Navigating the inheritance and distribution of a deceased person’s assets can be a complicated process, especially when disputes or unique circumstances arise. A Deed of Family Arrangement is an invaluable tool in estate planning, allowing beneficiaries to reshape the distribution of assets in a manner that best suits their needs or resolves disputes. This post explores the various intricacies of Deeds of Family Arrangement in South Australia, from when they are used to their legal limitations.
What is a Deed of Family Arrangement?
A Deed of Family Arrangement is a legal document that allows the parties with interest in an inheritance, including beneficiaries, executors, trustees, and even creditors, to alter the terms of a will or intestacy rules. Whether to accommodate changing family dynamics or resolve conflicts, this deed offers a flexible approach to estate planning.
When Can You Use a Deed of Family Arrangement?
To Prevent an Inheritance Claim: If a will is challenged, parties may agree on a new apportionment, formalising it through this deed.
To Alter the Terms of a Will: If beneficiaries want to change the will's terms, such as retaining a property, a deed may be drawn.
To Alter Intestacy Rules: When no will exists, and legal rules don't meet the family's needs, this deed can create a more fitting distribution.
Entering a Deed of Family Arrangement:
All parties must agree to the terms.
Parties must be 18 years or older and have mental capacity.
Executors or administrators must sign to enforce the document.
Capital Gains Tax (CGT) and Stamp Duty Considerations: The deed can have significant CGT and stamp duty implications, governed by the Income Tax Assessment Act 1997 (Cth) and various State laws. Professional advice is crucial in understanding these matters, as they may vary across regions.
Limitations and When a Deed Cannot Be Used: A deed cannot be used to avoid claims under the Inheritance (Family Provision) Act 1972 (SA), if the affected person is an infant or lacks legal capacity, or to contract out of one's right to an inheritance.
Examples of Deed of Family Arrangement: Whether it's to change the will's terms, prevent inheritance claims, or alter intestacy rules, real-life applications of this deed are versatile and adaptable to various situations.
Final Thoughts
The Deed of Family Arrangement is a valuable legal tool that can enable flexibility and agreement among beneficiaries, executors, and other interested parties in the distribution of a deceased person's estate. It can provide a way to resolve disputes, amend terms, and adapt to new circumstances without the need for contentious court proceedings.
However, given the complexity of the legal requirements and the potential implications for stamp duty and capital gains tax, professional legal advice is essential to ensure that the deed complies with all relevant laws and safeguards the interests of all parties involved.
Should you wish to discuss your specific situation or require assistance in drawing up a Deed of Family Arrangement, please do not hesitate to contact us at 08 7084 3060 or lawyers@kdandcolawyers.com for an obligation free appointment.
We look forward to assisting you with your legal needs.