Individual taxation responsibilities unfortunately do not cease at death
In addition to finalising a deceased estate, an executor is responsible for settling any outstanding tax obligations that the deceased had at their date of death. This may require that a review be undertaken to ensure that:
- there are no outstanding tax returns that need to be lodged; and
- any tax liabilities are paid
In some cases the deceased may have unknowingly been entitled to a tax refund and as such the executor would be entitled to recoup the tax refunds.
It is unwise to assume that tax affairs are up to date. Increasingly we are seeing elderly clients with multiple years’ outstanding returns. Many clients failed to lodge not because they were avoiding tax but because they were unaware they needed to lodge.
An executor can be held personally liable for any outstanding tax obligations after the finalisation of an estate. It is therefore prudent for an executor to show they have provided reasonable care when dealing with the deceased’s and the estate’s tax affairs. A Tax History Report or Letter of Advice on Tax Obligations may provide you the confirmation needed to ensure you have executed your taxation obligations as an executor sufficiently. Where you have relatively little information on the deceased, it can also potentially uncover previously unknown estate assets and income sources.
At BNR Partners we specialise in the taxation of deceased estates and pride ourselves at making the estate taxation process as seamless as possible for the executor. We provide a comprehensive range of services for simple to more complex estates.