Estate planning in Australia

• A. A will
• B. An enduring power of attorney ✓
• C. A testamentary trust
• D. A living will

Why: An enduring power of attorney remains effective if the person loses mental capacity, allowing a chosen attorney to manage financial and property matters. A will only takes effect after death, and a testamentary trust is created within a will rather than being a decision-making document.

• A. Testator
• B. Beneficiary
• C. Intestate ✓
• D. Executor

Why: A person who dies without a valid will is said to have died intestate. Their estate is then distributed according to the intestacy rules of the relevant Australian state or territory. A testator is someone who makes a will, a beneficiary receives assets, and an executor administers the estate.

• A. Corporations Act 2001
• B. Succession Act 2006 (NSW) ✓
• C. Family Law Act 1975
• D. Income Tax Assessment Act 1936

Why: In New South Wales, the Succession Act 2006 governs wills and intestacy, including how estates are distributed when there is no valid will. Each state and territory has its own equivalent legislation, while the Corporations Act deals with company law and the Family Law Act with family separation matters.

• A. To receive the largest share of the estate
• B. To provide legal advice to beneficiaries
• C. To administer the estate and carry out the wishes in the will ✓
• D. To pay tax on behalf of the deceased's family

Why: An executor is the person named in a will to administer the estate, which includes gathering assets, paying debts and taxes, and distributing property according to the will. The executor does not necessarily receive a larger share, and beneficiaries may obtain their own independent legal advice.

• A. It eliminates the need to pay any taxes ever
• B. It ensures assets are distributed according to your wishes and can reduce disputes ✓
• C. It guarantees that the estate will never go to court
• D. It prevents creditors from making any claims

Why: Estate planning helps ensure your assets pass to the people you choose, in the way you intend, and can reduce the likelihood of family disputes. It cannot eliminate all taxes, guarantee avoiding court, or fully prevent legitimate creditor claims.

• A. 16 years
• B. 18 years ✓
• C. 21 years
• D. There is no minimum age

Why: In most Australian states and territories, a person must be at least 18 years old to make a valid will. Some jurisdictions allow minors who are married, in a registered relationship, or serving in the armed forces to make a will, but 18 is the general rule.

• A. It must be typed on paper with a witness's signature only
• B. It must be in writing and signed by the testator in the presence of two witnesses who are present at the same time ✓
• C. It must be notarised by a solicitor
• D. It must be registered with the state Supreme Court before death

Why: The standard requirement under the Wills Act provisions in Australian jurisdictions is that the will be in writing, signed by the testator, and witnessed by two (or sometimes more) people who are present together when the testator signs. Notarisation and court registration are not general requirements.

• A. Beneficiaries cannot read legal documents
• B. A beneficiary-witness may lose their gift, as the law protects against conflicts of interest and undue influence ✓
• C. Beneficiaries must always be over 21 to witness
• D. Witnesses must be unrelated to the testator by law

Why: Under Australian law, if a beneficiary (or the spouse of a beneficiary) witnesses a will, their gift under that will may be void. This rule exists to prevent undue influence and conflicts of interest. Most jurisdictions have provisions to protect the gift in some circumstances, but the general principle is to avoid beneficiary witnesses.

• A. Codicil
• B. Testamentary capacity ✓
• C. Probate
• D. Intestacy

Why: Testamentary capacity refers to the mental ability required to make a valid will. The testator must understand what a will does, the nature and extent of their assets, and the people who might reasonably expect to benefit. A codicil is an amendment to a will, probate is the court process of confirming a will, and intestacy means dying without a valid will.

• A. Their estate is automatically given to the government in all cases
• B. Their estate passes according to the intestacy rules of the relevant state or territory ✓
• C. Their estate is divided equally among all friends
• D. The estate is held by the public trustee indefinitely without distribution

Why: When someone dies intestate (without a valid will), their estate is distributed according to the intestacy rules set out in the legislation of the state or territory where they lived. These rules typically prioritise a surviving spouse, children, and other close relatives. The government does not automatically take the estate in general cases.

• A. To determine the tax rate applied to the fund's investment earnings
• B. To direct how a member's superannuation balance is paid out if they die
• C. To transfer ownership of the fund's assets to the trustee
• D. To set the minimum pension payments the member must receive

• A. Non-binding nomination
• B. Binding nomination
• C. Reversionary pension
• D. Testamentary trust nomination

• A. A sibling who lives overseas
• B. A former business partner
• C. A spouse, including a de facto partner
• D. A friend who helped care for the member

• A. A pension that reverts to the member if their nominated beneficiary dies first
• B. A pension that continues to a nominated dependant after the member dies
• C. A lump sum paid to the estate when a pension is commuted
• D. A pension that is automatically cancelled upon the member's death

• A. The Australian Taxation Office automatically transfers it to the Commonwealth
• B. The member's bank
• C. The trustee of the super fund, usually guided by the SIS Act and the fund's trust deed
• D. The member's employer

• A. To appoint someone to manage your financial and property affairs if you lose the capacity to do so ✓
• B. To transfer ownership of your house to another person immediately
• C. To make binding decisions about your medical treatment only after your death
• D. To register your will with the state government

Why: An enduring power of attorney lets you appoint an attorney to manage your financial and property affairs, and it continues to operate if you lose decision-making capacity. It does not transfer ownership or relate to death. Note that option A is the correct answer here, so the 'correct' field above should read A.

• A. An enduring guardian makes personal and lifestyle decisions, including some health care decisions, while an attorney manages financial and property matters ✓
• B. An enduring guardian manages bank accounts while an attorney makes medical decisions
• C. There is no difference; the two terms refer to the same role
• D. An enduring guardian can only act after the principal has died

Why: Enduring guardians make personal, lifestyle and in many states health care decisions, whereas enduring attorneys handle financial and property matters. The roles are separate and can be held by different people.

• A. They must have legal capacity to understand the nature and effect of the document at the time it is made ✓
• B. They must be over 80 years of age
• C. They must have already been declared bankrupt
• D. They must appoint a lawyer as their sole attorney

Why: The donor (person granting the power) must have capacity when signing, meaning they understand what the document does and its consequences. Age limits and lawyer appointments are not general requirements.

• A. Immediately upon signing, regardless of the donor's condition
• B. Only upon the donor's death
• C. When the donor loses decision-making capacity, or as specified in the document, depending on the state or territory ✓
• D. When the donor files their tax return each year

Why: Enduring powers are designed to operate when the donor can no longer manage their own affairs. Some Australian jurisdictions allow immediate effect, but the document's terms and state law determine this. They do not operate only at death, which is the role of a will.

• A. They should act in the best interests of the donor and, where possible, consider the donor's known wishes and values ✓
• B. They should act in their own financial interests
• C. They should always follow the instructions of other family members over the donor's wishes
• D. They should avoid consulting the donor at all times

Why: Attorneys and guardians have a fiduciary or duty-of-care obligation to act in the donor's best interests, respecting their wishes and values as far as practicable. Acting for personal gain or deferring to others over the donor breaches these duties.

• A. To receive all income generated by the trust for personal use
• B. To hold and manage trust assets in accordance with the trust deed for the benefit of beneficiaries ✓
• C. To act as the sole beneficiary of the trust's capital
• D. To guarantee the trust's debts with their personal assets

Why: A trustee holds legal title to trust assets and must administer them according to the trust deed and their fiduciary duties for the beneficiaries. They do not personally own the assets or act as the default beneficiary.

• A. The beneficiary who receives the most distributions
• B. The person with the power to appoint or remove the trustee ✓
• C. The Australian Taxation Office
• D. The auditor responsible for annual accounts

Why: The appointor holds the power to appoint and remove trustees, providing a key control mechanism over the trust. This role is usually held by the settlor or a trusted advisor.

• A. Distribute income and capital to beneficiaries at the trustee's discretion within the terms of the trust deed ✓
• B. Only pay fixed amounts to beneficiaries on a set schedule
• C. Avoid all tax obligations for the trust and its beneficiaries
• D. Transfer ownership of the trust to the Commonwealth Government

Why: Discretionary trusts give trustees flexibility to decide how income and capital are distributed among a class of beneficiaries each year, which is a major reason they are used in tax and asset planning.

• A. The property becomes exempt from all creditors automatically
• B. The assets are generally not legally owned by the individual, which can shield them from that individual's personal creditors ✓
• C. The individual can avoid paying any stamp duty on transfers
• D. The property is guaranteed to increase in value

Why: Because the trustee holds legal title rather than the individual, assets in a properly structured trust are generally less exposed to the personal debts or bankruptcy of that individual. Protection depends on proper structuring and the absence of sham arrangements.

• A. The date on which the trust is registered with ASIC
• B. The date on which the trust must be wound up and capital distributed to the entitled beneficiaries ✓
• C. The annual date on which the trustee must lodge a tax return
• D. The date the settlor signs the trust deed

Why: The vesting date is the point at which the trust terminates and beneficiaries become absolutely entitled to the trust property. Trust deeds must specify this date to comply with the rule against perpetuities in Australian law.

• A. New South Wales
• B. Victoria
• C. Queensland ✓
• D. Western Australia

Why: Australia abolished state-based death duties (estate duties) progressively between 1976 and 1982. Queensland, along with all other states and territories, no longer levies a general death duty or inheritance tax on estates, so the correct answer is Queensland. Some jurisdictions retain other taxes or duties on specific transfers, but not a general estate tax.

• A. It is tax-free because it is a death benefit
• B. The taxable component is taxed at 17% (plus Medicare levy) for the recipient ✓
• C. It is taxed at the recipient's marginal rate with no concessions
• D. It is taxed at a flat 30% rate in all cases

Why: Superannuation death benefits paid to non-dependants are taxed at 17% (including the 15% contributions tax component plus the Medicare levy, which applies to the taxable component of the benefit). Benefits paid to dependants such as a spouse or financially dependent child are generally tax-free. The 17% rate applies to the taxable component, with the tax-free component passing without tax.

• A. The beneficiary pays CGT on the full sale price
• B. The dwelling is exempt from CGT for the beneficiary, as it is a pre-CGT asset ✓
• C. CGT applies only if the beneficiary lives in it
• D. The beneficiary must pay CGT at 50% of the market value immediately

Why: Assets acquired before 20 September 1985 are pre-CGT assets. Where a pre-CGT asset passes to a beneficiary on death, it generally retains its pre-CGT status, so no capital gain arises on later disposal. This makes the correct answer that the dwelling is exempt from CGT for the beneficiary.

• A. Shares held in a family company
• B. Assets passing to a beneficiary under the deceased's will, where a CGT event is deferred to the beneficiary ✓
• C. Art collections sold through an auction house after death
• D. Cryptocurrency held in an exchange account

Why: Under Australian tax law, a CGT event generally does not occur when a deceased's assets pass to beneficiaries under a will or intestacy. Instead, the beneficiary acquires the asset at the deceased's cost base (or market value for post-CGT assets), and CGT is deferred until the beneficiary disposes of it. The other options describe transfers or sales that can trigger CGT.

• A. To avoid stamp duty on property transfers
• B. To allow income earned by the trust to be distributed to beneficiaries who may be taxed at lower marginal rates ✓
• C. To eliminate all capital gains tax on estate assets
• D. To remove the need for a will

Why: A testamentary trust is created under a will and takes effect on death. Income it earns can be distributed to beneficiaries, including minors, who may be taxed at lower marginal rates, since the trust is taxed under special rules that allow minors' income to be taxed at adult rates in certain cases. Its main tax purpose is income splitting across beneficiaries; it does not eliminate CGT or stamp duty, and a will is still required to establish it.

• A. Letters of administration
• B. Grant of probate ✓
• C. Codicil order
• D. Testamentary trust declaration

Why: A grant of probate is issued by the relevant state or territory Supreme Court when a will is valid, authorising the named executor to deal with the deceased's assets. Letters of administration are used when there is no valid will.

• A. Grant of probate
• B. Letters of administration ✓
• C. Enduring power of attorney
• D. Deed of variation

Why: Letters of administration (sometimes called letters of administration on intestacy) authorise a person, usually a close relative, to administer the estate of someone who died intestate. Probate applies only where there is a valid will.

• A. Corporations Act 2001
• B. Family Provision legislation (e.g., Succession Act 2006 NSW) ✓
• C. Income Tax Assessment Act 1936
• D. Competition and Consumer Act 2010

Why: Family provision legislation in each state and territory, such as the Succession Act 2006 (NSW), allows eligible persons such as spouses, children and dependants to apply to the court for a share of the estate where proper provision has not been made for them.

• A. One month
• B. Six months
• C. Twelve months ✓
• D. Five years

Why: In New South Wales, a family provision application generally must be made within 12 months of the date of death, or within 12 months of the grant of probate or administration if this is later, with the court able to grant leave in some circumstances. Time limits vary across states and territories, so the local rules should always be checked.

• A. To act as a witness to the will's signing
• B. To collect the deceased's assets, pay debts and distribute the estate according to the will ✓
• C. To make medical decisions for the deceased before death
• D. To pay the deceased's personal income tax for the lifetime of the deceased

Why: An executor is responsible for locating and collecting the deceased's assets, paying debts and taxes, and distributing the remaining estate in accordance with the terms of the will, usually after obtaining a grant of probate.