It is often the case that executors live far and wide and that is usually not an issue in estate administration.

Care must, however, be taken before appointing an overseas resident to be the sole executor of an Australian estate.

An estate is a trust.

The residency status of a trust is determined by whether the trustee is an Australian resident for tax purposes.

If the management and control of the trust is not based in Australia, this can have some significant tax implications for the estate administration.

In particular, the estate may not be able to:

  1. access the income tax free threshold ($18,200.00);
  2. obtain franking credit refunds; and
  3. obtain certain 50% CGT discounts.

There are some steps that can still be taken if the will maker insists on a foreign resident being the executor but it involves the careful consideration of the circumstances and the obtaining of specialist accounting advice to ensure there are no adverse tax consequences.