Letters of Administration in NSW for a Deceased Estate Outside of Australia

Introduction

When a person dies without a valid will and leaves assets in New South Wales, the next of kin may need to apply to the Supreme Court of NSW for a grant of letters of administration. The process raises further legal and tax questions when the deceased estate is located outside Australia and the entitled relatives reside overseas, making advice from wills and estate planning lawyers at LawBridge particularly valuable.

This article explains how overseas next of kin can obtain letters of administration in NSW, the choice between a fresh grant and a reseal of an existing foreign grant, and the tax consequences of a non-resident administrator for the estate.

Interactive Tool: See If You Qualify for a Reseal or Need a Fresh Grant

The Process for Overseas Beneficiaries to Obtain Letters of Administration in NSW

Eligibility Requirements & Time Limits for Next of Kin

An application for letters of administration should be filed within six months of the date of death. Part 78 Rule 16 of the Supreme Court Rules 1970 (NSW) (‘Supreme Court Rules‘) requires an explanation for a later filing, either in the administrator’s affidavit or a separate affidavit of delay.

Under Chapter 4 of the Succession Act 2006 (NSW) (‘Succession Act‘), the next of kin entitled to apply is identified through the rules of intestacy. The order usually begins with:

• spouse or de facto spouse, who takes the whole estate where all children of the deceased are also children of that spouse;
• children, where there is no surviving spouse or where a child is not also a child of the surviving spouse;
• parents;
• brothers and sisters;
• grandparents; and
• aunts and uncles.

Each category must be exhausted before the next category is considered. People in the same category may apply jointly. If only some entitled relatives apply, the others must provide consent or receive notice of the intention to apply.

The Appointment of an Attorney in NSW for Representation

A person entitled to a share of the estate may use a power of attorney where that person lives outside NSW. The Supreme Court of New South Wales may make a grant of administration to the appointed attorney, allowing the attorney to manage the deceased estate locally.

The grant is limited and is expressed to be for the use and benefit of the entitled person. This arrangement allows an overseas beneficiary or next of kin to obtain authority to deal with assets in New South Wales without applying personally from outside Australia.

The Choice Between a New NSW Grant & a Reseal for Foreign Estates

Eligibility Criteria for a Commonwealth Realm Reseal

A foreign grant may be resealed by the Supreme Court of NSW where it was issued by a court in a Commonwealth Realm country in which the Queen is, or was when the grant was issued, the Head of State. 

Under Section 107 of the Probate and Administration Act 1898 (NSW) (‘Probate and Administration Act‘), resealing allows the foreign grant to take effect in NSW for assets located in NSW.

Eligible countries include:

• The United Kingdom, including England, Scotland, Wales and Northern Ireland; and
• New Zealand, Papua New Guinea and the Solomon Islands.

The original grant, an exemplification, or a court-sealed and certified copy must be produced to the Supreme Court of NSW. Once resealed, the foreign grant has the same force and effect in NSW as if it had been granted by the Supreme Court of NSW.

Scenarios Requiring a Fresh Grant of Administration

A fresh grant in NSW may be required when the foreign grant comes from a country that is not eligible for resealing. The Supreme Court of NSW cannot reseal recent grants from:

• Malta;
• South Africa;
• Pakistan;
• India;
• Sri Lanka;
• Fiji;
• Hong Kong; or
• the Republic of Ireland.

The form of the NSW application depends on the original foreign grant and whether the deceased left a will. 

A foreign probate grant may require an application for a grant of probate in NSW, while an overseas grant of administration with the will annexed may require probate or administration with the will annexed based on a copy of the will. If the deceased died without a will, a fresh grant of administration in NSW is required.

Tax Residency Rules for Deceased Estates Administered from Abroad

The Distinction Between a Resident Trust & a Non-Resident Trust

For Australian tax purposes, a deceased estate is treated as a trust and is classified as either a resident trust or a non-resident trust. This classification depends mainly on the residency of its executor, administrator or trustee and the location of its central management and control.

Under the Income Tax Assessment Act 1936 (Cth) (‘Income Tax Assessment Act‘):

• an estate is a resident trust if at least one trustee is an Australian tax resident at any time during the relevant income year; and
• an estate may be treated as a non-resident trust where probate or a grant of administration is given to an executor or administrator who is not an Australian resident.

The Importance of Central Management & Control in Australia

An estate may still qualify as a resident trust if its central management and control occurs in Australia during the relevant income year. This concerns where high-level decisions about matters such as selling or investing estate assets are made.

The Australian Taxation Office may require evidence that those decisions occurred in Australia. Instructions given by Australian family members to an overseas executor may support this position; however, records must demonstrate that the estate’s high-level decisions and management were made in Australia.

Financial & Tax Consequences of a Non-Resident Administrator

Loss of the Capital Gains Tax Discount & Tax-Free Threshold

A deceased estate administered by a non-resident administrator may be treated as a non-resident trust for Australian tax purposes. This can revoke access to the 50% capital gains tax discount that may otherwise apply when estate assets have been held for at least 12 months.

The estate may also lose the $18,200 tax-free threshold available during the first three income years after the deceased’s death. Investment income earned in Australia may then result in a higher tax liability because the estate is taxed as a non-resident.

The Impact of the Foreign Resident Capital Gains Tax Withholding Regime

When a foreign resident administrator sells Australian land, the foreign resident capital gains tax withholding regime may apply regardless of the contract price. The purchaser must withhold 15% of the purchase price and remit it to the Australian Taxation Office as non-final withholding tax.

The estate’s final capital gains tax liability is determined when the administrator lodges the estate’s tax return. A refund may be available if the amount withheld exceeds the final liability.

Practical Strategies for Attorneys & Families to Minimise Estate Taxes

The Benefits of an Australian Resident Administrator

Appointing an Australian resident administrator can allow a deceased estate to be treated as an Australian resident trust for tax purposes. The administrator may be a family member, trusted individual, licensed trustee company, accountant or lawyer.

As explained above, resident trust status preserves key concessions including the 50% capital gains tax discount and the $18,200 tax-free threshold. An Australian resident administrator may also obtain an Australian Taxation Office clearance certificate, which can remove the purchaser’s obligation to withhold tax when estate property is sold.

Conclusion

A NSW application for letters of administration requires careful attention to eligibility, the six-month filing period, and the correct form of representation. The choice between a fresh grant and a reseal can affect how authority is obtained, while administrator residency may affect the estate’s tax treatment and available concessions.

With these issues considered together, contact wills and estate planning lawyers at LawBridge to discuss the estate, including overseas beneficiaries, NSW Court applications, reseals and cross-border tax concerns. Legal advice can help clarify the appropriate grant, representation arrangements and steps for managing the deceased estate.

Frequently Asked Questions