When someone passes away, their family is often left dealing with more than just grief. There’s paperwork, deadlines, and sometimes, legal mess. Inheritance can bring families together—or tear them apart. It all depends on how things are planned, structured and managed.
Whether you’re the executor, a beneficiary or just trying to understand your rights, knowing the legal side of inheritance is crucial. A solid plan makes things clear. A poor one? That’s where things get messy.
That’s why wills and estate planning should never be put off or done without expert advice. Let’s break down what you really need to know—from tax rules to legal challenges—and how to protect yourself and your family from the most common traps.
Inheritance Taxes in Australia: What You Really Pay
In Australia, there’s no formal “inheritance tax.” That might sound like a relief, but don’t get too comfortable. Taxes can still apply—it just depends on what the estate includes and how it’s structured.
Here’s what you need to watch:
- Capital gains tax (CGT)
Assets like property, shares or businesses can trigger CGT when sold. The tax applies to the increase in value since the deceased acquired the asset—not the value at death. Executors often sell assets to divide the estate, which is where CGT kicks in. - Superannuation
Super doesn’t automatically go to your estate. It goes to the nominated beneficiary—but if that person isn’t a dependent under tax law (like an adult child), they may pay up to 17% in tax on the taxable component. - Income earned after death
If assets keep generating income after death—like rent from a property—that income must be declared on a separate estate tax return. - Foreign assets
If the deceased held assets overseas, those countries may apply their own inheritance tax rules.
And then there are administration costs:
- Probate fees
- Legal and accounting fees
- Property transfer costs
Each estate is different. That’s why it’s important to work with professionals who understand how to minimise tax exposure. You can reduce or defer CGT with the right timing and legal structures. Testamentary trusts are often used to manage income in a tax-effective way.
Superannuation is especially tricky. If not set up correctly, a large chunk can go to the ATO instead of your kids. This is where capital gains and superannuation in estate planning become critical parts of your legal strategy.
Common Legal Challenges That Arise After Death
When someone dies, their will might not be the last word. Legal challenges happen more often than people think. In some cases, the law allows others to make a claim—even if they’re not named in the will.
Here are the most common types of inheritance disputes:
- Family provision claims
These are made by people who believe they weren’t left a fair share. In most states, spouses, children and dependants can apply. Courts look at financial need, relationship history and contributions made to the deceased’s life or estate. - Undue influence or fraud
Someone might claim the will was made under pressure or wasn’t signed freely. This is especially common when a vulnerable person changes their will late in life. - Lack of capacity
If the deceased had dementia or mental illness at the time of signing the will, it can be challenged on the grounds they didn’t understand what they were doing. - Outdated or invalid wills
If the will doesn’t meet legal requirements—or there’s a newer one hidden somewhere—it can be contested or rejected by the court.
Legal challenges are time-sensitive. In NSW, for example, family provision claims must be made within 12 months of death. Executors should wait before distributing the estate to avoid being personally liable if a valid claim arises later.
A real-life example: A man left most of his estate to his new partner, leaving his adult children just a token amount. The children made a family provision claim and ended up receiving a larger share. The case went to court, stretched over two years and drained legal costs from the estate.
Even when a will seems clear, you should understand what to do when a will is contested. The right preparation makes all the difference in how claims are handled.
How to Protect a Will from Legal Challenges
You can’t stop someone from trying to contest a will—but you can make it much harder for them to succeed. The stronger your documents, the less room there is for arguments.
Here’s what helps protect your will from legal attack:
- Use a qualified estate planning lawyer
DIY wills are risky. One small error in wording or signing can leave the whole thing open to dispute. A lawyer ensures everything is legally sound. - Get a capacity certificate
If you’re older or unwell when making your will, get a doctor’s letter confirming you understand what you’re doing. This helps defend against future claims of lack of capacity. - Explain your decisions in writing
If you’re giving more to one child than another, leave a letter with your will explaining why. It’s not legally binding, but it can help the court understand your reasoning. - Use a testamentary trust
This helps control how assets are used after you’re gone. It’s also harder to challenge than a basic gift in a will. - Update your documents regularly
If your will is 10 years old and doesn’t match your current life, it’s more vulnerable. Keep it current, especially after marriages, divorces, births or deaths.
When it comes to defending a will, context matters. Judges want to know if the person writing the will made decisions freely and fairly. A well-prepared plan shows intention, logic and legal clarity.
These legal tactics for protecting a will from challenges won’t stop every dispute—but they’ll give your family the best chance of defending your wishes in court.
Drafting Mistakes That Lead to Disputes
A will doesn’t have to be unfair or malicious to cause problems. Simple drafting mistakes can trigger disputes, delays or legal fees. These errors are more common than you’d think—and they’re often made when people try to write their own wills or rely on generic templates.
Here are a few mistakes that cause trouble:
- Vague language
Saying “I leave my property to my children” without naming them can lead to arguments. Does that mean biological children only? Stepchildren? Adopted kids? - Unclear asset descriptions
If you leave “the house” to one person but own multiple properties, it creates confusion. The executor might not know which one you meant. - Missing or outdated beneficiaries
People change. If someone in your will has died or you’ve had a falling out, the will might need updating. If not, assets might go to unintended people—or be distributed under intestacy laws. - Conflicting clauses
If one part of your will says your spouse gets everything and another part gives specific gifts to others, the two parts might contradict each other. That can lead to interpretation disputes. - Failure to revoke old wills
If more than one version of your will is floating around, the court has to decide which one is valid. That takes time and can lead to legal challenges.
Even small wording issues can make things hard for your executor and stressful for your family. These common drafting errors cause disputes that could’ve been avoided with proper legal guidance.
What Happens When Disputes Go to Court
Most inheritance disputes start with legal letters and negotiations. But when parties can’t agree, they end up in court. This process can be long, expensive and emotionally draining.
Here’s what usually happens:
- Filing the claim
Someone lodges a formal application with the Supreme Court, often a family provision claim. They explain why they think the will is unfair or invalid. - Mediation
Before trial, the court may require all parties to attend mediation. This is a chance to resolve the issue without going to a full hearing. - Hearing
If mediation fails, the matter proceeds to trial. Witnesses may be called. Medical records and family history are reviewed. Judges weigh fairness, need and intent. - Judgment
The court issues a decision. This could involve rewriting parts of the will or ordering new distributions. Costs are usually taken from the estate.
These cases don’t just cost money. They delay asset distribution and put families through public, drawn-out battles. In some cases, people stop speaking altogether.
Take this case: A man died leaving everything to his long-time partner. His children from a previous marriage weren’t named in the will. They challenged the will, claiming financial need and unfair treatment. After 18 months, the court awarded them a portion of the estate—but legal fees had already eaten up a significant share.
That’s why it helps to learn from lessons from real-world estate planning horror stories. They show how even well-meaning plans can go sideways if the legal side is ignored.
Absolutely—let’s keep the momentum going. Here’s an additional 300+ word subtopic that fits naturally into the article theme, deepens the value, and brings a bit more practical insight to the legal side of inheritance:
The Role of Executors and Why It’s Not Just a Formality
Choosing the right executor is one of the most important decisions you’ll make in your estate plan. This isn’t just a box to tick—it’s a serious legal role with big responsibilities. An executor’s job is to carry out your wishes, manage your estate and deal with legal, tax and financial matters after you pass away.
Many people name a family member or friend as executor, thinking it’s a symbolic role. But the truth is, executors have real legal duties. They can be personally liable if they get things wrong. That’s why it’s important they understand what they’re signing up for—and have the time, skill and temperament to manage the process.
An executor’s duties include:
- Locating the will and applying for probate
- Identifying all assets and liabilities
- Paying off debts and tax owed by the estate
- Managing property and financial accounts
- Distributing assets to the beneficiaries
- Keeping accurate records and reporting to the court if required
Things get even trickier if the estate involves businesses, overseas property or disputes between beneficiaries. In those cases, it’s often better to appoint a professional executor or at least have a solicitor guide the process.
If the executor doesn’t act in good faith or mismanages the estate, they could face legal claims from beneficiaries. This includes distributing assets too early, ignoring debts or failing to act fairly.
It’s also possible to appoint more than one executor—but that can cause conflict if the co-executors don’t get along or can’t agree on decisions.
When planning your estate, think carefully about who’s capable of handling the legal, emotional and administrative load. It’s not about choosing someone close—it’s about choosing someone capable. That decision alone can make or break the success of your entire estate plan.
Frequently Asked Questions
1) Is there an inheritance tax in Australia?
No, Australia doesn’t have a formal inheritance tax. That means if you receive money or property from someone’s estate, you usually won’t pay tax just for inheriting it. But that doesn’t mean the estate itself escapes tax. There are still tax obligations that need to be handled before the estate is distributed. For example, if the estate includes property, shares or other assets that have grown in value, capital gains tax (CGT) may apply when those assets are sold.
Income earned by the estate after death—like rental income or interest—needs to be reported. In these cases, the executor lodges tax returns on behalf of the estate. Superannuation can also be taxed. If it goes to a non-dependent (like an adult child), it can attract up to 17% tax. Life insurance payouts, if held inside super, can also have tax implications.
Every estate is different. It depends on the mix of assets, the timing of sales and who the beneficiaries are. The best way to avoid surprises is to get legal and tax advice early. Even though there’s no inheritance tax, the system is complex—and poor planning can still cost your family thousands.
2) Who can legally challenge a will in Australia?
Only certain people can challenge a will under Australian law. These typically include a spouse (including de facto partners), children, stepchildren and anyone who was financially dependent on the deceased. The rules vary slightly between states, but in general, these are the people who can bring a claim under family provision laws.
They must prove that they weren’t properly provided for and that they have a financial need. The court looks at their relationship with the deceased, their current financial situation, their age and health and any support they received during the deceased’s life. If they succeed, the court may adjust how the estate is divided.
Other grounds for challenging a will include lack of capacity (the person didn’t understand what they were signing), undue influence (someone pressured them into changing their will) or fraud. These cases can be complex and require strong evidence.
If you think you may have grounds to challenge a will—or if you’re defending against one—speak to a lawyer quickly. There are strict time limits, and waiting too long could stop you from taking legal action altogether.
3) What is probate and why is it needed?
Probate is a legal process that confirms a will is valid. It gives the executor authority to carry out the wishes of the deceased. In most cases, banks and other institutions won’t release assets unless probate has been granted.
The process starts by applying to the Supreme Court in the state where the deceased lived. You’ll need to submit the original will, a death certificate, and an inventory of the estate’s assets and debts. If everything checks out, the court issues a grant of probate.
Once probate is granted, the executor can start collecting assets, paying debts and distributing what’s left to the beneficiaries. If there’s no will, the process is called letters of administration—and the court appoints someone (usually the next of kin) to manage the estate.
Probate is important because it protects everyone involved. It makes sure the right person is managing the estate, and it gives legal certainty to banks, insurers and the tax office. Skipping probate—or doing it incorrectly—can delay everything and put the executor at risk of legal claims.
4) How can I reduce the risk of someone contesting my will?
There’s no way to guarantee your will won’t be challenged, but you can take steps to make it harder. Start by working with a qualified estate planning lawyer. They’ll make sure your documents are legally valid and reduce the chance of error.
If you think someone might contest your will—like a child you’ve left out—consider leaving a written explanation. It’s not legally binding, but it helps the court understand your thinking. If the person has no legal grounds to claim, the letter may prevent them from trying.
You can also use strategies like testamentary trusts or making binding nominations on super. These tools give you more control over how assets are distributed and can’t be easily challenged. Some people also consider gifting assets while they’re alive. This reduces the value of the estate and may deter future claims—but be careful. Large gifts can affect things like aged care and Centrelink.
Regularly updating your will is also key. If your will is old or doesn’t reflect your current life, it’s more open to challenge. Keeping things current sends a clear message about your intentions.
5) What happens if a will is found invalid?
If a will is declared invalid, the estate is either distributed under a previous valid will or according to intestacy laws. This can create confusion and delay, especially if there are multiple versions of a will or if the deceased never made one at all.
A will might be declared invalid if it wasn’t signed correctly, if the person didn’t have the mental capacity to make it, or if they were pressured into signing it. Disputes can also arise when there are handwritten notes or informal documents that create doubt about the deceased’s real intentions.
Once a will is found invalid, someone—usually the next of kin—applies for letters of administration. The estate is then divided based on a fixed legal formula. That often means spouses and children get specific shares, but it doesn’t account for personal relationships or individual needs.
This can lead to unfair outcomes and even more disputes. That’s why it’s critical to get your estate planning right. A valid, professionally drafted will keeps control in your hands—and gives your loved ones peace of mind.
Why Inheritance Law Should Never Be an Afterthought
If you care about your family, planning for inheritance isn’t just smart—it’s essential. Whether you’re writing a will, defending one, or receiving an inheritance, the legal side can’t be ignored. Mistakes here cost time, money and relationships.
With blended families, digital assets and growing estates, inheritance law will only get more complex in the years ahead. That’s why working with experts is so important. Protect your legacy and spare your family the stress—visit Ignify Legal for experienced, practical estate planning that gets it right from the start.
Please call us today at (02) 9413 4708 or submit an online enquiry.
