If you are over the age of 18 you can make a Will – provided you have capacity.

In general terms a person will have the necessary capacity if they:

• know what a Will is;
• know of the amount and type of property they are disposing of;
• understand the moral claims to which they should give effect when deciding to whom to leave their property; and
• are not delusional or suffering from a mental illness at the time they sign their will.

Who decides on capacity?

It is not the role of a lawyer to be an expert in assessing the capacity of their client.

However, a lawyer can be involved in carrying out a “legal” assessment of the

Will maker’s capacity.

If there is a question about someone’s mental capacity to make a will, then an opinion, preferably in writing, should be obtained from that person’s treating doctor. The opinion should state that the Will maker has the required testamentary capacity to make a Will.

When should the Will be signed?

It would be ideal if the doctor could be present when the Will maker signs the will and even better if the doctor is one of the two witnesses to the will. In all likelihood this will not be possible.

Where there is the likelihood of the Will being challenged on the Will maker’s death on the basis of lack of capacity, it is important to obtain contemporaneous medical evidence from the Will maker’s treating doctor or in some cases a geriatrician confirming the Will maker has capacity. It is prudent for the doctor to conduct a medical examination to determine this and then provide a written report confirming his opinion.

We feel that the Will maker should on the same day provide instructions to the lawyer and sign the Will.

Having a medical report stating that, in the doctor’s opinion, the Will maker had capacity and then on the same day the person provided instructions and signed their Will, places the Will maker in a strong position so far as capacity is concerned.

Could the Will be challenged?

It is important to address the issue of capacity in some circumstances because a Will can be challenged on the grounds that the Will maker did not have sufficient capacity when signing the Will. This arises most frequently where the Will maker is ill, for example, in hospital on medication or elderly and suffering from dementia.

It is difficult to set aside a Will on grounds that the Will maker lacked testamentary capacity if the Will is prepared by a competent lawyer who took appropriate instructions from the Will maker and was satisfied the Will maker had the requisite testamentary capacity to make a will.

How your lawyer can help

If you are worried because you know someone who wants to make a Will and may not have capacity or may be in the early stages of dementia and you are not sure, then it is prudent to encourage them to consult a lawyer who is experienced in Will making and to do this as soon as possible.

It is also prudent to ensure the lawyer is made aware of this potential difficulty because as we suggest, it may be necessary for the Will maker to first attend their doctors surgery for an appointment with the doctor being able to provide a satisfactory written report so it can be taken to the lawyers office ahead of the Will making appointment but on the same day.

It is then a matter for the lawyer to be in a position to actually prepare the Will on the spot for checking and signing. Then the Will maker will have a Will that is dated the same day as a medical report saying they had capacity.

As you can see there is a degree of planning that is needed, so speak to your lawyer first to ensure that all the plans are worked out first.

If this is relevant to you or your family then please call us on 3 9264 6888 or email mail@nhlegal.com.au.

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Every family law situation is different and it is important that people get the right advice and are able to make informed decisions about their family and their own future before entering into any agreement or going to court. In this article we have identified the top 5 issues where myths exist and we have set the record straight.

Myth 1: You need to be divorced before you can divide your property

There is no provision that requires a divorce to be finalised before a financial settlement can be negotiated.

You are only entitled to a divorce after 12 months of separation, once you become separated you can immediately start negotiating a financial settlement.

In fact, if you have not finalised your property settlement by the time of your divorce you should do so within 12 months because there is a time limit of 12 months to start Court proceedings after you are divorced.

Myth 2: I owned it before we got together, so it’s mine if we separate

A person will not necessarily be able to keep those things in their own name that they brought into the relationship or that were paid for individually during the relationship.

The factors which must be taken into account when the Family Law Courts consider how property is to be divided is set out in the Family Law Act. There is no universal equation applied, property settlement is based on all of the information provided including the various contributions made by both parties to the accumulation of the assets and the Court will then use its discretion in deciding the matter.

The Family Law Courts may give greater weight to the individual contributions of one party in a very short relationship which may result in that party being awarded an asset that they brought into the relationship.

A lawyer practicing in family law can advise you exactly what is taken into consideration by the Court when providing detailed and specific advice to clients about their individual circumstances.

Myth 3: Property will always be split 50/50 in a property settlement

This is usually the most common myth in family law. There is no rule or presumption that parties have to divide their assets equally when they separate.

As outlined above there is no universal equation applied, property settlement is based on all of the information provided and the discretion of the Court in deciding the matter.

The percentage outcome depends on many factors, which include:

• The length of the relationship;
• The financial contributions of each person;
• The non-financial contributions of each person; and
• The current and future needs of each person.

The longer the relationship, the more likely it is that the Courts will consider the contributions and future needs of the parties as being equal, all factors need to be considered. The reality is that an exact 50/50 split is very rare.

Myth 4: The assets are held by a company or trust, so they are excluded from a property settlement

When a marriage or de facto relationship breaks down property can be divided between the parties.

The definition of “property” is very broad under the Family Law Act. In the case of assets owned by a company or trust the Courts will look at who has control over the company or trust. Even if a person is not a director, if the entity is under the control of one of the parties the Court has the power to deal with the assets as an asset of the marriage.

Usually, assets held by a company or trusts will come within the definition of property

Myth 5: Pre-nuptial agreements are only used in the USA

The use of Pre-nuptial agreements or “pre-nups”, as they are often known, has been popularised, sometimes sensationalised by their use in the USA. There have been plenty of newspaper stories and even movie storylines about them and their enforceability.

So, do we have them in Australia?

In fact, we do. In Australia they are known by the somewhat less sensational name of Binding Financial Agreements or BFA’s.

A BFA is often used as an asset protection mechanism by people going into a new relationship or marriage allowing a couple to agree in advance on an acceptable division of assets. After a relationship breaks down, a BFA can reduce the financial stress of a separation and allow the couple to amicably separate without the need for costly, time-consuming and stressful court action.

BFA’s must be properly drafted and executed to ensure the agreed property distribution is enforceable, so it is sensible to discuss this with your lawyer to ensure your assets are protected.

Conclusion

No two family law cases are the same and urban myths don’t usually apply. The Courts will always take into account the individual circumstances of each case before applying their wide discretion to make decisions.It is important to obtain independent legal advice from experienced family law solicitors who will help you to understand the processes involved concerning your particular circumstances.

If you know someone who may need assistance or advice on how to proceed please call on 02 9264 6888 or email us mail@nhlegal.com.au

The post Fact or fiction – Top 5 myths about family law property settlements appeared first on Neville Hourn and Borg Legal.

The choice of business structure is an important decision to make at the start of a business venture, as the structure can impact on tax implications and reporting requirements during the lifetime of the business. When setting up a business structure, consideration should be given to factors such as how many people will be involved in the business, what the business will do, how much income is likely to be earned from the business and the intended growth of the business.

Sole Trader

A person can carry on a business on his or her own behalf, as a sole trader. A sole trader can trade under his or her own name or a registered business name. The income earned as a sole trader is taxed at the same rate as individual tax payers.This is the simplest form of business structure, with lower establishment costs and with minimal legal and compliance requirements. The main disadvantage to this type of business structure is that a sole trader is personally liable for all obligations incurred in the course of the business.

Partnership

Two or more individuals can carry on business in partnership, where the income from the business is received jointly. Partnerships are relatively inexpensive to form and operate. Most partnerships are established by a partnership agreement which sets out the rights and obligations of the partners. A partnership itself is not taxable, rather each partner pays tax on their share of the net income of the partnership.

The downside to this type of business structure is that partners are severally and jointly liable for the obligations of the partnership. There is also potential for dispute and loss of trust between the partners.

Trust

Under a trust, a trustee owns the property or assets of the trust and carries on the business on behalf of the beneficiaries of the trust. A trustee can be an individual or a company. A formal Deed is required to set up a trust and there are annual tasks for a trustee to undertake. As such, it can be expensive and complicated to set up and administer a trust.

The advantages of a trust are that there is flexibility in income distribution and income can be streamed to low income tax beneficiaries to take advantage of their lower marginal tax rate. Furthermore, assets can be protected through a properly drafted Deed. The disadvantages are that trusts can be costly to set up and there are more compliance and legal requirements.

Company

A company is a separate legal entity capable of holding assets in its own name. The words “Pty Ltd” after a business name show that the business is a registered legal entity trading in its own right. A company is owned by shareholders and directors manage the company’s day to day business and affairs. The shareholders of a company receive any company profits in the form of dividends. Shareholders can limit their personal liability and are not generally liable for the company debts. Instead, the financial liability of the company is limited to the company assets.

Companies are governed by the Corporations Law and there are a number of duties and obligations for company directors. Primarily, directors have an obligation to act in the best interests of the company. Establishment of a company and ongoing administrative and compliance costs associated with the Corporations Law can be high. There is also a requirement to publicly disclose key information.

Conclusion

Each business will vary and no business owners’ circumstances will be the same. It is advisable to talk to an accountant or solicitor about the costs and risks of each business structure to make sure that the business structure used is the right one for the business and its needs going forward.

If you or someone you know wants more information or needs help or advice, please contact us on 02 9264 6888 or email mail@nhlegal.com.au.

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Lawyers and other parties involved in property transactions have an obligation to ensure that the person claiming authority to deal with land is legally permitted to do so. This includes confirming a person’s capacity to act as agent for a company or as an attorney.

The VOI process is particularly important in land and property dealings as it assists in reducing identity theft and land title fraud. Verification of Identity has always formed part of good practice however from 1 August 2016 it became mandatory for land transactions.

Lawyers and other parties must take ‘reasonable steps’ to verify the identity of their clients, their client’s agents and persons to whom title deeds are being provided.

This means that your Lawyer will need to formally verify your identity during a face to face interview or use other approved methods to confirm your identity and authority to enter into the contemplated transaction. The VOI requirements extend to any person authorised to act on behalf of the client.

When do I need to prove my identity?

Land and Property Information (LPI) is the central registration authority for real property (land) dealings in New South Wales. The LPI registers hundreds of transactions affecting land every week.

New provisions under the Real Property Act 1900 (NSW) allow the Registrar-General to make rules (Conveyancing Rules) regarding the verification and identity of particular classes of persons with respect to certain transactions (Conveyancing Transactions).

The Conveyancing Rules set out the framework required for VOI processes which also reflect the methods used by recently-introduced electronic conveyancing procedures.

Broadly, a Conveyancing Transaction is a transaction between one or more parties involving the creation, disposal or transfer of an interest in land. A typical conveyance, mortgage, charge or lease over property falls within this category.

The registration, recording or removal of an interest or notation in the titles register are also Conveyancing Transactions and will be subject to VOI processes. Examples include the registration of an easement, caveat or plan of subdivision.

The VOI process must also be used for documents that do not require registration at LPI (such as a contract for sale and purchase of land and agreement for lease).

How does the VOI process work?

Your Lawyer must be satisfied that he / she is dealing with the person claiming to be authorised to enter transactions regarding the property. Likewise, Lawyers acting for the party on the other side to your property transaction must confirm the identity of their client.  The idea is to create an ‘even playing field’ in the conveyancing and property transaction setting.  By ensuring all sides to a transaction undertake diligent VOI measures the parties are better protected against property fraud.

If you are involved in a property transaction such as the sale or purchase of land or borrowing money secured by a mortgage, you will need to meet personally with your Lawyer or other agency to provide documents and formally prove your identity.

During the VOI process you will be asked to produce original documents so that your identity can be compared (ideally) with a document containing photo identification.

The documentation required for the VOI process is similar to the present ‘100 points’ system commonly used for banking and other identification processes. There are various categories and combinations of documents which may be used to prove your identity.  These include an Australian or foreign passport, drivers licence or photo card, birth or citizenship certificate, Medicare, Centrelink or Department of Veterans’ Affairs card.  For those persons who are not Australian citizens or residents, other types of documents may be used.

The types of documents you need to produce are categorised with the higher category documents being the preferred VOI source, for example an Australian passport and driver’s licence.

If sufficient identification documents are not available, an Identifier Declaration may be used which enables another person to identify you. Your Lawyer can advise you on this process.

Verification of Identity documentation relating to a property transaction must be kept securely by your Lawyer for seven years. Once the VOI process is carried out, further verification need not take place for two years.  This means that you need not undertake a further VOI process for a subsequent property transaction that occurs within two years of the initial VOI.

What if I cannot visit my Lawyer?

If you are unable to attend a face to face interview with your Lawyer, an Identity Agent can be used to confirm your identity. This is practical for clients who are travelling or do not reside close to their Lawyer’s office.

Australia Post and other reputable agents offer this service and your Lawyer can refer you accordingly. The Identity Agent will complete the VOI process in a similar manner as required by your Lawyer and provide an Identity Agent Certification.

What about companies and attorneys?

If a party involved in a Conveyancing Transaction is a corporate entity, a company search will be obtained to confirm the existence of the company and to establish those persons authorised to sign on behalf of the company. The authorised representatives will then need to undergo the VOI process.

Similarly, attorneys entering transactions on behalf of their principal must provide the document authorising such a transaction and complete the VOI process to verify their identity.

Conclusion

Identity theft leading to the registration of fraudulent documents and dealings over land is not a new phenomenon and can have devastating financial and other affects. Verification of Identity is an important safeguard against fraud and is an essential risk management tool.

By imposing standard and reciprocal requirements for Lawyers and Conveyancers to identify their clients, mandatory VOI rules are likely to offer better protection and safeguard you against a possible fraud in connection with your property transaction.

For more information about VOI, talk to one of our experienced Property Lawyers or if someone you know wants more information or needs help or advice, please contact us on 02 9264 6888 or email mail@nhlegal.com.au.

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These terms form the basis for the trading relationships for all businesses.

If a business is the supplier of goods or services then it should have written terms of trade which:

• are professionally prepared;
• tailored to fit the business;
• reflect the terms on which it is prepared to supply goods or services to customers; and
• allow customers to easily understand their obligations.

A lot of businesses don’t take the opportunity to set the terms on which they do business which can mean they are left at a commercial disadvantage, or worse, a legal disadvantage if the transaction does not go according to plan.

It is important that the terms of trade are set and understood before any commercial dealings have taken place.

Key issues to consider

In most commercial transactions involving the supply of goods or services there are some standard issues that should be covered by the terms of trade.

The terms should set out the basis of the business relationship between supplier and customer and should cover such things as:

Goods/Services. The goods and/or services to be provided should be identified and described.

Price. The price should be defined, either the amount or with reference to other documents like invoices that will be provided. Is GST (or other taxes) included or excluded?

Payment Terms. The price could be payable in cash on delivery or on terms which have been pre agreed. If credit is provided then describe the interest rate and other applicable terms.

Delivery. The method of delivery (if any) – where and when will delivery occur? How will delivery be made and who is responsible for the delivery costs?

Risk and Insurance. When does the risk in the goods pass to the buyer? If insurance is required, who is responsible for paying for it?

Warranty. Is there any warranty provided for repairing defects in materials or quality of work? If so, what is the warranty period and the limitations on the obligations under the warranty?

Reservation of title. This is often called a “Romalpa” clause. Does the ownership of the goods pass to the buyer when the goods are delivered or does the seller retain ownership until full payment is received? Suppliers will also need to register their interest in accordance with the Personal Property Security Act to ensure that their reservation of title clause remains enforceable against, and continues to have priority over, other interests as intended.

Providing credit. Credit should only be provided where information and consent that enables credit and reference checking has been provided and the terms of the credit have been agreed in writing.

Personal guarantee. Where commercial credit is provided to a private company the directors or owners of that company should provide a personal guarantee for the money owed to the business. The guarantee should be provided before any goods/services are provided. Depending on the individual business there are many other terms that can/should be included in the terms of trade that address specific issues faced by the business.

Where possible the terms of trade should also limit the liability of the business to the extent allowed under the Competition and Consumer Act and the Australian Consumer Law.

Some common traps

Businesses often supply goods and services based on informal arrangements which are open to misunderstanding and misinterpretation. Disputes can be avoided if there are clear, written terms of trade from the beginning.

Terms of trade are sometimes printed on the back of an invoice. These terms are difficult to enforce because the invoice is sent after the deal has already been done. The best practice is getting the customer to agree to the terms of trade before any commercial dealings.

If the business provides quotations or estimates it is good practice to send out the terms of trade when the estimate/quote is provided and to get the customer to sign off on the terms and to agree to be bound by them.

All businesses are different and it is very dangerous to simply copy the terms and conditions used by a competitor (or found on the Internet) unless those terms have been reviewed and tailored to fit the particular business.

In more complex cases not covered by your terms of trade you will need professional assistance in preparing a contract that caters for the specific business transaction

Summary of the benefits

Clear and concise terms of trade are an effective way of minimising disputes and protecting cash flow and you are better off setting the terms on which your business trades rather than accepting someone else’s terms forced upon you.

If your terms of trade are professionally prepared to cater for your business model and trading terms you will find it much easier to successfully recover or prevent bad debts.

If you would like to discuss your business requirements or you need any help or advice please contact us on 02 9264 6888 or email mail@nhlegal.com.au.

The post Protecting your cashflow – the importance of your terms of trade appeared first on Neville Hourn and Borg Legal.

It has been said that litigation is a game in which the court is the umpire. It is an area of law where the client needs to have great faith in the legal team because it comes at a cost. Many cases have been commenced by inexperienced and excitable legal practitioners who want to help. The client has come looking for legal help and too often legal help is sought unwittingly from the wrong firm or the wrong practitioner.

In these circumstances both client and lawyer need to think and act carefully.

So how should a client act and what questions should he ask to find out if his lawyer is the right one in this case?

Usually by the time the parties are thinking about lawyers in a commercial dispute, emotions are already running high. Usually the client is frustrated and wants to take immediate action and almost always a client feels they are in the right.

It is precisely at this time that objectivity and cool heads are needed rather than for a lawyer to provide advice to a client thinking it might be the advice that a client wants to hear. The client needs an experienced lawyer because you don’t want to be involved in an unmeritorious case. If there are poor prospects then it’s better to hear that now, rather than later.

Usually the unsuccessful party will have to pay not only their own legal costs but also a proportion of the successful party’s costs too. The risks are high and it is not an area of law for the faint hearted.

To ensure you engage the right lawyer to conduct your commercial dispute matter, ask this:

1.  Have you handled cases like mine? Naturally, you want a lawyer who has successfully handled a variety of business disputes. If you meet with the lawyer, it is your chance to learn about the lawyer’s experience and qualifications.
2. What course of action would you recommend? Will I need to go to a hearing? Are there other options? Hearings are expensive and time consuming; an experienced commercial lawyer will know if your dispute can be resolved through less costly alternative dispute resolution methods such as mediation.
3. What are the strengths and weaknesses of my case? A good commercial lawyer will be able to warn you of potential problems that may impact your case or your business.
4. What is my case worth? Your lawyer should be able to give you an estimated value of your case.
5. Who will be handling my case? Will I deal with one lawyer or an entire team? Will work be delegated? Who will keep me updated? Who will be my main contact person? What do I do if I want to know what’s going on?
6. How will decisions be made regarding my case? Am I a partner in my legal case? Will I be involved in decision making? Will I be consulted about changes in the action plan?
7. What will my tasks and responsibilities be? What am I responsible for bringing to the case? Are there documents and information that you will need from me? What else can I do to help my case?
8. How long will it take to resolve this matter? The lawyer won’t be able to give you a definite answer. The opposing party may try to hold things up or act unreasonably. Your time is valuable and your lawyer should seek to resolve the dispute in a way that produces the best outcome for you in a reasonable amount of time.
9. How do your fees work? Most lawyers’ charge on an hourly basis and different staff charge at different rates, depending on experience or role. Ask your lawyer to give estimates. Although it is hard to do this for the whole case at the beginning you should always receive a Costs Agreement from the firm.
10. Are there any other questions I should be asking? These questions can give you a feel for the lawyer’s experience and style. More importantly, they can help you determine your comfort level with the lawyer. No matter how impressive the lawyer’s credentials, if you are uncomfortable, the lawyer may not be right for you.

The initial consultation is your chance to interview the lawyer before you make a hiring decision. Asking these questions allows you to learn about the lawyer and assess if he or she is the right one for you in this matter.

If you need more information or if you need assistance or advice on how to proceed please call us on 02 9264 6888 or email mail@nhlegal.com.au.

The post How to find the right lawyer in a Commercial Dispute case appeared first on Neville Hourn and Borg Legal.

If you have a website privacy policy you should review it for compliance with the privacy principles.

The aim of the principles is to bring Australia’s privacy laws (first introduced in 2001) in line with current technology trends and to provide more transparency around the capture and use of personal information.

The principles apply to organisations and Government agencies and fines of up to $1.7 million may apply for non-compliance.

The principles make it more difficult for businesses to collect information about consumers without their knowledge and changes how businesses handle, use, and store personal information and engage in direct marketing.

If your business is affected, you may need to update your privacy policy and your procedures and systems to comply with the law.

Which businesses are affected by the privacy laws?

If you generate more than $3 million in annual turnover and you handle personal information your business is affected. If you generate less than $3 million but your business is “trading in personal information” you may also be affected by the changes in the law.

What does “trading in personal information” mean?

Personal information is information that identifies, or could reasonably identify, an individual. This includes names, addresses, dates of birth and bank account details.

Trading in personal information includes collecting or providing personal information to a third party for a benefit, service or advantage. If you collect personal information and then provide it to a business to manage your direct marketing, you may be trading in personal information.

What are the key reforms?

The key reforms affecting small businesses, particularly in the online space, are that:

• your privacy policy must address specific topics; and
• you must have procedures and systems in place to ensure you comply with the new laws.

Companies face fines of up to $1.7 million for serious or repeated breaches of the Privacy Act. Sole traders and entities that are not companies face fines of up to $340,000.

How do I ensure my business complies?

You should conduct a review of your business and identify how you deal with personal information. The following elements need to be addressed:

Privacy Notice

When you collect personal information, inform individuals of your organisation’s name, contact details, the purpose of collection and to whom it will be disclosed.

Privacy Policy

Your privacy policy must address the required topics. These include:

• What personal information you collect.
• How you collect the personal information.
• The purposes for which you use and disclose it.
• If you provide personal information to parties overseas you need to disclose that and, if practicable, specify the countries where those parties are located.
• Setting out how you secure and store personal information.

Systems

Establish a system to ensure that:

• Staff who handle personal information comply with the new privacy laws.
• Individuals can access their personal information and correct out of date or incorrect information.
• You have a process to deal with complaints about your compliance with the laws.
• Enables recipients of direct marketing material to unsubscribe.

Conclusion

You should review your business policies and procedures and identify how you deal with personal information. Following the review you should get your privacy policy in order and have procedures and systems to comply with the new law.

If you need more information or if you need assistance or advice on how to proceed please call us on 02 9264 6888 or email mail@nhlegal.com.au.

The post Does your privacy policy comply with the privacy laws? appeared first on Neville Hourn and Borg Legal.

Where a person is appointed by a Will, that person is called “an executor”.

An executor is chosen by the person making the will to carry out their wishes in managing their estate, and is responsible for the administration and distribution of assets to beneficiaries according to those wishes. An executor may be a friend, a relative, or a professional.

Most people are unaware of the complexities and time involved in administering an estate and may find the role to be a burden.

What are the legal steps that are taken after someone dies?

The executor of a Will may need to make an application to the Supreme Court for Probate. This is usually done with the help of a lawyer. Probate is a Court order declaring a deceased’s Will valid and that the person named in the Will as the executor can finalise the deceased’s affairs.

It is not always necessary to get a Grant of Probate. The need for a Grant by the Courts has been relaxed over the years, although an application for a Grant is still necessary in many cases.

When do I need to apply for Probate?

The requirement to apply for a Grant of Probate will depend upon the nature of the assets of the estate. To determine whether a Grant is needed, the person appointed executor in the will must contact the organisations with which the deceased held assets to determine the requirements of those organisations for transfer of those assets to the executor or the beneficiaries. This is best done through your lawyer.

Where a dispute does or is likely to arise over the estate, a person appointed as executor would be wise to apply for a Grant of Probate. Where a person does not have the right to deal with an estate, the person can become personally liable to the beneficiaries.

How to apply for Probate

Anyone appointed an executor under a Will must firstly determine the deceased’s assets and debts. Once that is known the executor can then determine how the assets can be transferred to the beneficiaries.

In making an application to the Supreme Court, the executor must:

• advertise the application
• lodge a formal application with the Court with an affidavit (a sworn statement) containing:
  • proof of the advertisement
  • details about the Will
  • certain details about the deceased person; and
  • the original Will
• do a search of the Registry records to indicate a previous Grant has not been made; and
• provide a certified copy of the death certificate.

Paying any debts and distributing the assets

Any debts of the estate must be paid before the estate is distributed. Then the executor distributes the estate in accordance with the will.

After the Grant of Probate from the Supreme Court Registry has been made, evidence of the Grant must be sent to the various places where the deceased’s assets were held (ie. the deceased’s banks or share registries). Those institutions then transfer the assets as directed by the executor or the executor’s lawyer.

Any land in the sole name of the deceased can be transferred to the executor or the beneficiary by lodging the Grant of Probate with the Land Titles Office, together with an application to transfer the land.

Where the deceased owned land in more than one jurisdiction, it may be necessary to apply to the Supreme Court of each jurisdiction for a reseal of the Grant of Probate, before the land can be transferred under the Will.

If you need to know any more about administering an estate please call us on 02 9264 6888 or email mail@nhlegal.com.au.

The post Dealing with deceased estates – Executor duties appeared first on Neville Hourn and Borg Legal.

Many properties are sold at auction, particularly in a rising market, so it is important for buyers to understand the processes involved so they can bid confidently on the auction day.

There are many things that need to be done before the auction to ensure that your interests are protected and that you are fully informed about the property you are intending to buy, these things are outlined below.

Contract Review

The most important thing to do is to take the contract of sale to your lawyer well before the auction date.

Your lawyer will review the contract, advise you of any risks and help to protect your interests by identifying any terms that might need to be negotiated on your behalf or that you wish to have altered, for example; longer settlement periods, reduced deposits and/or additional terms and conditions.

Your lawyer will also make sure you are buying exactly what you intended to and that it’s in the condition you expect by arranging any pre auction inspections that should be carried out such as building and pest inspections.

If you are the successful bidder at the auction the reviewed contract can be signed with confidence.

Inspect the Property

You should thoroughly inspect the property before the auction day and satisfy yourself that all inclusions are in proper working order and that the gas, water and electricity are functioning properly.

If you are successful on the auction day you will be buying the property ‘as is’.

Research

Thoroughly research the area and surrounding suburbs before the auction day, so that you are comfortable about the amount you are prepared to pay for the property, and can bid confidently.

Finance

Make sure that you have your finance in order before making an offer. If you are obtaining mortgage finance, you should have your finance unconditionally approved (not just pre-approved). Confirm with your lender the maximum amount you can borrow.

Pre-approval is not confirmation of how much the lender is willing to provide you, it is an indication of what you might be able to borrow depending on the value of the property, determined by a formal valuation after the auction.

It is important to ensure that you have adequate funds available to complete the purchase within the timeframe stipulated in the contract.

Deposit

If you are the successful bidder you will be required to pay a deposit cheque or deposit bond (usually 10% of the purchase price) immediately following signing of the contract.

Register to Bid

To participate or bid at an auction, buyers must register with the selling agent and be given a bidder’s number. You can register with the selling agent at any time prior to the auction, such as when you inspect the property, or on the day itself.

To register you must provide ID, a card or document issued by government or a financial institution showing your name and address, for example:

• driver’s licence or learner’s permit
• vehicle registration paper
• council rates notice.

If you do not have this kind of proof of identity you can use two documents that together show your name and address.

Reserve price

Before auctioning a property, the seller will nominate a reserve price, which is usually not advertised. If the bidding continues beyond the reserve price, the property is sold at the fall of the hammer.

Bidding

Make sure you have a strategy going into the auction and that you set yourself a maximum purchase price. Stick to that maximum price. If you feel as though you may be too emotionally attached to bid at the auction yourself, then organise with the Agent to have someone bid on your behalf. If you elect to do so, you must provide a written signed authority to the Agent authorising the person to bid on your behalf.

Successful Bidder

If you are the highest bidder, immediately following the auction, you will be asked to:

• provide our contact details to the Agent;
• sign the contract of sale; and
• pay the deposit.

You will be entering into an unconditional and legally binding contract, there is no cooling-off period.

The signed contract will then be delivered to your lawyers office and they will contact you to discuss the next steps.

Conclusion

Getting the right advice, being fully informed and prepared before the auction day is a critical part of ensuring that the purchase of your next (or first) property runs smoothly.

The purchase of a property, at auction or otherwise, should not be too stressful and our expert team can help guide you through the process and make sure your interests are protected.

If you or someone you know is looking to purchase a property at auction and needs help or advice, please contact us on 02 9264 6888 or email mail@nhlegal.com.au.

The post Buying a property at auction – Things you need to know BEFORE the auction day appeared first on Neville Hourn and Borg Legal.

A Testamentary Trust is any trust established under a will, but the term is usually used in the context of a discretionary family trust established under a will.

Why are they becoming more popular?

Their increasing popularity arises from the very considerable benefits that can flow from their establishment and use, including the fact that although assets of the trust may be controlled by the intended beneficiary, they do not form part of that beneficiary’s estate. Major benefits of a testamentary trust include the ability to protect assets and to possibly reduce tax paid by the beneficiaries from income earned from their inheritance – providing a greater level of flexibility and control over the distribution of assets to beneficiaries.

Reasons why you should consider a testamentary trust include:

CGT benefits

Assets owned by the deceased that would have been subject to capital gains tax (CGT) had the deceased sold them before their death, can pass through their estate to a testamentary trust without a CGT event occurring.

If an asset was a pre-CGT asset, the trust will receive a cost base equivalent to the market value of the asset at the date of death. If the asset is a post CGT asset, then the trust will inherit the deceased’s cost base. This is particularly important where the assets have significant unrealised capital gains. This also provides a good opportunity to “reset” the ownership of assets subject to CGT.

If for example, mum and dad own the shares in a company that is the corporate beneficiary of their family trust. The shares may have a nominal cost base but because of trust distributions made over a number of years (and often not paid in cash) the company may have become very valuable. All of that increased value is potentially subject to CGT if mum or dad changed the ownership of these shares during their lifetime. However, after their death the shares can be moved to a testamentary trust and dividends from the company can then be distributed by the trust to a range of beneficiaries, tax effectively.

In addition, trust assets may be transferred to beneficiaries without incurring CGT (but only in respect of assets of the trust that were owned by the deceased when they died).

Income Tax advantages

Income can be distributed from a testamentary trust to infant beneficiaries (under the age of 18) and taxed in those children’s hands at adult marginal tax rates (instead of at the top marginal tax rate as would otherwise be the case). Testamentary trusts may, over time, sell and replace the original assets received from the estate and the distributions to infant beneficiaries will continue to be taxed at (more beneficial) adult rates.

With the tax free threshold of $18,200 since 2013/14, testamentary trusts are even better vehicles for clients because children and grandchildren under the age of 18 years who receive income from a testamentary trust are taxed on that income at adult rates, and enjoy a tax free threshold of $18,200 (or $20,542 if the low income tax offset applies) and the marginal tax rates which apply to adults.

Without this special provision trust distributions to minors may only access a tax free threshold of $416 and thereafter the effective tax rate applied to the minor’s income is 66% of income up to $1,307 and 45% after $1,308, on the entire amount of income received.

Flexibility to the Trustee

The trustee can buy and sell underlying assets of the trust (and thereby enhance the value of the trust) without losing or endangering any tax advantage.

We suggest it is desirable that clients provide the trustee with some guidelines about the administration of the trust, but they should be carefully framed in order to avoid any confusion or legal or accounting complications.

Protection of assets

Testamentary trusts provide a level of protection to the assets held in the trust, including against creditors of the beneficiaries who may want to recover from the trust assets an amount owing to them by a beneficiary, and in the Family Law Court in the case of the divorce of a trust beneficiary.

It is quite common for a wife to guarantee her husband’s business venture and vice versa, to some extent we can all be at risk whether in high risk occupations or not. However, if a bankrupt has received an inheritance through a testamentary trust it will be protected from creditors.

In the Family Court, an inheritance held within a testamentary trust is unlikely to be the subject of a Family Court order in the case of a marriage break-up.

Protecting ’at risk’ beneficiaries

It is not uncommon for people suffering a variety of disabilities to be unable to properly manage their financial affairs.  At the same time, families may wish to ensure that an adequate fund is set up to meet the beneficiaries’ reasonable needs, and so as not to affect any pension rights they may have.

These people can be described as being ’at risk’, a description that may for example include people who are drug or gambling addicted, mentally or physically disabled or simply spendthrifts who are not capable of looking after any wealth that is left to them.  For these people a testamentary trust can be managed by a trustee (who should be) a responsible and capable person (or people) who take action for the benefit of the ’at risk’ person.

Summary

It is becoming much more common to steer away from the traditional husband and wife will, which provides for a husband and wife giving everything to each other and then to the children, and to replace this with one or more testamentary trusts controlled by the surviving spouse and/or children under which the spouse and children are potential beneficiaries.

If the funds in the estate justify it (and remember this may include the proceeds of life insurance policies, or superannuation), wills providing for testamentary trusts can provide that on the death of the spouse, sub-trusts come into existence for the benefit of each child and that child’s family – controlled by the child concerned.

Testamentary trusts are a very powerful and useful estate planning tool. The flexibility of such trusts, especially if combined with a memorandum of wishes as to how the trust should be administered, can be an appropriate arrangement as well as providing a highly advantageous tax mechanism, for many years into the future.

To find out more about how testamentary trusts can benefit you, contact us on 3 9264 6888 or email mail@nhlegal.com.au.

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