When planning your estate, most people focus on who will receive their assets—not how those gifts may be taxed. But the truth is, tax can significantly affect the value of what’s ultimately passed on, particularly if you own shares, property, or a family business.
In Queensland, there’s no formal inheritance tax or death duty. However, that doesn’t mean an estate is free from tax consequences. Capital gains tax (CGT), superannuation tax, and even income tax can all come into play—often with unexpected results.
Understanding these implications is critical to preserving the value of your estate and avoiding avoidable surprises for your beneficiaries.
No Inheritance Tax, But Capital Gains Still Apply
Queensland does not impose a state-based inheritance tax. But federal tax laws still apply—and capital gains tax is often the most significant.
When a person dies, their assets are generally treated as if they’ve been transferred to their legal personal representative (usually the executor of the Will). While CGT is typically deferred until the asset is sold, certain events can trigger it immediately—especially if assets are distributed outside the family group or sold during the estate administration process.
Common CGT triggers include:
- Selling an investment property during probate
- Gifting shares to a non-resident beneficiary
- Transferring assets to a trust or company without market-based consideration
If you own assets that have appreciated significantly in value, it’s essential to understand how CGT might affect their eventual distribution—and what strategies may be available to reduce or defer the tax.
Superannuation Death Benefits: Tax May Still Apply
Superannuation is not automatically dealt with under your Will. It sits outside your estate unless your super fund allows for a binding death benefit nomination in favour of your legal personal representative.
More importantly, superannuation death benefits can be taxed depending on who receives them.
A tax-free super payout can usually only be made to:
- A spouse or de facto partner
- A dependent child under 18 (or under 25 if financially dependent)
- Someone with whom you had an interdependency relationship
Where benefits are paid to adult children or non-dependants, tax can be as high as 17% (including the Medicare levy) on the taxable component of the fund.
This makes it essential to align your superannuation death benefit nominations with your estate planning intentions—especially if you’re aiming to divide your estate equally between adult children.
Testamentary Trusts and Income Tax Planning
For high-net-worth families, testamentary discretionary trusts are a powerful tool not only for asset protection, but also for tax minimisation.
A key advantage is that beneficiaries under the age of 18 can receive income from the trust at adult tax rates. This can significantly reduce tax payable where a beneficiary has limited other income and the estate generates ongoing income (e.g. from investments or rental properties).
Testamentary trusts also offer:
- Flexibility in managing distributions
- Protection from creditors or family law claims
- Tax-effective asset management across generations
However, to access these benefits, the trust must be carefully drafted and correctly activated through your will.
Don’t Forget the Executor’s Tax Responsibilities
The executor of your estate is responsible for lodging any final tax returns and dealing with tax liabilities on behalf of the deceased. This can include:
- The date of death return
- Estate tax returns (if the estate earns income during administration)
- Capital gains or losses on asset disposals
- Finalising any ATO debts
This responsibility is more complex when estates hold shares, businesses, or income-generating properties. Ensuring your executor is supported by professional advisors is essential to avoid delays, penalties, or accidental tax breaches.
Effective estate planning isn’t just about dividing assets—it’s about preserving value.
Understanding the tax consequences of your estate plan is crucial, particularly if you own property, operate through a trust, or have substantial superannuation.
At Perspective Law, we work with clients and their advisors to design estate plans that are not only legally valid but also tax-aware, protecting both your legacy and your loved ones from unnecessary complexity.
If your circumstances have changed—or if you haven’t reviewed your plan in several years—it may be time to revisit your documents with tax in mind.
Need assistance with estate planning or administration?
Speak to the team at Perspective Law to discuss your situation in confidence. We’re here to help you make sense of the process—and ensure nothing is left to chance.
Call our team now on 07 3839 7555 or contact us to start your conversation today.