What to Do When Someone Dies: A Practical Guide for Executors and Families

Dealing with the loss of a loved one is challenging enough without the added complexity of managing their financial and tax affairs. Thanks to a comprehensive step-by-step guide published by the Australian Taxation Office (ATO), navigating the key responsibilities after death becomes clearer.

1. Look After Yourself First

Before diving into paperwork and legal formalities, the ATO emphasises the importance of emotional well-being. If you’re feeling overwhelmed, it suggests reaching out to support services such as Lifeline Australia, Beyond Blue, or MensLine Australia.

2. Notify the ATO and Pause Correspondence

Once you’re ready, one of the earliest tasks is to inform the ATO of the death. This helps stop ongoing tax communications directed to the deceased. Usually, an executor or next-of-kin makes the call.

3. Determine Who Manages the Estate

The person responsible is typically the executor named in a will. If there’s no will or executor, the next of kin may assume the role. The administration of a deceased estate can take 6-12 months or more — it’s important not to distribute assets until obligations are resolved.

4. Seek Professional Help if Needed

Handling tax, legal and estate matters often require expert advice. The ATO points out that for issues like contested wills, probate, or administering an estate without a will (‘intestate’), you may need a lawyer, public trustee or tax agent.

5. Probate or Letters of Administration

To act formally on behalf of the deceased’s estate you may need a grant of probate (if there is a will) or “letters of administration” (if not). These documents give you legal power to deal with the deceased’s tax and financial affairs. Some small estates may not require them, but many institutions still demand them.

6. Notify the ATO of Your Role

Once you are in the position to manage the estate, you should submit a notification to the ATO. This registers you as the estate’s representative. If you hold the official legal personal representative (LPR) status, you’ll have full access to deal with the tax affairs. Without that status, there are legal limitations.

7. Check for Business-Related Tax Issues

If the deceased ran a business (sole trader, partner, or similar) there are extra steps: a final Business Activity Statement (BAS), GST, CGT (capital gains tax) on business assets, partnerships winding up, etc.

8. Lodge the Final (“Date of Death”) Tax Return

A tax return must be lodged for the income period from the start of the financial year to the date of death. Any outstanding previous years’ returns should also be considered.

9. Lodge Tax Returns for the Estate

After death, the estate becomes a separate entity. If assets continue to generate income (e.g., rent, dividends), the estate may need to lodge trust-style tax returns. There’s no inheritance tax in Australia, but you still must ensure correct tax treatment.

10. Finalise Tax Affairs Before Distributing Assets

Before any distribution to beneficiaries occurs, all tax obligations must be settled. The authorised representative (LPR) is liable for unpaid tax up to the value of the estate and may even face personal liability if distributions are made prematurely.

Why This Matters

Failing to follow these steps can delay the estate’s closure, cause beneficiaries to wait longer for distributions, or expose the executor or administrator to legal and financial risk. Having a structured checklist helps make a complex process more manageable during a delicate time.

Contact our office on 03 9848 5933 and speak to one of our tax professionals if you require assistance with a deceased estate.

Source: www.ato.gov.au