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Unconditional Contracts – The Importance of Disclosure and Completing Searches

By | Commercial Law

When entering into an unconditional Contract for the sale of a property, a Seller may be led to believe that they have no obligations to disclose any matters affecting the property.

Similarly, a Buyer entering into an unconditional Contract may think that completing property searches is an unnecessary expense.

If you have signed an unconditional Contract for the sale or purchase of property in Queensland, you should be aware that there are still:

  1. obligations imposed on a Seller to disclose certain information relating to the property; and
  2. searches that may give a Buyer rights to claim compensation or terminate the Contract.

What is an “unconditional Contract”?

A Contract for the sale or purchase of property will be “unconditional” if there are no terms or conditions in the Contract that must be satisfied or fulfilled on or before the settlement date.  For example, a Contract for a property sold at auction is “unconditional” as it is not subject to the Buyer obtaining:

  1. satisfactory building and pest reports for the property;
  2. satisfactory enquiries and searches in relation to the property being purchased; and/or
  3. sufficient finance approval to purchase the property;

Similarly, a Contract that is subject to the above conditions will become unconditional when such conditions are satisfied or fulfilled.

I have signed an unconditional Contract for the sale of my property. Do I still have to disclose anything to the Buyer?

Although a Contract may be unconditional, a Seller still has obligations to disclose certain matters affecting the property being sold.  In particular, a Seller must disclose to the Buyer:

  1. Any encumbrances affecting the property and which will remain in existence after settlement. Encumbrances are matters which burden and impede the property and/or the title to the land.   For example:
    1. Easements which burden the land (granting someone other than the registered owner/s a right to use and/or benefit from the land);
    2. Easements in favour of a Local Government or other Authorities (Easements in Gross);
    3. Unregistered encumbrances such as drainage, stormwater and/or sewerage lines running through the land;
  2. Whether the property being sold is subject to any tenancies or Lease arrangements that will continue after settlement;
  3. Whether the property being sold is the subject of any current or threatened claims or disputes (including court proceedings and/or neighborhood, fencing or tree disputes in QCAT).

I have signed an unconditional Contract to purchase a property. Do I still need to complete any searches?

Although a Contract may be unconditional, in most instances the standard conditions of a Contract and/or legislation provide a Buyer with a right of termination or claim for compensation if certain matters affecting the property and/or the Seller/s are discovered. For this reason, the following searches can be invaluable when purchasing a property:

  1. Title search: A title search discloses particulars of the Seller and the land which are recorded in the Queensland Land Titles Register (including the registered owner, the registered property description and all registered interests over the land being sold).  If the Seller/s and/or the property described in the Contract are not accurate, the Buyer may have a right to terminate the Contract. For example, a Buyer will have a right of termination if:
    1. The Contract contains an error in the description of the property and as a result, the Buyer will suffer significant expense and/or loss (that is, the Buyer will be materially prejudiced);
    2. The Contract does not disclose the existence of a registered encumbrance affecting the land; and/or
    3. At settlement, the Seller named in the Contract is not the registered owner of the land
  2. Registered Plan search: A registered plan search will provide an image of the Plan which is registered with the Queensland Land Titles Register when the Lot (a unit within a building or the land being purchased) was created.  If the location of or the area of the Lot is not accurately described in the Contract, or if there is an error with respect to the boundaries of the property, and if the Buyer will be materially prejudiced as a result of such inaccuracy or error, the Buyer will have a right to terminate the Contract or claim compensation.
  3. Contaminated Lands Register (“CLR”)/Environmental Management Register (“EMR”) search: If the property being purchased is recorded on either the CLR or EMR and the Seller has not disclosed this prior to entering into the Contract, the Buyer will have an immediate statutory right to terminate the Contract or at the very least, a right to claim compensation.  A Buyer’s right of termination exists regardless of the terms and conditions contained in the Contract.
  4. Local Government and other statutory authority searches: These searches will provide general information in relation to the property including rates, town planning and building approval details.  Although not all adverse search results will give the Buyer a right to terminate or claim compensation, a Buyer will be afforded rights if the following matters arise:
    1. If there is a notice or order (issued prior to the Contract date) requiring the Seller to pay money or complete work on the property, then the Seller is responsible for complying with such notice or order. If the Seller does not comply prior to settlement, the Buyer will be entitled to claim any costs and expenses arising from such notice or order as a debt against the Seller.
    2. If there is a proposal to alter or locate transport infrastructure on the property and such proposal has not been disclosed in the Contract, the Buyer will have a right to terminate the Contract.

Common Myths About Wills

By | Wills & Estates

Wills & Estate Lawyers come across many common myths and incorrect assumptions about Wills. Relying on these mistaken beliefs can have serious financial and emotional consequences for your Estate and your family members following your death.

Myth #1 – “If I die everything will automatically pass to my husband/wife or partner”.

This is not always the case.If you die without a Will, you are considered to be intestate. The Queensland intestacy laws contain a set of rules for the distribution of assets where people have died without a valid Will. Under those rules, your spouse will receive a portion of your Estate. However, they may not receive all of your Estate depending on the size of your Estate and the other family members you leave behind. Further a partner may not be considered a spouse for legal purposes such as distribution of your Estate on intestacy.

Although the intestacy rules recognise the importance of providing for your spouse, the provision your spouse actually receives may not be adequate for his or her needs. In those circumstances your spouse may be forced to bring a claim on your Estate resulting in costly litigation and an enormous emotional burden for your spouse and your family.

By making a Will now, you can ensure your spouse or partner is adequately provided for and prevent your assets passing to those you do not intend to benefit from your Estate.

Myth # 2 – “If I don’t make a Will, my Estate will go to the State or the Public Trustee.”

This is a common misconception and although it is not completely untrue, the chance of this occurring is extremely low.

If you die without leaving a valid Will your Estate will be distributed in accordance with the Queensland intestacy rules. Generally your spouse and your children will inherit, but it can get quite complicated especially when there are current and former spouses and blended families involved.

In the event you that you are not survived by any spouse, child, parent or next of kin, the Estate is deemed to be bona vacantia and the State is entitled to it. This will only occur after a thorough search has been carried out to determine there are no living relatives who may be entitled to your Estate.

Myth #3 – “I don’t have any assets so I don’t need to make a Will”.

The Estate of a deceased person needs to be dealt with, regardless of whether there are many assets or not, and regardless of whether there is a Will or not.

Even if you think your Estate is not worth a lot, it is still important to make a Will. The administration of your Estate will be simpler, quicker and less expensive if you have made a Will.

Further, your Estate might be worth more than you think. Many people have personal possessions and superannuation. Superannuation may form part of your Estate and by law will require distribution.

Additionally, if a person dies accidentally there may be substantial compensation that falls into the Estate for distribution. Small Estates can be unnecessarily complicated if you have not made a Will.

Myth #4 – “I can write my own Will using a Will-kit an online template”.

Can an informal document be a Will? read more Making a homemade Will can be disastrous for your Estate and your family.

It is our experience that homemade Wills, do-it-yourself Will Kits, and online template Wills cause more problems than they are worth. It is very common for people to complete the Will Kit forms or online templates incorrectly or fail to have it signed and witnessed correctly.

This can result in a purported Will being challenged in court if the drafting is not clear or if there is any uncertainty about the meaning or interpretation of your words.

While leaving behind a note or homemade will might outline what you would like to happen, this type of document may not be legally effective.

The costs to have the Court determine if an informal document is your last Will and/or to interpret what the document means will be substantially greater than the up-front cost of seeing an experienced solicitor to prepare your Will.

It will also cause additional uncertainty, stress and delay for your family members following your death.

Myth #5 – “If I leave my child a nominal gift (eg $1) in my Will, they won’t be able to bring a claim on my Estate.”

This is not true. Leaving an estranged child a small or nominal gift will not protect your Estate from a claim. In fact, it might have the effect of upsetting the person you wish to disinherit and actually cause them to bring a claim on your Estate.

One of the significant factors in considering whether adequate provision has been made for a child or spouse is the needs and financial position of that person. A nominal sum obviously does not take into account those issues at all.

Related Myth #6 – “I can make a Will that no one can challenge or change”

In Queensland the spouse, child or dependents of a deceased person have a statutory right to make a claim on the Estate if adequately provision has not been made for their proper maintenance and support. For more information on this topic please see our guide “Have you been left out of a Will”. It is not possible to make a Will that no one can challenge or change. There is no certain way to guarantee that a claim will not be made.

Our experienced solicitors can give you advice on some of the steps you can take to reduce the risk that a person will make a claim on your Estate. These steps may include keeping assets out of the Estate and therefore beyond the reach of a claim (for example, through joint ownership, binding nominations on superannuation or trust structures). Such steps may have undesirable asset protection, tax and stamp duty risks so need to be carefully considered.

Myth #7 – “I cannot make a gift to the person I nominate as executor”

This is not true. It is very common to appoint your spouse as your executor and to leave your whole Estate to your spouse.

On a separate but related note, your executor is entitled to claim a commission from your Estate for performing the role of executor. To claim commission the executor must obtain the Court’s permission. It is common for the Court to allow commission in the range of 1.5% – 3% of the Estate, depending on the size and complexity of the Estate and the time and skill involved in its administration.

To avoid the cost of obtaining the Court’s permission, an executor will sometimes obtain the consent of each of the beneficiary’s to the commission to be paid.

If you do choose to leave a gift to your executor, it is important that your Will is clearly drafted to express if that gift is conditional upon that person performing the role of executor and if that gift is in substitution for any rights the person would have to claim executor’s commission.

It is best to appoint an adult family member whom you trust and consider reasonable and sensible as your executor. If you do not have a trusted family member or friend to perform the role of executor, you can consider appointing the Public Trustee or a solicitor from our firm to be your executor in their professional capacity. If you appoint a professional executor your Estate will have to pay for the professional services of that person to administer your Estate. Given that an executor who is a family member will generally not be paid nor claim commission it is far preferable to appoint a family member where possible.

Myth #8 – “I can use my will to make a gift of my superannuation benefits”.

Your Will disposes of all assets you own at the date of your death. If you have funds held in a superannuation account, technically those funds are held by the Trustee of the Superannuation Fund, for your benefit. You do not yet own them and they will not automatically form part of your Estate.

Given that superannuation often represents a significant part of your net wealth, and that you may have substantial sums in death benefits connected to your superannuation, it is critically important to understand how your superannuation will be dealt with on your death.

For more information on how your superannuation will be dealt with following your death please see our guide “Superannuation: Your Biggest Asset

Myth #9 – “I can make a gift in my will of assets held by a family trust because I am the trustee of that Trust”.

If you are a trustee of a family trust or a unit trust or a self-managed superannuation fund, you should obtain specialised Estate planning advice about what will happen to the trust and the assets owned by the trust following your death.

In your Will it may be possible to appoint a person who will take on the role of trustee from you on your death. This allows you to pass the day to day control of the trust to another person. However, since you do not personally own any of the assets of the trust, you cannot use your Will to give away or deal with any of the assets owned by the Trust. Only the Trustee can make distributions from the Trust in accordance with the Trust Deed.

At the time of making your Will, the terms of the original Trust Deed (and any amendments to that Deed) will need to be consulted to consider the beneficiaries, the clauses regarding death of a trustee, and any powers of appointment of trustees, appointors or principals, to ensure that you have an effective plan regarding the control and beneficial interests of the assets of the trust following your death.

Myth #10 – “I can keep my will confidential after my death and tell my executor not to show it to anyone else”.

Following your death your Executor is entitled to all of your property, including all of your documents.This includes your original Will, which will not be provided to any person other than the Executor you have nominated in your Will, following proof of their identity and proof of your death.

Section 33Z of the Succession Act 1981 (Qld) provides that a number of other people are entitled to obtain a copy of your Will, including:

  1. A person mentioned in the will;
  2. A person mentioned in any earlier will of the deceased;
  3. A spouse, parent or child of the deceased;
  4. A person entitled to a share of the Estate if the person had died intestate
  5. A creditor of the Estate;
  6. A person entitled to bring a family provisions application against the Estate.

Even if you have instructed your Executor not to show your Will to anyone else, or not to your Will to a specific person or persons, if one of the people listed in s33Z requests a copy, they are entitled to it and your Executor will have to provide them with a copy.

NDIS-Funded Service Providers’ Criminal Screening Obligations

By | Commercial Law

With the roll-out of the NDIS in Queensland, it is important that service providers who receive NDIS funding are aware of their criminal screening obligations regarding their staff and volunteers. The criminal history screening requirements are required as a safeguard to protect persons with a disability from increased risk of exploitation, violence, abuse and neglect.

Under the Disability Services Act 2006 (Qld) (“the Act”), a non-government service provider who receives funding from the Queensland Department of Communities, Disability Services and Seniors or the Federal National Disabilities Insurance Scheme (“NDIS”) may only engage persons to perform services on behalf of the service provider who have undergone a criminal history screening and received a positive notice and Yellow Card.

Responsibility to comply with the criminal history screening and Yellow Card requirements rests with the service provider, not with the individuals engaged by the service provider.

Who needs to undergo a Criminal History Screening?

The requirement for a criminal history screening applies to all “engaged persons” of the Service Provider. Engaged persons includes all employees, volunteers, contractors, executive officers, board members and management committee members, whether paid or unpaid, and irrespective of whether or not they will be personally working with persons with a disability.

Service providers have an ongoing obligation to undertake further criminal history screenings of persons engaged by the service provider every 3 years.

Who is exempt?

Service Providers are not required to obtain criminal history screenings for the following persons, who are exempt under the Act:

  • Clients;
  • Tradespersons who are not employees;
  • Persons providing services only to children, who hold a valid Blue Card; and
  • Registered Health Practitioners (including chiropractors, dentists, doctors, nurses, occupational therapists, optometrists, osteopaths, pharmacists, physiotherapists, podiatrists and psychologists).

Risk Management Strategies

Under the Act, all service providers must develop and implement a written Risk Management Strategy for persons engaged by the service provider. The purpose of the Risk Management Strategy is to establish practices and procedures regarding persons with a disability which:

  • Promote their wellbeing; and
  • Protect them from abuse, neglect and exploitation.

Service providers must review and implement their Risk Management Strategy each year.

What about Unfair Dismissal Laws?

The requirements of the Act override a service provider’s obligations under the Fair Work Act 2009 (Cth). It follows that a service provider cannot be sued for unfair dismissal if it terminates an employee who does not comply with the criminal history screening requirements under the Act.

At Delaney & Delaney, we have extensive experience in advising clients in the disability sector regarding their legal obligations. We can help service providers navigate the laws regarding criminal history screenings to ensure compliance with the law.

Is All of Your Property Held in Your Partner’s Name, Leaving You in a Difficult Situation After Separation?

By | Family Law

What is a caveat?

Caveats may be lodged against the title to land to prevent certain dealings with that land. A person who lodges and has the benefit of the caveat is known as the “caveator” and the person who owns the land is known as a “caveatee”. The caveat is a document which stops the caveatee or any other person dealing with the land. It informs any potential purchaser or anyone wishing to deal with the land that the caveator has an interest in that land.

Caveats: How to protect your interest in property owned by your ex-partner in a family law proceeding

In a family law proceeding, all property owned by either or both of the parties is included in the property pool.  Sometimes, the primary asset is the property in which the parties have been living throughout the relationship. If the property is owned by one of the parties, but the other has made contributions to its acquisition, improvement or maintenance throughout the relationship, that person may have a caveatable interest in the property. Contributing to mortgage repayments and other property related expenses or physically working on the property to improve it may give rise to a caveatable interest.

We strongly recommend that you seek legal advice from a family lawyer prior to lodging a caveat.

How is a caveat lodged?

In Queensland a Form 11 is prepared and lodged with the Titles Registry. The form must be properly drafted such that the caveator’s interest may be recognised by the courts as capable of sustaining a caveat and must be supported by evidence. After the form is lodged, the Titles Registry checks to make sure it meets particular legislative and administrative requirements. If the caveat meets these requirements, it will be registered.

A person who lodges a caveat without a proper interest in the land may be liable to compensate a person who suffers loss or damage as a result of the caveat.

Removing a caveat

Caveats do not need to be removed from the Title after a certain time. However, they can be removed by an order of the Court, at the caveator’s request by lodging the appropriate form or when a court makes a determination in relation to how the property will be dealt with.

A caveat will automatically lapse three months after the caveator has lodged it, unless the caveator starts court proceedings and gives the required notice of such proceedings to the Titles office before the caveat has lapsed. In family law proceedings, this usually involves filing an Initiating Application in the Federal Circuit Court or Family Court to initiate family law proceedings, seeking Orders in relation to the property.

What You Need to Know About Commercial Litigation in Queensland

By | Commercial Law, Litigation

Commercial Litigation

Our Solicitors practice in Commercial Litigation helping to resolve disputes between companies, or individuals and companies. Given that a company is considered a legal entity and, therefore, can sue and be sued at law, companies can become embroiled in litigation for many reasons. They can commit both civil and criminal offences. Companies can play almost all the legal roles that a person might normally play. For example, a company may wish to sue an entity or individual for monies owning to the company, or, a company itself could be sued for monies it owes to another person or company.

Pursuing or Defending a Claim in Court

In most litigation, the person making the claim (the plaintiff) files an “originating process” in the Court. An originating process is a document setting out the details of the complaint/claim and the remedy being sought. This document starts the process in the court system.  Once an originating process has been filed there is usually a specific period during which the filed documentation must be given to (“served upon”) the person that the claim is against (known as the “defendant”). Once the defendant has received the documents, the Court then provides a time period during which the defendant can file a defence.

Once the matter is in the Court System the parties must comply with a number of requirements prior to trial. There will be times where the parties will need to appear before the Court on a “mention”. These appearances before the Court give the Registrar, or a Judge, an opportunity to see where the parties are up to in their negotiations or preparation for hearing.

The Court may require the parties to attend a Settlement Conference (Magistrates Court) which is conducted by a Registrar and may result in resolution of the matter. Some Courts may require the parties to attend Mediation or a Case Appraisal Conference in an attempt to reach early resolution.

If the matter has not resolved and is proceeding to trial then the parties will attend a “Directions Hearing”. At the Directions Hearing the Judge or Registrar provides times and dates for trial material to be filed and served, including affidavits and all evidence to be relied upon.

Due to the fact that company resources are expended when pursuing or defending a claim in Court, the benefits of reaching a swift resolution often outweigh pursuing the full amount of a claim.  Consent Orders may be agreed to by the parties and filed in an appropriate Court to finalise proceedings. These Consent Orders, once filed in Court, become Orders of the Court and should there be a breach of the Consent Orders, parties may be brought back before the Court, penalties may apply or an order requiring specific performance of the Orders may be made.

Court Monetary Limitations

If you run a company that is seeking to recover monies from another entity and want to pursue the matter in Court, it is important to remember the monetary limitations to which the individual courts are subject. Currently the monetary limits are as follows:

Queensland Civil and Administrative Tribunal (QCAT) with monetary disputes of up to $25,000.00;

Magistrates Court deals with monetary disputes of up to $150,000.00;

District Court deals with matters from $150,000 up to $750,000.00; and

Supreme Court deals with all matters in excess of $750,000.00.

Alternative Dispute Resolution in Commercial Law

In an attempt to keep commercial matters out of the Court system, to avoid tying up company resources for a number of years, Delaney & Delaney can guide you through the alternative dispute resolution avenues, such as mediation and arbitration, to allow speedy and cost effective solutions.  Some contracts between companies include clauses whereby parties agree to attend binding arbitration or mediation, should disputes arise.

Parties can engage, by consent, in these processes or they may be required to attend alternative dispute resolution by the Court process.

Delaney & Delaney can assist parties through mediation and arbitration.

Some common types of commercial claims

Debt Recovery

In debt recovery proceedings, the plaintiff files a claim to compel the payment of money owing to it by the defendant. A successful plaintiff can also commonly recover interest on the unpaid amount up to the date of payment, together with a portion of their legal costs.

Damages

In a damages claim, a plaintiff seeks compensation from the defendant for losses caused to the plaintiff as a result of the defendant’s wrongful conduct. An example of a damages claim is where a buyer defaults under a contract to purchase land. The seller may elect to sue the buyer for its losses caused by the buyer’s default, including agent’s commission, legal fees, and any reduction in the purchase price if they resell the property to another buyer.

Specific performance

In a claim for specific performance, the plaintiff seeks to compel the defendant to perform a contract as per its terms. There are a number of criteria which must be met in order to succeed in a claim for specific performance, and a court will only order specific performance if it is satisfied that damages are not a sufficient remedy for the plaintiff. An example of a specific performance would be where a buyer under a contract to purchase land defaults and refuses to settle. The seller may sue the buyer to perform the contract as per its original terms.

Injunction

A plaintiff may apply to the Court for an injunction to prevent a Defendant from doing an act which is causing, or is likely to cause, detriment to the Plaintiff: for example, if a defendant is about to publish defamatory claims about the plaintiff, the plaintiff can apply to the court for an injunction preventing the defamatory publication.

The above is a basic overview of some types of commercial litigation. If you are contemplating making a claim, Delaney & Delaney can help you to: understand whether your claim is worth pursuing; enter negotiations with the other party with a view to resolving the matter out of court, and advise you on whether an alternative dispute resolution service would serve you better. We can also prepare your originating process or defence and represent you at Court throughout the matter.

If you require legal advice about your specific circumstances, please contact a member of our commercial law team who will be happy to assist you.

Key Facts to Know About Property Settlement After Divorce or Separation

By | Family Law

One of the most traumatic times in an adult’s life comes in the unfortunate event of divorce or separation from a long-term partner. But despite the anger, stress and disappointment, it’s crucial that an estranged couple address and resolve the financial ties they formerly shared, not least to ensure one party can’t make further property settlement claims against the other into the future.

Most commonly this means determining ownership of real estate – often the family home – though settlement can also extend to business, investment portfolios, superannuation and other assets such as cars.

In terms of property, a number of courses may be taken, from selling the house and dividing the proceeds, to having one party assume full ownership and ‘pay out’ the other in cash or other assets. Some of the issues involved are outlined below but there is no substitute for expert legal advice from a firm experienced in property settlements between ex-spouses.

What needs to happen for a property settlement to take place?

Two important factors in reaching a property settlement with an ex-partner are that it be legally enforceable and that it is reached within certain time limits.

Regarding the first factor, while there’s nothing stopping you reaching an informal agreement with your ex-partner on how to divide your property, it is usually not recommended because such an agreement is not legally binding and can present considerable difficulties should there be subsequent dispute over its terms. More preferable are consent orders or binding financial agreements.

Consent orders

Consent orders are an agreement between ex-partners, approved by the court and then made into a court orders. Because the court aims to make an agreement which is final and prevents any further legal action, these orders are very difficult to change after they have been made, making it even more important to seek trusted legal advice before signing them.

Under the Family Law Act, the court will determine whether any agreement is fair and equitable before it will make consent orders.

Any attempt to cancel consent orders in property disputes, once made, will require one party to prove that there was fraud (dishonesty); that the orders are impractical to carry out; or that there are exceptional circumstances involved.

Binding financial agreements

A financial agreement is an agreement between parties which has not gone before a court to ensure it is just and equitable.

Married or de facto couples can make such legally binding financial agreements before, during or at the end of a relationship. In the event of a relationship breakdown, a financial agreement about property will only be legally enforceable if it signed by both parties and contains a statement to the effect that each party received independent legal advice prior to signing the agreement on how it will affect his or her rights, and whether or not the agreement is to his or her advantage. Each party’s lawyer must also sign a document saying independent advice was furnished.

Suffice to say, expert legal advice is vital if you’re making a binding financial agreement, or to assess which of the methods outlined above for formalising your property settlement, is most appropriate in your particular circumstances.

Time limits

Another compelling reason to seek good legal advice is that an experienced lawyer will make sure that consent or financial orders are resolved within the mandated time limits.

In short, you must apply for a property settlement either:

  • within a year of the date your divorce took effect;
  • within two years of the date your de facto relationship ended.

After these timeframes, only special circumstances will allow you to apply to the court for a property settlement.

It’s important to resolve property settlements as soon as practicable after separation because what is sometimes forgotten is that the court, in determining each party’s entitlement in the settlement, assesses the property pool to be divided at the time of the trial, not the time of separation.

This means that if, for example, you acquire a new asset or the value of an asset improves post separation, the extra value will be subject to the property settlement.

In any event, the aim of any property settlement should be to achieve an equitable result that is to the satisfaction of both parties, within the prescribed time limits. The best way to meet this aim is to consult a lawyer with a specialist background in negotiating these settlements for immediate advice and guidance.

When Can a Child Decide Which Parent to Live With in Australia?

By | Family Law

When a spousal relationship breaks down and there are children involved, there are few more fraught issues than those involving the children’s future living arrangements. This is particularly difficult when a child has a firm view about which parent he or she wants to live with, either all or most of the time.

Contrary to some popular misconceptions, a child’s specific age is not one of the determinants in deciding where the child will live when a court needs to hand down a decision in relation to parenting arrangements. Instead, a number of the key factors the court will assess in deciding the living arrangements are:

  • the child’s maturity;
  • his/her level of understanding of the overall situation;
  • whether his/her expressed wishes about where to live are well informed;
  • whether or not the child has been unduly influenced (usually by one or other of the parents, but also potentially by relatives, counsellors, etc.).

How does the process work?

The two main considerations for a family court are that a child/children maintain a meaningful relationship with both of the parents, and that children are protected from physical or psychological harm.

In terms of taking a child’s wishes into account, the court will generally rely on a ‘family report’ from a court consultant or trained counsellor, therapist or psychologist who has conducted an interview with the child.

The report writer will interview and observe the parents, the children and any other people living in the same household as the children, such as step-parents and step-siblings if the parent has a new partner. They will usually ascertain the child’s wishes and ask questions designed to aid assessment of the child’s maturity and level of understanding. The family report will then be prepared for the court with recommendations about the future parenting arrangements the judge should consider.

These are far from easy issues to decide. The difference in maturity between two siblings, for instance, may mean the court views the desire of the older sibling to stay with one parent as persuasive while the same view held by the younger sibling may not be given as much weight by the court. While the court will always be reluctant to separate siblings who demonstrate a strong attachment to one another, it is not likely to refuse the wishes of a sibling adjudged to be mature and insightful about the overall situation.

The role of an independent children’s lawyer

In some situations the court will appoint an Independent Children’s Lawyer to make an independent assessment of the child’s wishes and circumstances. This person will gather information from sources including teachers, doctors, psychologists, counsellors, police and child welfare authorities before making a decision whether to interview the child or not.

This appointment will often be made in cases where:

  • there are allegations of physical, sexual or psychological child abuse;
  • there is ongoing intractable conflict between the parents;
  • the child is alienated from one or both parents;
  • there are cultural or religious differences affecting the child;
  • there is a proposal to separate siblings into different households or take a child overseas.

Out-of-court options

Avoiding the cost and trauma of court proceedings should be the first aim in any family breakdown situation. An experienced legal professional can provide helpful advice on family dispute resolution options so that going to court becomes only a last option. These options can include taking account of the wishes of children through inclusive mediation, counselling and other means.

Family break-ups are stressful and all-consuming.  Assistance from legal professionals with expertise in this area will help clarify your options and the best way forward, particularly in taking account of the wishes of children so that a resolution which protects their welfare and helps them maintain a relationship with both parents, where possible, is reached.

Lawyer Says, “Leave The Will Alone”

By | Wills & Estates

In her Will, the deceased women gave her second husband the right to live in her home, free of all cost apart from rates and insurance, for the rest of his life.

The Will provided that after his death the house was to be sold and the proceeds divided between the three adult children of her first marriage. The deceased and her second husband did not have children of their own. The second husband was aged 60 of the time of his wife’s death and was living in her home throughout the marriage. Although, the children of the first marriage had the right to claim a better share from her estate they chose to make no claim. Despite his right to live in the home for the rest of his life the second husband was not satisfied and made a claim to full ownership of his late wife’s home. By lodging his claim for a greater share the second husband gave each of the three children an opportunity to claim further provision for themselves which they did.

When the parties and their Solicitors met to resolve their differences, it became clear that the cost of the debate could not be met out of the small cash estate left by the deceased. The cost of all parties with legitimate claims is usually paid out of the estate assets and the home had to be sold to meet the legal expenses and the claims of the three children. In the end the husband ended up with only a small sum of money, far less than needed to buy an alternative home. It was a poor result for him because he and the new wife he married only months after his first wife’s death, lost the opportunity to live cost-free for the rest of his life in a home they could call their own. The children, on the other hand, received their share of the mother’s estate many years sooner than they could have expected to receive it.

 

© Delaney & Delaney Solicitors. This publication is for information only and is not legal advice. You should obtain advice specific to your circumstances and not rely on this publication as legal advice. Should you have any queries in relation to this publication, please contact our office on (07) 3236 2604.

Expert Advice In Family Law

By | Family Law

Adducing further expert evidence in family law proceedings

In property proceedings before the Federal Magistrates Court, an Order was made by the Court to appoint a joint expert to value a block of land.  Following the release of the joint valuation, the husband disputed the value based on the significant difference in value between the jointly appointed valuation and an earlier valuation obtained by him.  The difference in value was $210,000.00.

Due to this dispute, a conference was held with the legal representatives, the joint valuer and the husband’s valuer.  This conference did not resolve any issues.  Consequently, the husband filed an Application in a Case and supporting Affidavit.  This Application sought the Court’s leave to adduce evidence in the Court other than the evidence of the jointly appointed Court expert (in accordance with Rule 15.12 of the Federal Magistrate CourtRules 2001).

When the Court considered this Application, the Court also considered Part 15.5 of the Family Court Rules 2004 since the Federal Magistrate Court Rules did not set out any criteria for the Court to follow in exercising their discretion to grant leave to a party to adduce evidence other than the evidence of a joint expert.

The Court also referred to the matter of Knight and Knight [2007] FamCA 263.  In this matter, Bryant CJ, granted the wife permission to adduce evidence from an expert witness who was not jointly appointed after having regard to the following:

  1. whether it is necessary to resolve or determine an issue in the case;
  2. whether unnecessary costs will arise from the appointment of more than one expert, and, if so, whether the interests of justice outweigh the costs involved;
  3. considering whether the interest of justice are otherwise met, and in particular whether there would be any delay occasioned by allowing the wife to have an expert, and, if so, whether that is outweighed otherwise by the interests of justice.

In determining this issue, the Court considered the significant difference between the valuations and the significant effect the valuations have on the property pool.  The Court also noted the real property in question was not a usual suburban house, but a rural/residential block which value may be affected by other factors (e.g. the government’s selling of the land resumed for the Traveston Dam project – this issue was raised by both valuers).

The Court decided that in the interest of determining a just and equitable property division, it would allow the two valuers to give evidence at the final hearing.  At the final hearing, the Court will be required to determine which value will be place on the land (either the joint valuation or the husband’s valuation).  The Court cannot select another figure or average out the values at the final hearing.

© Delaney & Delaney Solicitors. This publication is for information only and is not legal advice. You should obtain advice specific to your circumstances and not rely on this publication as legal advice. Should you have any queries in relation to this publication, please contact our office on (07) 3236 2604.

Drafting A Will

By | Wills & Estates

Considering Availability of Assets When Drafting a Will

Delaney & Delaney administers many deceased estates, acting for the executors of Wills.  On behalf of the executor, we collect the net assets of the deceased and distribute them in accordance with the Will.

It is common nowadays for people to deposit funds in various investment organisations who invest the funds for the investor, and in return, the investor receives dividends and sometimes a weekly pension.

We have administered a number of estates of deceased who held investments in these particular financial institutions.  Since the global financial crisis, some of these institutions have frozen the funds.  Now, instead of contacting the institution and withdrawing the deceased’s invested funds, the investment may only be withdrawn at the discretion of the institution.  Often, the investment may only be withdrawn in small instalments.  Consequently, the estate administration process can be prolonged unnecessarily and beneficiaries may not receive their gifts from the estate for years after the death of the will maker.

Anyone who makes a Will should consider how readily accessible his or her assets are, and whether particular clauses need to be drafted in the Will in consideration of frozen assets.

 

© Delaney & Delaney Solicitors. This publication is for information only and is not legal advice. You should obtain advice specific to your circumstances and not rely on this publication as legal advice. Should you have any queries in relation to this publication, please contact our office on (07) 3236 2604.

New Regulations Establishing Governance for Not-For-Profit Sector

By | Not-for-profit

Established governance standards for entities registered with the Australian Charities and Not-for-profits Commission (ACNC) have now been finalised (NB Entities that are registered charities are automatically registered at the ACNC)

The governance standards are set out in the Australian Charities and Not-for-profits Commission Amendment Regulation 2013 (No. 1)(Regulations). The Regulations will require compliance by registered entities from 1 July 2013, although transitional arrangements will operate until 1 July 2017 in some circumstances.

Under the new changes, there are five governance standards. There are new requirements under each standard, which are summarised below.

NB: There is a new interpretation clause:

Requires the governance standards to be interpreted in a manner that is consistent with the objects of the Act:

  • to maintain, protect and enhance public trust and confidence in the Australian NFP sector;
  • to support and sustain a robust, vibrant, independent and innovative Australian NFP sector; and
  • to promote the reduction of unnecessary regulatory obligations on the Australian NFP sector.

The Five (5) Governance Standards:

1.      Purposes and not-for-profit nature of a registered entity

  • Requires registered entities to commit to a NFP/charitable purpose. Compliance with this standard will be met as a matter of course for registered charitable entities, given that establishing a charitable purpose is an eligibility requirement for attaining charitable tax concessions.
  • The standard requires a registered entity’s constitution to be consistent with NFP/charitable purposes
  • It requires the entity to make information regarding its purposes and activities publicly available (e.g. on website or social media, provide info on request, and display charity’s purpose at the charity’s office.
  • Charities can meet this standards by providing governing documents to the ACNC to be uploaded on the ACNC register (soon this will be able to be done online)

2.      Accountability to members

Requires registered entities to take reasonable steps to ensure that they are accountable to their members and that members have a reasonable opportunity to raise concerns about the governance of the entity. Minor amendments to Notes 1 and 2 emphasise the steps that a registered entity may take in order to comply with Standard 2 could include:

  1. the holding of annual general meetings with a question and answer session;
  2. providing members with an annual report;
  3. providing for elections for its responsible entities (e.g. directors and trustees); and
  4. providing an opportunity for members to propose and vote upon resolutions.

NB: companies, indigenous corporations, incorporated associations, and co-operatives that already meet their responsibility to hold meetings under its incorporating legislation will be assumed to meet this standard.

3.      Compliance with Australian laws

  • Standard 3 seeks to ensure that a registered entity’s ongoing operations and assets are protected by requiring that the entity comply with Australian law,specifically by prohibiting registered entities from committing indictable offences or engaging in other specified punishable conduct.
  • It allows the ACNC to take a ‘proportionate approach’ (may include regulatory action) to protect public trust and confidence, protect the assets of the entity, and ensure the registered entity continues to operate in a manner that is sustainable and consistent with its purposes.
  • NB does not have the effect of extending Australian law to overseas jurisdictions.

4.      Suitability of responsible entities

  • Provides that a registered entity must take reasonable steps to ensure that its responsible persons are not disqualified from the management of corporations (under Corporations Act) or from being a responsible person by the ACNC Commissioner within the previous 12 months.
  • The ACNC can take reasonable steps to remove the person if they are not satisfied of these things.
  • NB obligation applies to charity itself, not individuals.
  • To meet this standard, charities can search ASIC Disqualified Persons Register before appointing a responsible person. It can also require all responsible persons to sign a declaration.

5.      Duties of responsible entities (persons)

  • Seeks to ensure that officers and other persons responsible for registered entities conduct themselves in a manner that would meet certain standards similar to those imposed on directors under the corporations law. These standards include duties to act with reasonable care and diligence; to act in good faith and in the best interests of the entity; and to disclose conflicts of interest.
  • There are several ‘protections’ (or defences) for responsible entities in respect of breaches of Standard 5 (including making existing defences available under corporations law, and a defence based on responsible entities acting in good faith).
  • This also puts responsible financial management duty’on entities. This is a duty ‘to ensure that the registered entity’s financial affairs are managed in a responsible manner.’ This includes ‘putting in place appropriate and tailored financial systems and procedures’ proportional to the relevant entity’s size and circumstances, and to the complexity of its financial affairs. Procedures limiting sign-offs for bank accounts or the ability to write cheques, and requirements for approval of expenditure, may comprise reasonable steps in satisfaction of this standard.
  • As part of the general financial management duty, registered entities will eventually be required to meet specific financial reporting requirements. These regulations have not yet been finalised.

Charities can meet this standard by:

  1. Bringing the duties to the attention of responsible persons;
  2. Have processes in place to manage conflicts of interest;
  3. Take action if a responsible person is not carrying out their duties;
  4. Providing annual training for all responsible persons;
  5. Having a charter that sets out how responsible persons are to behave;
  6. Having a policy to require a responsible person not to vote on matters where the person has a conflict of interest;
  7. Having processes for the responsible management of money.

Entities that are registered at the ACNC should:

  • review their constitutions and internal policies and procedures to ensure that they are consistent with the minimum governance standards; and
  • take action to make any necessary changes to prevent non-compliance and potential enforcement action being taken against the registered entity or any of its responsible persons.

How will ACNC implement the governance standards?

The ACNC will generally apply the standards as a set of general principles, rather than as precise rules. This means a charity may choose how to comply, so long as it can demonstrate that it has acted appropriately taking into account factors such as:

  1. Size;
  2. Purposes;
  3. Reach (local, national, international);
  4. Activities;
  5. The people and causes it helps (such as vulnerable people);
  6. Source of funding (public donations or government funding); and
  7. Existing governance systems and processes.

Fiona Kennedy and Julia Marler both practice extensively in the charities and not-for-profit sector.  We would be happy to assist your organisation in identifying and fulfilling its compliance obligations under the new regime.

 

© Delaney & Delaney Solicitors. This publication is for information only and is not legal advice. You should obtain advice specific to your circumstances and not rely on this publication as legal advice. Should you have any queries in relation to this publication, please contact our office on (07) 3236 2604.

Case Guardians

By | Family Law

Appointment of case guardian in family law proceedings

When husbands and wives or defacto partners separate, most parties will seek independent legal advice, negotiate a settlement and execute a document to formalise their agreement (either Consent Orders or Binding Financial Agreement). However, if one of the separating parties lacks the capacity to make their own decisions, then further steps are required to be taken in order for the Court to be satisfied that the settlement is just and equitable.

A client instructed us to represent her in finalising her property settlement. However, prior to providing these instructions, she was diagnosed with a degenerative illness which would eventually affect her capacity and ability to provide instructions. Since the client was aware that her health was deteriorating, from the commencement of our involvement in this matter, she provided us with her authority to discuss all matters with her Attorneys she had appointed under her Enduring Power of Attorney.

Prior to the parties reaching final agreement and signing the appropriate documents to formalise the agreement (Consent Orders and Application for Consent Orders), the client’s doctor issued a report stating that the client no longer had capacity to make day-to-day decisions. Since the client now did not have capacity, she could not consent to her own property settlement and she could not execute documents to formalise the agreement reached between the parties.

Notwithstanding the fact that the client had appointed Attorneys under an Enduring Power of Attorney (appointed when she had capacity), in order to obtain sealed property Orders from the Family Court, the Court requested that a Case Guardian be appointed to act on behalf of our client. One of the client’s Attorneys agreed to take on this role.

In order to have the Court appoint a Case Guardian for the client, we were required to look at Part 6.3 of the Family Law Rules 2004 (the “Rules”).

In accordance with Rule 6.09 of the Rules, a person may be a Case Guardian if the person is:

  1. an adult;
  2. has no interest in the case that would be adverse to the client;
  3. can fairly and competently conduct the case; and
  4. has consented to act as a case guardian.

We were also required to also look at Rule 6.10 of the Rules which sets out further requirements to be followed by the proposed Case Guardian, including providing evidence to the Court that the person being appointed as Case Guardian has been appointed manager of the affairs of the client and filing a Notice of Address for Service (to become a party to the matter).

Since these parties had reached consent in relation to property settlement, the Order seeking the appointment of a Case Guardian for the client was inserted in the Consent Orders to be filed with the Application for Consent Orders.  The proposed Case Guardian also executed an Affidavit outlining their suitability to be appointed as Case Guardian as set out in Rule 6.09 and Rule 6.10 of the Rules.

In the event a person was to lose capacity during contested proceedings before the Court, then an Application in a Case, supporting Affidavit and Notice of Address for Service would need to be filed in the Court by the proposed Case Guardian.

© Delaney & Delaney Solicitors. This publication is for information only and is not legal advice. You should obtain advice specific to your circumstances and not rely on this publication as legal advice. Should you have any queries in relation to this publication, please contact our office on (07) 3236 2604.

Ghazel and Gay Marriage

By | Family Law

Family Court Rules Monogamous Marriage from a Country that Allows Polygamy Still Valid in Australia

In Ghazel v Ghazel and Anor [2016] FamCAFC 31, the Full Court of the Family Court of Australia ruled that a monogamous marriage from a country that allows polygamy was still valid in Australia.

The Full Court reviewed the Howard Government’s 2004 amendments to the Marriage Act 1961 amended by the Howard Government in 2004. Section 5(1) was changed to define marriage as “the union of a man and a woman to the exclusion of all others, voluntarily entered into for life”.

Section 88EA was added to the Act, saying “(a) union solemnised in a foreign country between a man and another man or a woman and another woman must not be recognised as a marriage in Australia.”

The Full Court also examined parliamentary material from 2004 and concluded that sections 5(1) and 88EA were amended to prohibit only gay marriage.

Like many cases, the ruling in Ghazel & Ghazel considers and affirms issues only tangentially related to the main dispute. It reminds us that nothing short of legislative reform from our elected representatives will expand the scope of marriage.

 

© Delaney & Delaney Solicitors. This publication is for information only and is not legal advice. You should obtain advice specific to your circumstances and not rely on this publication as legal advice. Should you have any queries in relation to this publication, please contact our office on (07) 3236 2604.

Olympic Plans

By | Family Law, General News

Recognising an Unsustainable Plan before it is Put into Practice Gives Confidence the Future is Manageable

In the lead up to a global sporting event like the Olympics, fans will jump on the internet to find out exactly when their favourite event will be broadcast.  They eagerly set their alarms and wake in the dark of night to watch their heroes compete against the best in the world.

It’s fun, but after two or three nights it starts to take its toll.  Waking up at 6am, having gone to bed only a couple of hours earlier, is a lot less fun.  If you’re lucky, you’ll get through the day feeling a bit tired.  If you’re someone who needs their eight hours (like me) you’ll shuffle through the world like a zombie, desperate for the sweet release of sleep.

Towards the end of the Olympics we have to decide whether to miss out on a nail-biting final to catch up on rest or spend the next few days in a sleep-induced haze.  It’s a stark reminder of the difference between making plans and living them.

Section 60CC(3) of the Family Law Act 1975 describes issues parties must bear in mind when planning children’s orders.  In particular, section 60CC(3)(e) requires consideration of “the practical difficulty and expense of a child spending time with and communicating with a parent and whether that difficulty or expense will substantially affect the child’s right to maintain personal relations and direct contact with both parents on a regular basis”.

When proposing orders it is easy to say “it’s in the children’s best interest to spend equal time with both parents on a week about basis.”  Less easy is to ask “is the children spending time with both parents on a week about basis sustainable in the long term?”

It is not an easy question because the answer could be unwanted.  A parent may have work commitments, or live in a distant location, or a child might need to frequently attend extra-curricular activities (like swimming training).  There are any number of reasons why living a week about schedule would be impossible.

Anticipating this issue is a good thing.  It is far better, for both parents and children, to recognise an unsustainable plan before it is put into practice and starts causing problems.  Not only does this drastically reduce the likelihood of having to renegotiate arrangements only months after they’re (supposedly) settled, it gives both parents comfort and confidence that the future is manageable.

Staying up all hours is fun, but there’s a reason the Olympics only take two weeks out of every four years.

 

© Delaney & Delaney Solicitors. This publication is for information only and is not legal advice. You should obtain advice specific to your circumstances and not rely on this publication as legal advice. Should you have any queries in relation to this publication, please contact our office on (07) 3236 2604.

An Unsent Text Message Can Count as a Will – But at What Price?

By | Wills & Estates

In Re Nichol; Nichol v Nichol [2017] QSC 220, the Supreme Court of Queensland ruled that an unsent text message on the mobile phone of a deceased person, could be treated as a Will pursuant to section 18 of the Succession Act 1981 (Qld).

he effect of the text message was to bequeath the deceased person’s Estate to his brother and nephew, rather than to his wife of one year, with whom he had had a difficult relationship. The mobile phone with the unsent message was found with the deceased when he was discovered after tragically taking his own life. The deceased had made no formal Will during his lifetime.

Generally there are very strict execution requirements for a Will. It must be in writing, signed by the person making it, dated when it is signed, and witnessed by two independent witnesses. If these formalities are not complied with, the Will may not be valid.

The outcome of the case is a surprise for Estate lawyers, who meticulously ensure that the Wills they draft for their clients comply strictly with the legislative requirements.

The case of Re Nichol shows that the courts are endeavouring to keep up with modern times, where it is becoming common for people to record their feelings and wishes in electronic form. The general perception that a binding legal document must display a handwritten signature is fast going out of fashion. In response to the changing times, courts are taking a more flexible approach to Wills that are not executed in accordance with the traditional requirements.

The High Price of a Cut-Price Will

However, the court’s decision in Re Nichol does not mean that there is no need to make a formal Will.

In circumstances where a Will is properly drafted and executed, having complied with the strict legislative formalities, the process of Estate administration is much more smooth and inexpensive.

There is no doubt in this case that a substantial portion of the Estate would have been spent in litigation costs. There would also have been significant stress for all parties involved.

The relatively small cost to have your Will properly drafted and executed while you are alive, could save your Estate thousands of dollars in litigation costs after you die.

What Did the Deceased’s Brother and Nephew have to Prove?

In limited situations, an informal document that purports to state the testamentary intentions of a deceased person can be classified as a Will, or part of a Will. The Court must be satisfied that the person really intended that document to be a Will.

Proving that a person really intended an informal document to be a Will is a strenuous task.  It involves compiling evidence to prove complex legal concepts, including the intent to make a Will and the testamentary capacity to make a Will.

In Re Nichol, after considering all of the evidence, the court found that the deceased had testamentary capacity and that the text message was intended to operate as his Will upon his death.

The Court also decided that almost all of the costs of the parties to the litigation would be paid out of the deceased’s estate. These costs would have been substantial.

Delaney & Delaney has over 100 years’ experience drafting Wills, advising on Estate planning, and administering Estates. We welcome you to contact us today so that you have the peace of mind that your wishes are in a form that the Court will simply accept as valid.

The case of Re Nichol can be accessed here: http://www.austlii.edu.au/cgi-bin/viewdoc/au/cases/qld/QSC//2017/220.html

 

By Ingrid McCabe

© Delaney & Delaney Solicitors. This publication is for information only and is not legal advice. You should obtain advice specific to your circumstances and not rely on this publication as legal advice. Should you have any queries in relation to this publication, please contact our office on (07) 3236 2604.

Brisbane Family Law Centre’s 2017 Pantomime

By | General News

We are excited to announce our Principal Solicitor, Ms Fiona Kennedy, will be playing the part of “Kazza” in Brisbane Family Law Centre’s “Cinderella, Queen of the Desert” pantomime.

The pantomime also stars Her Honour, Justice Margaret McMurdo, playing Irma Meena (Cinder’s step-mother) and esteemed family law barrister Jennifer McCardle,  playing Cinderella. Justice Forrest of the Family Court is playing Johnny Young.

All profits raised by the Pantomime will be donated to the Women’s Legal Service to assist them in their important work helping women and children to safer futures.

The show will be held at the Princess Theatre, Woolloongabba on Saturday, 21 October 2017 commencing at 7pm. Get your tickets now before it’s too late.

https://www.trybooking.com/book/event?eid=284996 

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An Insight into Special Disability Trusts

By | Wills & Estates

Special Disability Trusts can be established to great benefit for vulnerable people with a disability. William Delaney shares his expert insight into how Special Disability Trusts operate.

What Is a Special Disability Trust?

A kind of Trust established for Succession Planning for current and future care of a person in a family with a severe disability or severe medical condition.  There is only one beneficiary namely, the person with the disability.

It is not called a “Special Disability Trust” because the Disability is “Special”.  It is “Special” because of the benefits available through Centrelink.

What is the purpose for the Trust funds?

The Trust fund can only be spent on the care and accommodation needs of the beneficiary. However, up to $11,500 can be applied each year for other needs on related items.  This is called, “discretionary spending”.  The Trust cannot pay a family member for providing any service or accommodation.

Is there an end date to the Trust?

The Trust comes to an end on the date of death of the beneficiary or when all funds have been expended.

So there needs to be a clause in the Trust Deed, directing the Trustees to pay the balance to a nominated person or persons, after death.

How much money can I contribute to this Trust Fund?

Anyone can contribute but the maximum allowable is $500,000.  Amounts over this can still be received but the concessions do not apply to the excess.  A contribution of some or all of this amount by a Pensioner, is not included in the asset test of that Pensioner.

Centrelink Benefits for the Beneficiary 

The beneficiary can own the principal place of residence (which is exempt in the asset test) plus up to $650,000 in other assets in the Trust and still receive a full pension.

The income of the Trust, regardless of what profit is made, is not added to the Income Test for the beneficiary.

The beneficiary can work up to 7 hours a week and can receive normal wages.

Discretionary expenditure includes private health insurance, medical expenses and maintenance of the Trust property.

Tax Treatment

The Trustee lodges a Tax Return and is assessed at the beneficiary’s marginal rate.  There are CGT advantages when Trust assets are sold.

Stamp Duty

As a general rule no Stamp Duty is payable when the Trust acquires a property for the beneficiary’s principal place of residence (PPR).  A contribution of a residential home to the Trust for the use of the beneficiary as a PPR is also free of stamp duty.

What are the Disadvantages?

Goods and services including accommodation supplied by the beneficiary’s family members cannot be paid for by the Trust.

Example:The parents of a beneficiary, who provide the beneficiary with accommodation in their home or in another place owned by them, cannot be paid rent or board from the Trust.  If another family member, parents, spouse or children of the beneficiary provide care or support, they cannot be paid for those services from the Trust.

Is the Beneficiary Eligible?

The Trust is only available if the beneficiary qualifies as having a severe disability or severe medical condition.  Medical and other health reports would have to be obtained to prove eligibility.  There may be a need for other evidence to prove that the condition is severe and is unlikely to change.

The persons proposing to establish the Trust will need to spend a lot of time and money to get this evidence.  They will then need to get expert Financial Tax Advice and Medical Advice which could be costly.  If they believe they have good reason to proceed they should make an appointment with the Centrelink Special Disability Trust official for final advice.

If a decision is made to proceed it is wise to engage Lawyers to draft the Trust Deed which must comply with the Model Trust Deed approved by Centrelink.

Who Can be a Trustee?

The Trust needs two or more Trustees.  They cannot include the beneficiary or the person who established the Trust.  They should be independent but family members.  They have to be Australian residents and they must not have any prior problems with bankruptcy or and not convicted of any dishonest conductor an offence under the Veterans’ Entitlements Act.

Obviously there is a need to appoint a person who will have a long term commitment which is likely to mean the appointment of someone much younger than the beneficiary and this can be an issue if there are no suitable persons.  The same applies for the need for a Nominator/Appointor who has the task of appointing additional Trustees when the need arises.

What to Think About

There are many reasons why it can be advantageous but there is a lot of work to be done before you can be confident that it is suitable for you, your circumstances and your beneficiary’s circumstances.

Your decision hinges on the financial and tax advice and the advice and guidance you get from the Centrelink Official.

Speak to One of Our Solicitors

Our Estate solicitors are experienced in drafting Special Disability Trusts, which can be established to great benefit for vulnerable people with a disability.

We invite you to make an appointment with our Mr William Delaney, Ms Julia Marler, Ms Kristy Schaefer, or Ms Anna Delaney to discuss whether this is an appropriate Trust for your succession planning.

 

By William Delaney

 

© Delaney & Delaney Solicitors. This publication is for information only and is not legal advice. You should obtain advice specific to your circumstances and not rely on this publication as legal advice. Should you have any queries in relation to this publication, please contact our office on (07) 3236 2604.

Changes to the Succession Act 1981 – bringing defacto relationships into line with marriages

By | Family Law

Kristy Schaeffer and William Delaney discuss the implications of recent amendments to the Succession Act 1981

From 5 June 2017 a number of changes to the Succession Act 1981 came into effect (pursuant to the Court & Civil Legislation Amendment Act2017 No. 17).  These changes have the effect of bringing de facto relationships into alignment with traditional marriage relationships in two particular ways:

  • Firstly, a new section 15B provides that the end of a defacto relationship now has the same effect on a testator’s Will as a divorce – that is, it revokes any benefits left to the testator’s former defacto partner and revokes the former defacto partner’s appointment as an executor.  These provisions will take effect unless a contrary intention appears in the Will (section 15B(3)).  We highlight for our clients that there still remains an important practical difference between a divorce and the end of a de facto relationship, namely, that a divorce involves the issue of a Divorce Order from the Federal Circuit Court of Australia.  There exists no equivalent formal piece of evidence to prove the end of a defacto relationship.  For clients who are in a situation which involves the end of a defacto relationship, we recommend you consider reviewing and possibly updating your Will, or providing us with instructions to formalise or document the end of the defacto relationship to ensure the new s15B applies in your situation.
  • Secondly, changes to section 40A(2) and (3) now clarify that a stepchild includes the child of one party to a defacto relationship as a stepchild of the other party.  Accordingly, such a stepchild is an eligible applicant to bring a Family Provision Application against the estate of the deceased ‘step-parent’ provided the defacto relationship subsisted at the death of either of the parties to the defacto relationship (this is the same position as a stepchild where there is a marriage relationship between the child’s parent and the other party which subsists at the date of death of either party).

We have been assisting clients with estate planning, including the making of Wills and enduring documents, estate administration and estate disputes for over 100 years.  Particularly if you have an estate with complicated assets or family structures we would recommend that you come and see us for advice on the many issues you should consider when making your Will and establishing a thoughtful, considered and fair estate plan.  We are interested to ensure that our clients make good decisions to protect their estate from costly estate litigation and protect your family members from the risk of conflict and disputes following your death.

By Kristy Schaeffer and William Delaney

© Delaney & Delaney Solicitors. This publication is for information only and is not legal advice. You should obtain advice specific to your circumstances and not rely on this publication as legal advice. Should you have any queries in relation to this publication, please contact our office on (07) 3236 2604.