WEBVTT - Mushroom murders: Inheritance lessons 0:00:07.080 --> 0:00:10.080 Hello, and welcome to The Australian's Money Puzzle podcast. I'm 0:00:10.160 --> 0:00:18.080 James Kirkby. Welcome aboard everybody. There is a subject I 0:00:18.120 --> 0:00:19.919 have wanted to do on the show for a long 0:00:19.960 --> 0:00:24.400 time and it's about wills and estate planning and inheritance. 0:00:24.600 --> 0:00:27.400 Now stay with me here. It's only human if you 0:00:27.440 --> 0:00:30.160 were to say not today, no thank you, because that's 0:00:30.160 --> 0:00:33.040 a problem that all investors have. They don't want to 0:00:33.080 --> 0:00:36.239 deal with this until they have to. But one of 0:00:36.240 --> 0:00:39.160 the things we see again and again is it's so 0:00:39.200 --> 0:00:42.440 important actually to be across this. Now. I've been trying 0:00:42.440 --> 0:00:44.800 to find a way to get this issue on the 0:00:44.800 --> 0:00:47.800 show in a way that you'd find interesting, and fortunately 0:00:47.840 --> 0:00:51.879 I've come upon somebody and something Inherits Australia is an 0:00:51.880 --> 0:00:57.440 operation which involves a man called Chris Hill, and he 0:00:57.640 --> 0:01:01.840 has done a marvelous exercise by keeping tabs on the 0:01:01.840 --> 0:01:06.319 most interesting cases in the land basically and what we 0:01:06.440 --> 0:01:11.319 learn from them. And most recently he watched the Mushroom 0:01:11.560 --> 0:01:15.600 murders trial Aaron Patterson, of course, who's now been convicted 0:01:15.640 --> 0:01:18.360 of three murders, one of the biggest cases of the year. 0:01:19.319 --> 0:01:21.959 And what's fascinating of course is that Aaron Patterson's quite 0:01:21.959 --> 0:01:26.000 wealthy and she received most of that wealth through inheritance, 0:01:26.040 --> 0:01:28.680 and there's also going to be consequences now that she's 0:01:28.680 --> 0:01:32.199 been found guilty for that wealth. So is the ideal 0:01:32.200 --> 0:01:34.480 man to have on the show this week, that's for sure. 0:01:34.840 --> 0:01:37.319 Chris Hill of inherit Australia, How are you? Thanks for 0:01:37.360 --> 0:01:37.680 coming on? 0:01:38.319 --> 0:01:40.680 Very good, Thank you, James, and good morning or good 0:01:40.680 --> 0:01:41.880 afternoon to our listeners. 0:01:42.080 --> 0:01:44.040 Great to have you on, Chris. And first of all, 0:01:44.080 --> 0:01:47.960 you know, hats off from making the most averted dimension 0:01:48.160 --> 0:01:52.720 of investment interesting on this issue as well, very few 0:01:52.800 --> 0:01:57.280 things are more interesting than the Mushroom murders trial, which 0:01:57.320 --> 0:02:01.800 has been a gigantic story here all around the world. Now, 0:02:01.800 --> 0:02:03.200 one of the things I just wanted to ask you, 0:02:03.680 --> 0:02:08.359 Aaron Partison, it turns out, first of all, is quite 0:02:08.400 --> 0:02:13.440 a wealthy woman, largely due to inheritances. Could you explain 0:02:13.960 --> 0:02:16.440 what is it she inherited and what was her situation 0:02:16.720 --> 0:02:19.119 VISI vie in inheritance and wills. 0:02:19.840 --> 0:02:22.720 Yeah, and this all came out in the testimony that 0:02:22.760 --> 0:02:24.840 we heard, I think it was on the first of 0:02:24.880 --> 0:02:28.880 May at court. She inherited about two million dollars from 0:02:28.880 --> 0:02:33.320 her grandmother in two thousand and six. That was distributed 0:02:33.360 --> 0:02:35.480 over an eight year period from I think two thousand 0:02:35.480 --> 0:02:39.000 and seven, and then she also received an inheritance of 0:02:39.040 --> 0:02:42.560 about nine hundred thousand dollars in a beach fund property 0:02:42.600 --> 0:02:45.480 from her mother in twenty nineteen. 0:02:46.440 --> 0:02:47.919 So I guess the. 0:02:47.919 --> 0:02:50.519 Issue that's going to arise now that she has been 0:02:50.560 --> 0:02:54.440 convicted is what's going to happen with those inheritances as well, 0:02:54.480 --> 0:02:56.440 of course, as what is a sentence going to be. 0:02:57.040 --> 0:02:59.680 So there's something in particular, isn't there that might necessarily 0:02:59.680 --> 0:03:02.440 come up and the trial or actly this mightn't come 0:03:02.520 --> 0:03:05.840 up in conventional general news coverage about this whole incident. 0:03:05.880 --> 0:03:09.560 But if you're wealthy basically, and you have assets, and 0:03:09.840 --> 0:03:13.600 you are convicted of murder, and in this case quite 0:03:13.600 --> 0:03:20.640 extraordinary three murders, then the estates linked with the victims 0:03:20.720 --> 0:03:25.760 of those murders they can claim against you, can they? 0:03:26.760 --> 0:03:29.480 Yes, certainly so if we look at the victims of 0:03:29.520 --> 0:03:34.920 those estates, which is the beneficiaries of the deceased persons, 0:03:35.760 --> 0:03:39.120 they have a right to make a claim against Eron 0:03:39.360 --> 0:03:42.560 in this case for what we call wrongful death under 0:03:42.600 --> 0:03:45.800 the Wrongs Act in Victoria, Part three of the Wrongs Act. 0:03:46.400 --> 0:03:49.760 So that's a compensation. That's a civil claim for compensation 0:03:49.960 --> 0:03:54.160 for the loss of income, loss of medical expenses, and 0:03:54.240 --> 0:03:57.720 other indirect losses as a result of it of losing 0:03:57.760 --> 0:04:01.760 their father, their mother, their brother, whoever that beneficiary is. 0:04:02.280 --> 0:04:06.200 And the three estates of the three murdered unfortunate murdered 0:04:06.560 --> 0:04:10.280 people linked in the Air and Patterson case. Those the 0:04:10.320 --> 0:04:14.160 states can claim against Aaron Patterson's own assets, can. 0:04:14.040 --> 0:04:17.400 They Yes, So it's a claim against her personally. It's 0:04:17.400 --> 0:04:22.080 a civil claim for compensation. And of course the issue 0:04:22.080 --> 0:04:25.279 that arises is if there's a judgment, as there inevitably 0:04:25.320 --> 0:04:28.839 will be in respect of each of those states, how 0:04:28.839 --> 0:04:31.839 that judgment can be satisfied and what assets of errands 0:04:31.880 --> 0:04:32.560 can be taken? 0:04:33.080 --> 0:04:34.600 And do you think they will do this? 0:04:35.320 --> 0:04:38.680 I think it's inevitable, right, It's a significant cases you've 0:04:38.680 --> 0:04:46.159 identified the wrongs that claims are easily broad because it's indisputable. 0:04:46.600 --> 0:04:49.279 Or you have to do is show that you are 0:04:49.520 --> 0:04:54.760 a victim of a person who commits a wrongdoing, and 0:04:54.800 --> 0:04:58.880 in this case, a convicted killer is a wrongdoer for 0:04:58.960 --> 0:05:00.720 the purposes of Yet. 0:05:01.240 --> 0:05:04.839 I don't follow criminal cases very often, but I would 0:05:04.839 --> 0:05:10.200 imagine in most cases the perpetrator, the murderer doesn't have 0:05:10.320 --> 0:05:13.320 much money in many cases, but in this case it's 0:05:13.480 --> 0:05:16.920 mostly unusual, isn't it? She is wealthy by most standards? 0:05:17.080 --> 0:05:20.559 But also intriguing here, Chris, is the fact that her wealth, 0:05:20.600 --> 0:05:23.240 in turn is due to wills and inheritance, isn't it? 0:05:24.040 --> 0:05:24.839 Yes, that's right. 0:05:24.920 --> 0:05:30.080 It's inherited wealth that she's received directly or indirectly. And 0:05:30.120 --> 0:05:33.159 I guess the question that arises is to what extent 0:05:33.200 --> 0:05:39.000 could any court judgment seize those inherited assets? And that 0:05:39.040 --> 0:05:43.359 comes down to in many cases, whether she has a 0:05:43.440 --> 0:05:47.880 fully vested, beneficial and legal interest in those state assets 0:05:47.960 --> 0:05:50.200 or whether they're held in still held on a trust. 0:05:50.760 --> 0:05:54.400 The two thousand and seven estate for the grandmother, my 0:05:54.480 --> 0:05:57.720 understanding was that it was paid out over eight years. Yes, 0:05:57.800 --> 0:06:01.440 so of course that's already expired. Now what she's done 0:06:01.440 --> 0:06:04.440 with that wealth? And I suspect that she's fed a 0:06:04.440 --> 0:06:06.960 lot of it on legal fees? But what if it's 0:06:07.040 --> 0:06:09.600 left of that wealth? I believe there were some loans 0:06:09.680 --> 0:06:13.200 as well that she made to help fund properties. Those 0:06:13.240 --> 0:06:18.080 loans would constitute assets, so to that extent, those assets 0:06:18.080 --> 0:06:20.799 could be seized as a result of a court order 0:06:21.120 --> 0:06:23.920 for any one of these wrongful desk claims. 0:06:24.240 --> 0:06:27.400 So could the properties that she owns end up being 0:06:27.440 --> 0:06:32.480 sold to satisfy these claims. Yes, right, absolutely fascinating. I 0:06:32.480 --> 0:06:34.640 didn't know any of this. One of the things it 0:06:34.720 --> 0:06:39.960 highlights is there are many people, I'm sure where wills 0:06:39.960 --> 0:06:42.760 and inheritance are so important, but in the case of 0:06:42.760 --> 0:06:46.520 Aaron Patterson, it explains almost entirely her wealth, and it 0:06:46.640 --> 0:06:49.280 also explains what's going to happen next in relation to 0:06:49.400 --> 0:06:51.720 that wealth. It's one of the things I suppose that 0:06:51.760 --> 0:06:55.280 the background being that Australia is a wealthy country and 0:06:55.320 --> 0:07:00.720 we have this enormous wealth transfer going on between generations. 0:07:01.440 --> 0:07:04.520 So you were telling me earlier about how the nature 0:07:05.040 --> 0:07:09.200 of wills is changing, how people are being more careful 0:07:09.240 --> 0:07:11.600 about what might go wrong in the future when they 0:07:11.680 --> 0:07:14.600 leave it will. I heard that one time that when 0:07:14.600 --> 0:07:17.520 you do will, most of the time what you hope 0:07:17.520 --> 0:07:22.200 will happen may not actually occur unless you add. 0:07:22.000 --> 0:07:22.880 All these extras. 0:07:23.080 --> 0:07:25.160 What are people doing these days that they used to 0:07:25.200 --> 0:07:29.120 do before to try and ensure that what they aim 0:07:29.200 --> 0:07:31.880 for and the will actually occurs in the fullness of time. 0:07:32.720 --> 0:07:34.600 That's a good question because I think there is a 0:07:34.640 --> 0:07:39.280 growing trend in the community for people to put conditions 0:07:39.280 --> 0:07:42.160 on their wills for a number of reasons. There's a 0:07:42.200 --> 0:07:46.320 build up of wealth, particularly property wealth that's accumulated over 0:07:46.360 --> 0:07:48.520 a period of time that's significant when it comes to 0:07:48.600 --> 0:07:51.440 the value of an estate. We used to see, or 0:07:51.480 --> 0:07:55.960 we still see, migrant workers in sy Carlton that didn't 0:07:55.960 --> 0:07:58.280 have a lot of income in their life but had 0:07:58.360 --> 0:08:01.920 very valuable assets. Their properties appreciated so much that means 0:08:01.960 --> 0:08:04.600 that there are states a lot larger. We're also seeing 0:08:04.600 --> 0:08:09.080 people now that have had more diverse relationships, blended families, 0:08:09.440 --> 0:08:15.280 multiple partners, children from different partners, same sex, and binary 0:08:15.360 --> 0:08:18.560 non binary. So we're seeing the complexity of the Australian 0:08:18.800 --> 0:08:22.760 society change and I think more people are looking at well, 0:08:22.800 --> 0:08:25.040 how do I make sure that my money gets into 0:08:25.080 --> 0:08:27.160 the right hands at the right time and doesn't get 0:08:27.200 --> 0:08:31.920 lost by any other person or any other claim. And 0:08:31.960 --> 0:08:36.280 the trend is towards definitely using testamentary trusts, especially if 0:08:36.280 --> 0:08:39.640 there's more significant wealth, and more even more so restrictive 0:08:39.679 --> 0:08:42.880 trust or capital protective trusts where there's significant wealth. 0:08:43.480 --> 0:08:45.679 So for someone who has no idea. What all these 0:08:45.679 --> 0:08:48.480 things mean. There's a will under trust? Is that how 0:08:48.520 --> 0:08:48.920 it works? 0:08:49.800 --> 0:08:50.000 Yes? 0:08:50.080 --> 0:08:52.480 So what we do in the case of a testamentary trust, 0:08:52.520 --> 0:08:56.800 we create the ability for a beneficiary to receive their 0:08:56.840 --> 0:09:00.400 share of the inheritance through a trust that's a connected 0:09:00.440 --> 0:09:03.200 to the will. In a more simple will, we just 0:09:03.280 --> 0:09:06.480 give them their inheritance. Right. So, if we circle back 0:09:06.520 --> 0:09:08.960 to Aaron Patterson, if she had received that money, if 0:09:09.000 --> 0:09:11.320 her mother had died today and just given it to her, 0:09:11.679 --> 0:09:13.960 that would be lost to her through any of these 0:09:14.040 --> 0:09:17.840 wrongful death claims. Or to bring it into context, if 0:09:17.880 --> 0:09:20.719 I left my wealth, say to my son, and he 0:09:20.800 --> 0:09:23.640 got sued or he had a relationship breakdown, that wealth 0:09:23.679 --> 0:09:26.959 will get lost or get dissipated or caught up as 0:09:27.040 --> 0:09:29.800 part of a claim by creditor or claim by an 0:09:29.840 --> 0:09:33.640 ex spouse. The testamentary trust is designed to protect that 0:09:33.720 --> 0:09:36.079 wealth and to ring bark it or quarantine it if 0:09:36.080 --> 0:09:37.480 there's a relationship breakdown. 0:09:38.040 --> 0:09:40.280 Okay, So the simple idea of just a will and 0:09:40.360 --> 0:09:42.480 the amount of money you hand it over, that's sort 0:09:42.480 --> 0:09:47.719 of fading into more complex structures that try to foresee 0:09:48.679 --> 0:09:51.480 complications down the track. Okay, really interesting, we'd be back 0:09:51.480 --> 0:09:53.040 in a moment. There's something else I really want to 0:09:53.080 --> 0:09:56.920 talk to, Chrispose And yes, Aaron Patterson is a fascinating case. 0:09:57.400 --> 0:10:02.040 And so is the case of the person who left 0:10:02.679 --> 0:10:05.720 a will on an iPhone note that was worth ten 0:10:06.080 --> 0:10:11.920 million dollars and what happened next. We'll be back in 0:10:11.960 --> 0:10:26.760 a moment. Hello, and welcome back to The Australian's Money 0:10:26.760 --> 0:10:31.920 Puzzled podcast. James Kirby here with Chris Hill of Inherit Australia. 0:10:31.920 --> 0:10:34.400 And Chris is an expert in this area of wills 0:10:34.440 --> 0:10:38.600 and inheritance and as I mentioned, and as you can 0:10:38.640 --> 0:10:41.559 see from segment one, I wasn't kidding. He has managed 0:10:41.600 --> 0:10:45.280 to make this area so interesting, which is an area 0:10:45.320 --> 0:10:48.520 that is front and center really in weather accumulation, but 0:10:48.880 --> 0:10:51.240 so many people avoid it for a variety of reasons, 0:10:51.240 --> 0:10:53.960 mostly because it's complicated, it's dry, and people don't want 0:10:54.000 --> 0:10:55.680 to think about the fact that they are going to 0:10:55.720 --> 0:10:59.280 die someday and they should leave a will behind. Now 0:10:59.360 --> 0:11:01.800 there was an extraordinary case, wasn't it, Chris Frecent Dave. 0:11:02.000 --> 0:11:06.640 There was a person in New South Wales who left 0:11:07.040 --> 0:11:11.480 a will at the last moment on an iPhone note. 0:11:11.600 --> 0:11:13.640 This would be interesting anyway, the fact that there was 0:11:13.679 --> 0:11:16.680 a ten million dollar will made it twice as interesting. 0:11:16.800 --> 0:11:20.679 And then the will that was written of the iPhone notes, well, 0:11:20.720 --> 0:11:24.800 it ended up in court and it was contested. Could 0:11:24.840 --> 0:11:25.680 you tell us what happened? 0:11:26.840 --> 0:11:27.080 Yeah? 0:11:27.200 --> 0:11:30.960 In fact involved in a state worth thirteen million dollars, right, yeah. 0:11:31.000 --> 0:11:34.680 So the significance of it is the fact that in 0:11:34.720 --> 0:11:38.000 this case mister Pete Colin Peak left behind a state 0:11:39.000 --> 0:11:44.439 and he after his death he had a document called 0:11:44.679 --> 0:11:47.320 Last Will of Colin Peak that was found in the 0:11:47.480 --> 0:11:51.560 notes app of his iPhone that purported to leave the 0:11:51.559 --> 0:11:55.360 bulk of his fortune to a close friend and within 0:11:55.440 --> 0:11:58.640 some lesser gifts to families. But there was a bit 0:11:58.679 --> 0:12:02.640 of dispute that arose between Colin Peake and his brother, 0:12:03.520 --> 0:12:05.880 who tried to argue that the note wasn't. 0:12:05.720 --> 0:12:06.960 A testamentary instrument. 0:12:07.559 --> 0:12:11.160 And this is probably a very recent case of a 0:12:11.200 --> 0:12:14.000 line of cases that were seeing the Robert Holmes of 0:12:14.040 --> 0:12:17.240 Court was one of those where people have not made 0:12:17.240 --> 0:12:21.079 a will or attempted to write a scribbled note somewhere 0:12:21.400 --> 0:12:24.000 as if it was a will, thinking that that's enough 0:12:24.160 --> 0:12:27.600 to get over the line. But of course what happened 0:12:27.600 --> 0:12:31.720 here was that the court decided that the note did 0:12:31.760 --> 0:12:36.040 not constitute a testamentary instrument, wasn't valid to be an 0:12:36.080 --> 0:12:42.040 informal will, and in those circumstances, he died in test state, 0:12:42.960 --> 0:12:45.720 which means that he died without a will or a 0:12:45.760 --> 0:12:49.280 valid will. And the Succession Act in New South Wales 0:12:49.400 --> 0:12:52.240 dealt with how that estate should be divided, and it 0:12:52.320 --> 0:12:53.840 left the estate to his brother. 0:12:54.600 --> 0:12:57.240 So just to clarify that the man who died and 0:12:57.360 --> 0:13:01.000 left this last minute with on his iPhone nose, the 0:13:01.040 --> 0:13:03.360 person he tried to end the money out didn't get it, 0:13:03.880 --> 0:13:07.440 and it was contested and the family actually got it. 0:13:08.000 --> 0:13:08.520 That's right. 0:13:08.600 --> 0:13:11.880 And because there was no children, no spouse, the intestacy, 0:13:12.080 --> 0:13:16.360 the Succession Act left the entire estate to the brother. 0:13:16.679 --> 0:13:21.239 I found amazing. Wasn't so much this dispute. The disputes 0:13:21.280 --> 0:13:25.360 every day about money, and thirteen million is a lot 0:13:25.400 --> 0:13:26.200 on a wis, so it was. 0:13:26.200 --> 0:13:27.000 A big dispute. 0:13:27.240 --> 0:13:30.160 But what I thought was extraordinary was the court didn't 0:13:30.200 --> 0:13:31.800 have any problem with the fact that it was actually 0:13:31.800 --> 0:13:34.000 written on an iPhone note. That wasn't any a thing, 0:13:34.200 --> 0:13:36.760 was it. You can even a will on an iPhone 0:13:36.800 --> 0:13:39.120 note if you wish, it would seem yeah. 0:13:39.200 --> 0:13:41.880 And that's because in New South Wales and in every 0:13:41.960 --> 0:13:45.920 state in Australia under the Irrelevant Succession Acts, there are 0:13:45.920 --> 0:13:49.000 provisions for what we call an informal will, and that 0:13:49.040 --> 0:13:51.840 can be a handwritten or typewritten note, or an email 0:13:51.960 --> 0:13:55.240 or a text, a video recording, or even an audio 0:13:55.840 --> 0:13:59.080 or a word document. The courts have considered different forms 0:13:59.600 --> 0:14:03.960 of what we might call a potential testamentary note. Right, 0:14:04.360 --> 0:14:07.720 this happened to be unusual because it was on an iPhone, 0:14:08.200 --> 0:14:12.600 and so the courts have applied three key tests to 0:14:12.720 --> 0:14:15.240 these sorts of issues. The first thing, is there a 0:14:15.280 --> 0:14:18.360 document or a record? Well, of course there was, and 0:14:18.360 --> 0:14:21.520 that can be in any different form. We've seen notes 0:14:21.600 --> 0:14:24.720 on napkins. There have been cases where someone has attempted 0:14:24.760 --> 0:14:28.760 to make a testamentary on a napkin. Yes, and this 0:14:28.840 --> 0:14:31.240 has been sought to be admitted into evidence as an 0:14:31.240 --> 0:14:34.800 informal will. So the court will look at the variety 0:14:34.880 --> 0:14:39.040 of media on which a written record is made and 0:14:39.080 --> 0:14:43.160 then they ask themselves, does the document or the note, 0:14:43.240 --> 0:14:45.360 or whatever the form of media is, even if it's 0:14:45.360 --> 0:14:49.400 an audio recording, purport to state the testamentary intentions of 0:14:49.440 --> 0:14:53.440 the deceased person. And the third question is does the 0:14:53.480 --> 0:14:57.680 decease intend this to be their last will? Right? This 0:14:57.760 --> 0:15:02.200 is their conclusive The court looks at a whole range 0:15:02.240 --> 0:15:04.520 of factors to decide that. 0:15:05.240 --> 0:15:08.280 So very quickly the courts put to one side, follow 0:15:08.440 --> 0:15:12.520 was written on and then discuss conventional issues like intention. 0:15:13.080 --> 0:15:15.240 That all there were always the things around will. And 0:15:15.280 --> 0:15:17.240 I suppose people are writing less, aren't they? I mean, 0:15:17.560 --> 0:15:20.600 I write less than I ever did, and I could 0:15:20.600 --> 0:15:23.400 imagine in ten years time never writing at all. Why 0:15:23.400 --> 0:15:25.360 would I need to? Once upon a time you'd go 0:15:25.360 --> 0:15:27.680 and interview somebody with your notebook. Now we'll just record 0:15:27.720 --> 0:15:29.640 it on my phone, just tip a button and there 0:15:29.680 --> 0:15:32.360 it is on a transcript, which is better than my writing. 0:15:32.920 --> 0:15:35.440 So the point I'm making is wills as we know 0:15:35.560 --> 0:15:38.320 them in this formal written document. It's probably going to 0:15:38.360 --> 0:15:42.640 become quite common that people leave videos or whatever, and 0:15:42.680 --> 0:15:45.440 they will stand up in court if the intention and 0:15:45.520 --> 0:15:48.160 the other legal aspects are good enough. Is that fair 0:15:48.280 --> 0:15:48.600 to say? 0:15:49.120 --> 0:15:52.000 It's fair to say that the courts are more aligned 0:15:52.000 --> 0:15:53.800 to contemporary modes of communication. 0:15:54.040 --> 0:15:55.600 Yeah, But it's. 0:15:55.440 --> 0:15:57.560 A balancing act because the Wills Act and each of 0:15:57.600 --> 0:16:00.960 the states have a very rigid process for making a 0:16:01.000 --> 0:16:02.920 will and executing a will for it to be binding 0:16:02.920 --> 0:16:05.240 and valid, and so what they don't want to do 0:16:05.360 --> 0:16:09.360 is upset that formal process because you introduced a lot 0:16:09.400 --> 0:16:13.560 of risk of mischief being introduced, or fraud or abuse. 0:16:13.560 --> 0:16:16.040 I mean, you could have a video recording of somebody 0:16:16.080 --> 0:16:18.120 making a will, but someone standing behind them with a 0:16:18.120 --> 0:16:19.720 gun outside of the view of the camera. 0:16:20.080 --> 0:16:21.320 So there's lots of issues. 0:16:21.640 --> 0:16:25.440 But you're right, the courts will entertain more common modes 0:16:25.440 --> 0:16:28.920 of communication like video or audio. But I think that 0:16:29.600 --> 0:16:31.920 certainly from our listener's point of view, having an audio 0:16:31.960 --> 0:16:34.600 recording with a written document like a will is going 0:16:34.640 --> 0:16:38.239 to be a lot more useful going forward, particularly when 0:16:38.440 --> 0:16:41.720 you want to explain why a will is drafted in 0:16:41.760 --> 0:16:45.920 a certain way, because we've seen recently cases where a 0:16:46.000 --> 0:16:50.480 court will want to look beyond the execution of it 0:16:50.520 --> 0:16:53.720 and ask did the will maker understand what they were signing? 0:16:53.760 --> 0:16:55.160 And we saw that We've seen that in the New 0:16:55.160 --> 0:16:59.160 South Wales case last year where the court asked, well, yes, 0:16:59.200 --> 0:17:01.640 they signed it, they understand I all know what they 0:17:01.640 --> 0:17:09.080 were signing. So communications like video audio will augment written documents. 0:17:09.720 --> 0:17:12.600 But it's this fascinating trend that we're seeing. 0:17:12.920 --> 0:17:16.120 Yeah, and the courts are actually, to my surprise, quite 0:17:16.200 --> 0:17:17.919 up to date there and allowing for it. 0:17:18.200 --> 0:17:18.919 Okay, terrific. 0:17:18.920 --> 0:17:21.199 Look, we'll take short break and there's something that I 0:17:21.240 --> 0:17:25.040 think everyone should know in the next segment. But simply 0:17:25.440 --> 0:17:27.480 if you think you inherit the super and there's no 0:17:27.520 --> 0:17:30.399 inheritance text in Australia actually most of the time for 0:17:30.480 --> 0:17:41.800 most people going to pay seventeen percent, we'll explain why. 0:17:42.600 --> 0:17:45.960 Hello and welcome back to The Australian's Money Puzzle podcast. 0:17:46.080 --> 0:17:51.280 James Kirby talking to Chris Hill of Inherit Australia. Chris, 0:17:51.280 --> 0:17:55.359 I have a question from Bruce. Came in just about 0:17:55.680 --> 0:17:57.760 maybe the week before last and I said to myself, 0:17:57.760 --> 0:18:00.840 I'll keep this one up my sleeve for when we 0:18:01.200 --> 0:18:03.280 have you on the show. So this is from Bruce. 0:18:03.320 --> 0:18:06.639 He says, can you provide some clarification on the tax 0:18:07.040 --> 0:18:09.880 on inherited super. I used to be under the impression 0:18:09.920 --> 0:18:12.280 that if super was left to your estate then it 0:18:12.320 --> 0:18:17.360 would be passed on on text. However, recent podcast by 0:18:17.400 --> 0:18:20.119 you led me to doubt this. I asked my accountant 0:18:20.160 --> 0:18:23.919 and I ended up more confused than ever well, you 0:18:23.920 --> 0:18:26.800 shouldn't be confused, Bruce. Now this is not advice, it's 0:18:26.840 --> 0:18:30.359 always information only. But tell me if I'm wrong here, Chris. 0:18:30.800 --> 0:18:34.080 There is no inheritance tax in Australia, Part A, Part B. 0:18:34.440 --> 0:18:37.680 If you inherit super, there are super. 0:18:37.440 --> 0:18:39.520 Taxes, yes, all right. 0:18:39.560 --> 0:18:42.040 First of all, I want to ask you, is Super 0:18:42.080 --> 0:18:44.760 becoming more important in your scene book? 0:18:44.840 --> 0:18:47.720 Definitely? I mean we're seeing a build up in super. 0:18:48.040 --> 0:18:50.400 We're seeing the government's interest in super with this three 0:18:50.440 --> 0:18:54.280 million dollar division two nine six SEX, recognizing that that's 0:18:54.320 --> 0:18:59.200 another opportunity to grab more federal revenue. But it's part 0:18:59.240 --> 0:19:02.240 of the government's retirement incomes policy to encourage people to 0:19:02.640 --> 0:19:05.119 save for retirement. Of course, we have an aging population, 0:19:05.320 --> 0:19:08.359 so necessarily we have a buildup of money in the 0:19:08.400 --> 0:19:12.760 superannuation environment and that's going to continue. So there's going 0:19:12.840 --> 0:19:15.679 to be a lot of wealth transfer on death with 0:19:15.800 --> 0:19:18.919 money coming out of super. And tax on Super is 0:19:19.280 --> 0:19:20.800 in the spotlight for many people. 0:19:21.600 --> 0:19:23.760 In fact, I'd go as far as to say that 0:19:23.840 --> 0:19:26.800 it's for the vast majority of people most of the time, 0:19:26.880 --> 0:19:31.600 because tax jew on Super is due on what they 0:19:31.760 --> 0:19:36.840 call the taxable component. The taxable component is the bit basically, 0:19:36.920 --> 0:19:40.720 where you've got a concession compulsory super, that's most people super, 0:19:40.760 --> 0:19:42.720 isn't it. I mean, the vast majority of super that's 0:19:42.800 --> 0:19:46.520 rolling in at twelve percent SGC is compulsory, so most 0:19:46.520 --> 0:19:49.320 super will be due a seventeen percent tax. Why is 0:19:49.359 --> 0:19:52.439 there a seventeen percent tax on inheritance super? 0:19:53.240 --> 0:19:56.720 I think to just correct any sort of assumption around 0:19:56.760 --> 0:19:59.960 that the tax applies depending on who is the recipient 0:20:00.200 --> 0:20:03.080 YEP of the super benefit on death. If it's a 0:20:03.119 --> 0:20:06.639 surviving spouse or partner, there is no seventeen percent tax. 0:20:06.920 --> 0:20:09.280 Yeah, I should clarify that adult children, really, isn't it. 0:20:09.600 --> 0:20:13.119 Yeah, we're really only considering probably the death of the 0:20:13.240 --> 0:20:15.320 last person in the superannuation fund, or if it's a 0:20:15.320 --> 0:20:17.760 single member fund, the death of the member and it's 0:20:17.800 --> 0:20:21.520 either passing to the estate or the children of the 0:20:21.560 --> 0:20:27.040 deceased member. In those cases, the tax impost arises in respective. 0:20:27.080 --> 0:20:30.200 As you say, the taxable amount, which is basically any 0:20:30.240 --> 0:20:33.320 money that you've put into a superannuation fund, including your 0:20:33.560 --> 0:20:36.760 super guarantee payments where there has been a tax deduction 0:20:36.920 --> 0:20:40.920 claimed that forms part of the taxable amount. The tax 0:20:40.920 --> 0:20:43.359 free amount is basically money that you put into the 0:20:43.400 --> 0:20:46.840 superfund after you've already paid tax. That goes in tax 0:20:46.880 --> 0:20:48.760 free and it comes out tax free. 0:20:49.240 --> 0:20:53.520 From the mast reside of people is taxable because they've 0:20:53.520 --> 0:20:56.520 got the concession. They don't even remember getting the concession 0:20:56.680 --> 0:20:59.840 or anything like that. But basically, by law, you must 0:20:59.840 --> 0:21:02.320 put twelve percent if your salary package into super that 0:21:02.480 --> 0:21:06.680 is concessionally treated. Yeah, and so in the future, let's 0:21:06.720 --> 0:21:08.840 just say there's a couple and as you say, if 0:21:08.880 --> 0:21:11.560 the super transfers from one person to the other, it's 0:21:11.600 --> 0:21:14.080 not tax. But if the last remaining person in the 0:21:14.080 --> 0:21:19.120 couple then dies, typically transfers to their adult children. Those 0:21:19.160 --> 0:21:22.560 adult children will pay tax on most of the super 0:21:22.600 --> 0:21:23.359 most of the time. 0:21:23.440 --> 0:21:25.360 Is that right? That's right? 0:21:25.440 --> 0:21:28.360 With one technical point of difference is if they are 0:21:28.440 --> 0:21:31.520 a tax dependent okay, right, and this would only apply 0:21:31.600 --> 0:21:35.359 to children who have like a permanent disability or children 0:21:35.400 --> 0:21:37.040 who are under age twenty five. 0:21:37.600 --> 0:21:40.879 Okay, but adult children being most people most of the time. Yeah, 0:21:41.160 --> 0:21:43.040 So Chris, why is there this tax? 0:21:44.960 --> 0:21:48.280 Well, look at it all stemmed from I mean when 0:21:48.320 --> 0:21:52.959 Pulkating developed the tax system. You know, there was basically 0:21:53.160 --> 0:21:56.600 tax when you exited the system, that was all changed 0:21:57.080 --> 0:21:59.159 in I think it was around ninety ninety three with 0:21:59.200 --> 0:22:01.600 the introduction of the Super Innovation act Ors this Act, 0:22:02.160 --> 0:22:05.879 and the government decided to tax money going in tax 0:22:06.040 --> 0:22:09.200 at a lower rate concessional rate, tax it during the 0:22:09.200 --> 0:22:11.639 operation of the fund and tax it on exit to 0:22:11.840 --> 0:22:14.119 sort of compensate for the tax that they were losing 0:22:14.160 --> 0:22:14.720 at the end. 0:22:15.080 --> 0:22:18.600 They wanted some money back for the favors they did 0:22:18.640 --> 0:22:20.320 you in the early days tax Mase. 0:22:20.640 --> 0:22:23.280 Yeah, so you know they're basically saying to you, look, 0:22:23.480 --> 0:22:25.920 if we give you a tax benefit when you put 0:22:25.960 --> 0:22:28.440 money into the fund, we want some of that back 0:22:28.480 --> 0:22:30.240 when you die, as simple as that. 0:22:30.600 --> 0:22:33.320 But the thing about nineteen ninety three when Keating created 0:22:33.320 --> 0:22:36.280