may not make equally good decisions and possibly make unreasonable and impulsive choices such as:

  • resign from their jobs;
  • increase their spending unreasonably;
  • buy real estate in a bad market;
  • overcommit themselves by increasing their debts; or
  • waste the money on unimportant or value destructing goods and services.

If you have concerns about a Beneficiary’s intentions and sense that they will possibly put themselves at financial risk and be worse off a few years after receiving an inheritance, you should discuss this with the person or other family members and organise appropriate financial or other advice.

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33.4 Beneficiaries Taking on Assets they Cannot Service and Maintain

There may be situations where one or multiple Beneficiaries have a strong sentiment towards a family home or other expensive assets.
If the decision was made not to sell that asset, Beneficiaries will need to be fully aware of the ongoing costs associated with servicing financial obligations and maintenance.

 

Especially with real estate that are still mortgaged, Beneficiaries need to fully understand the following elements and work out if they can afford the inherited asset.

  • Value of the mortgage associated with the inherited property;
  • the minimum repayments of that mortgage and how those payments will change if interest rates increase during the life of the mortgage;
  • the duration of those repayments;
  • all other rates including council, water and strata levies (where applicable); and
  • costs of the ongoing maintenance of the property.

33.5 Seek Professional Advice

If you think one or all the Beneficiaries could benefit from professional advice from an accountant, tax accountant and/or financial planner, you may want to organise a group or individual session.

 

You may have engaged the Beneficiaries during Step 28 – Request Tax Advice for Effective Distribution when you discussed the tax implications of the estate assets and liabilities. If you didn’t complete that step, it is advisable you seek a tax specialist’s help and either involve the Beneficiaries, inform them of the advice provided or request for advice in writing so this can be shared with the Beneficiaries.

 

simplyEstate has selected Specialist Partners across Australia to help you and the Beneficiaries to make better informed decisions. These are listed in the yellow section to the right or below and will happily help you with any of your queries.

 

If all Beneficiaries agree to engage a professional for advice, you may agree to pay this from the deceased estate before distribution, so the cost is shared between all and covered.

33.6 Investment options for Beneficiaries

An inheritance, be that money or other assets, can be a valuable additional part of a Beneficiary’s income stream or capital gains strategy, if done right.

 

If you think that a Beneficiary could benefit from investing some or all the inheritance money into an investment fund or other investment opportunities, you should speak to an Investment Fund Manager or Financial Adviser.

 

If Beneficiaries inherit real estate, they may want to consider renting the property out to generate income, after seeking tax advice. Depending on the state of the property and a real estate agent’s advice, it may be worthwhile investing some money to renovate and refurbish the property to achieve higher rental returns.

33.7 Pressure by Beneficiaries for Immediate Distribution

If Beneficiaries are pressuring you to make the estate distribution now, you should remind them of the following:

  • As the Executor or Administrator authorised to administer the deceased estate you oversee the process and determine when the estate is ready to be distributed.
  • Generally, you have up to 12 months from the date of death to administer an estate without Beneficiaries being able to claim interest payments on the value of their gifts.
  • Deceased estates should generally not be distributed within six months from the date of the Grant of Probate or Letters of Administration were issued by the Supreme Court due to possible claims against the estate.

You have been working diligently to reach this point and have come a long way. Request some final patience from the Beneficiaries and ask for their understanding. You should emphasise that you will be working through the final Step and inform them when the distribution can be made. Do not provide a deadline if you are unsure how long the final step will take to manage expectations and avoid the same situation in a few weeks’ time.

 

The final Step will take longer if the deceased person died Intestate without a Will, as the distribution will need to be completed based on the legislation of the relevant State/Territory.

33.8 Actions and Decisions to Complete Step

If you would like a little help from us at simplyEstate with this Step, you can email us or book your free first phone appointment. If you would like specialist help, get in touch with one of our Specialist Partners listed in the yellow section to the right or below and see how they can help.

 

If you have decided to tackle this Step yourself after reading and understanding this Step, you may want to:

  1. Finalise the simplyEstate Assets & Liabilities Inventory showing each Beneficiary and related values (subject to changes until finalised in Step 34);
  2. Seek legal advice if there were claims made against the estate and you are unsure about the validity of those claims;
  3. Discuss with the Beneficiaries what the estate is made up of and the total estate value (subject to changes until finalised in Step 34);
  4. Inform Beneficiaries of the financial implications if a real estate or other asset with high maintenance cost is inherited;
  5. Encourage all Beneficiaries to seek financial or tax advice as a group or individually to benefit them;
  6. Discuss investment options with Beneficiaries to invest the inheritance smartly; and
  7. Manage pressure for distribution by explaining the final process and kindly request their patience

Once you have completed all the necessary actions and decisions, you can move on to the next Step by clicking below or save progress at the top.

Would you like to talk to us?

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Book your free first appointment with us now to discuss the deceased estate administration.

Do you need specialist help?

Estate Lawyers

 

simplyEstate Specialist Partner Listings coming soon in 2019.

 

simplyEstate Specialist Partner Listings coming soon in 2019.

 

simplyEstate Specialist Partner Listings coming soon in 2019.

 

simplyEstate Specialist Partner Listings coming soon in 2019.

Tax Accountants

 

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simplyEstate Specialist Partner Listings coming soon in 2019.

 

simplyEstate Specialist Partner Listings coming soon in 2019.

 

simplyEstate Specialist Partner Listings coming soon in 2019.

Financial Planners

 

simplyEstate Specialist Partner Listings coming soon in 2019.

 

simplyEstate Specialist Partner Listings coming soon in 2019.

 

simplyEstate Specialist Partner Listings coming soon in 2019.

 

simplyEstate Specialist Partner Listings coming soon in 2019.

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