We often get asked whether a family member can buy someone else's share of an Estate, or be transferred someone else's share of an Estate.
As an example, perhaps one parent dies leaving their Estate to their two children. One child wants to buy the other child's share of the house, so rather than sell the whole house to a third party one sibling will retain the house.
Yes, this can be done, but you would avoid certain transaction costs if you had properly set up your Estate (that is, properly set up a Trust and some options in your Will).
Stamp duty alone may make an option like this untenable. For instance on a $600,000 property in the example above, the child who wants to 'buy' their siblings share would have to pay $9,000 in stamp duty, being the stamp duty payable ($8,990) on $300,000 plus the stamp duty fee of $10.
In a properly set up trust they could have avoided this $9,000 cost.
Do you still think it is too expensive to get proper advice on your Will?
Do I pay stamp duty on an Estate?
Ordinarily no, there is an exemption for most real property transactions made in accordance with the terms of the will thanks to section 63 of the Duties Act 1997 (NSW). Sometimes an agreement can attract a partial stamp duty exemption but the legislation is a bit convoluted, section 63(2) states that:
(2) If a transfer of dutiable property is made by a legal personal representative of a deceased person to a beneficiary under an agreement (whether or not in writing) between the beneficiary and one or more other beneficiaries to vary the trusts contained in a will of the deceased person or arising on intestacy, the dutiable value of the dutiable property is to be reduced by the portion of the dutiable value that is referable to the dutiable property to which the beneficiary had an entitlement arising under the trusts contained in the will or arising on intestacy.
Clear as mud?
Get proper advice, set your Estate up properly and if you are an Executor dealing with an Estate then you need to get proper advice to make sure you are complying with all of your tax requirements.
Estate planning is more than Wills
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