State probate duty
Probate duty in Victoria was abolished on 1 January 1984 for the estates of all persons dying on or after that date. Since 7 June 2000 no formalities are required, even for estates where the deceased died prior to 1 January 1984.
Federal estate duty
This duty was abolished on 1 July 1979. It can be levied only where the deceased died before that date, leaving assets to a brother or sister, remote relative or total stranger. Contact the Australian Taxation Office.
An estate is liable to pay income tax on the deceased person’s income up to the date of death as if the deceased was still alive. If the estate continues to earn income after the date of death, the estate or the beneficiaries are liable for income tax on that income.
Capital gains tax could be incurred if the estate or a beneficiary sells an estate asset and there is a capital profit on the sale. The law here is extremely complex and advice should be taken from an accountant or lawyer as to liability in any particular case (div 128 Income Tax Assessment Act 1997 (Cth)) before any sale or transfer of an estate entitlement occurs, particularly if a life interest in an asset is dealt with.
The expense in the administration of estates are:
- An executor’s commission can be charged by an executor and a trustee, if they are appointed as an executor in the will, and by an administrator (s 65 Administration and Probate Act 1958 (Vic) (‘A&P Act’)); commission is also payable to trustee companies (see ‘Trustee companies’, below).
- Legal fees may be charged if a lawyer is employed to act for the executor in the administration of the deceased’s estate.
The recommended charges for solicitors proving the will depend on the gross value of the estate.
Additional charges will be made where a solicitor also acts as an executor or where conveyancing or other work is involved (e.g. where a joint tenancy is converted to a single tenancy).
The following charges are therefore a basic minimum for obtaining the grant of probate or administration only. See order 9.01 and appendix 3-A of the A&P Rules.
|Gross value of estate||Legal charges|
|Up to $50 000||$499|
|Up to $70 000||$572|
|Up to $80 000||$608|
|Up to $90 000||$644|
|Up to $100 000||$680|
|$680 plus $35 for every $50 000 over $100 000 of the gross value of the estate||$35|
State Trustees charge in accordance with the scale of charges in section 13 of the State Trustees (State Owned Company) Act 1994 (Vic).
For administering an estate, a private trustee company must charge in accordance with the prescribed scale of charges in section 601TAA of the Corporations Act 2001 (Cth). The State Trustees and other trustee companies will give particulars of their exact charges upon request.
A person appointed executor/trustee or granted letters of administration is entitled to apply to the Supreme Court of Victoria for a commission or percentage not exceeding 5 per cent of the deceased’s gross assets (s 65 A&P Act). The usual rate of capital commission that is allowed by the court is between 2–3 per cent of the gross assets of the estate, depending on the size of the estate and the amount of time and trouble the executor incurs in winding up the estate. An executor may also be granted commission on income of an estate during the time the estate is administered by the executor. No specific rate is fixed by legislation, but percentages of up to 5 per cent are usual, depending on the difficulty of administration.
It is unusual for the full amount of commission of five per cent to be granted unless the estate is very complex, the estate is tiny, or the circumstances are very unusual. The commission will be reduced or refused if the court is satisfied that the executor, administrator or trustee was guilty of unreasonable delay, misconduct or incompetence in relation to carrying out their duties to the estate.
It is possible to avoid an application to the court if:
- all beneficiaries are legally capable and agree on a rate (under 5 per cent) with the executor; or
- the rate is specifically set out in the will.
The Administration and Probate and Other Acts Amendment (Succession and Related Matters) Act 2017 (Vic) (s 65) gives the Supreme Court the power to supervise the taking of an executor’s commission, and requires the early disclosure of the rate of commission that the executor will charge (ss 65A–65D A&P Act).