Deceased estates and duty

Key information

Whether duty applies to a transfer from a deceased estate depends on how the property is transferred.

• Transfers of property made strictly in accordance with a will or codicil may be exempt from duty under section 42 of the Duties Act (2000).
• Transfers outside the terms of the will, including intestacy transfers and some trust or estate arrangements, may be subject to duty.
• Some estate interests, such as life estates and interests in remainder, are dutiable unless an exemption applies.
• Where property is dealt with under a testamentary trust, duty depends on whether the transfer is from the estate to the trustee or from the trust to beneficiaries.

The documents required to support a transfer vary depending on the type of transfer and exemption claimed.

Transfers under a will or codicil

For these transfers to be exempt from duty, the following conditions must be met:

• The transfer is made by the legal representative of the deceased person (the executive) in accordance with the terms of the will or codicil.
• No valuable consideration is provided.

Revenue Ruling DA-051 – Transfer of dutiable property from a deceased estate explains how the exemption under s42 applies.

You can process these transfers using Duties Online (DOL) and we will assess whether the transfer is exempt. 

Transfers outside of the terms of the will

All other transfers of dutiable property arising from a deceased estate must be lodged with us using Duties Online (DOL) for complex assessment. We will consider whether duty is payable or whether an exemption applies and notify you accordingly.

Transfers that require a complex assessment include:

• a transfer arising on an intestacy
• a transfer of dutiable property not made for valuable consideration by the executor to a beneficiary in satisfaction of the beneficiary’s entitlement under the will or arising on an intestacy
• a transfer that has taken place under Part IV of the Administration and Probate Act 1958
• a transfer of a life estate and/or right to reside
• a transfer under a testamentary trust.

Life estates and estates in remainder

Life estates and estates in remainder are dutiable property under the Duties Act. Accordingly, the creation or transfer of a life estate or estate in remainder is subject to duty under the Duties Act unless an exemption applies.

A life estate is one type of freehold estate. It arises by grant or operation of law for the benefit of a person for the rest of their life. The key difference between an estate in fee simple and a life estate is that the life estate exists for the duration of the person's life whereas a freehold estate is not limited in duration.

A life estate can be created by a transfer of land instrument, a declaration of trust or under a will. In any case, there must be clear words showing an intention to create a life estate, such as 'to A for life' rather than simply a 'right to reside'. Our Revenue Ruling DA-028 – Duty liability of a right to reside, life tenancy or life interest provides more information on how to distinguish between a right to reside and a life estate for the purposes of s42 of the Duties Act.

Where the creation or transfer of a life estate or estate in remainder is not exempt, its dutiable value needs to be determined. We currently use a money table for life estates, prepared by the South Australian Revenue Office, to determine the value of the life estate or estate in remainder. We then use this to calculate duty.

If you want to provide your own actuarial valuation, you are entitled to do so.

Testamentary trusts

A testamentary trust is a trust specified in the will of the deceased and arises upon their death.

The deceased intends that the trustee or trustees holds the property in accordance with the terms of the testamentary trust for specified beneficiaries. At some future time, the trustee will distribute the property to those beneficiaries.

Where a deceased person leaves dutiable property to the trustee(s) of a testamentary trust, there can be 2 transfers of property:

1. From the deceased estate, that is from the executor of the will to the trustee of the testamentary trust (the first transfer).
2. From the trust at a future date, that is from the trustee of the testamentary trust to the beneficiaries of that trust (the second transfer).

We will treat the first transfer as if it were a transfer to a beneficiary under the will of the deceased as long as the transfer conforms to the trust(s) contained in the will and is not made for valuable consideration. As such, it will be exempt from duty under s42 of the Duties Act.

The exemption in s42 does not apply to the second transfer given the trustee is no longer the executor. The transfer may, however, be exempt from duty under other exemptions in the Duties Act (e.g. s36 or s36A). This will depend on the type of testamentary trust and the circumstances of the transaction.

Where the will provides for the executor and the trustee of a testamentary trust to be the same person, the executor becomes the trustee of the testamentary trust when administration of the estate is complete. This triggers a dutiable transaction which is exempt if it satisfies s42 of the Duties Act.

Supporting documents

There are different lodging requirements, depending on the exemption you are seeking. Our Evidentiary Requirements Manual explains the documents you need to lodge.