Bowen Buchbinder Vilensky

Archive for March, 2016

The Will to Challenge
Thursday, March 31st, 2016

This one (2)

By Laura Di Cristofaro, Solicitor at Bowen Buchbinder Vilensky Lawyers

31 March 2016

Modern life and the complexities that come with it mean that we must consider our estate planning very carefully.   However, with the increase in conflicting moral obligations to spouses, de factos, children, step children and other loved ones, even the most careful Willmaker may find that there is someone who feels that their Will is unfair and that they should have received an inheritance or a larger inheritance.  It is also possible that a relative may feel (for whatever reason) that, where a person dies without making a Will, the laws of intestacy do not provide that relative with adequate provision. 

The Family Provision Act 1972 (WA) (“the Act”) was enacted to make provision for the maintenance and support of the family and dependants of a deceased person, where the deceased person has not adequately provided for those people.  Under the Act the following classes of people may apply to the Court for further provision:

  • a spouse or de facto partner
  • a child
  • a parent

and, in certain circumstances:

  • a grandchild
  • a stepchild
  • a former spouse or former de facto partner.

The claim must be made within six months of a Grant of Probate (or Letters of Administration) being made.

The Court has a wide discretion to determine what is fair and adequate provision and will look at a number of factors, such as the claimant’s:

  • financial position
  • lifestyle
  • medical needs
  • relationship with the deceased,

as well as other factors such as the:

  • needs of other beneficiaries
  • size of the deceased’s estate
  • moral obligation to provide for the claimant.

The existence of the Act highlights the importance of ensuring that your Will is always valid and up to date in order to protect the rights of your beneficiaries.  It also highlights the importance of seeking advice from an experience estate planning lawyer when drafting your Wills in order to ensure that all measures are taken to protect your estate from legal fees after your death  - an ineffective Will is expensive to your estate.

If you were a dependant of a deceased person and do not believe that you have received an adequate or fair share of their estate, we recommend that you seek legal advice about your rights and the procedures involved in bringing a claim under the Act.  

Please contact Laura Di Cristofaro of our office at ldicristofaro@bbvlegal.com.au if you would like to have a discussion about Family Provision claims or your estate planning requirements.

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What is the Net Asset Pool?
Thursday, March 10th, 2016

Adam pic

By Adam Spashett, Senior Associate at Bowen Buchbinder Vilensky Lawyers

10 March 2016

Following on from my colleague’s article “What Do You Mean It’s Not Mine?”, I have reflected upon one of the more basic, yet most important, question in family law property settlement – what makes up the net asset pool?

Simply stated, the net asset pool is all of the parties’ assets minus their liabilities.

That sounds simple enough, but what exactly is an asset, a liability, or a financial resource, is sometimes not so simple.

Identifying and Valuing the Net Asset Pool

The asset pool includes assets which are:

  • owned by either party prior to the marriage;
  • accumulated during the marriage; and
  • acquired post separation.

The Family Court can deal with an asset which is:

  • registered in the sole name of a party;
  • registered in joint names; and/or
  • registered in the name of a company or trust which a party controls or in which a party has an interest.

The Court also has regard to the financial resources of a party, such as any benefits which may flow to a party from a trust.

There are often disputes between parties as to:

  • the identity of assets;
  • the value of assets; and/or
  • assets which may have been dissipated either before or after separation.

The Court recognises the concept of an “add-back” or “notional property”.  This means that the Court can “add-back” into the net asset pool those assets which:

  • formed part of the asset pool but have been spent (for example, funds in a joint account spent on a party’s legal costs);
  • have been gifted to a third party;
  • have been recklessly wasted by one of the parties (for example, gambling or extravagant expenditure); and/or
  • have not been disclosed or are unaccounted for.

In determining the net asset pool, it is necessary to consider any contingent or latent tax liabilities which may arise upon the division or transfer of assets.  Transfers of assets between parties, pursuant to orders of the Family Court are normally exempt from stamp duty and parties can claim capital gains tax rollover relief.  However, where other assets are transferred, such as sale or transfer of shareholdings, or superannuation splits, different considerations may apply.  Parties should obtain independent financial or accounting advice in relation to these matters.

The relevant date for the determination of the net asset pool is the date when the Court hears the application.  If parties negotiate a settlement, the appropriate valuation date will be at the time of a settlement.  Many litigants do not appreciate that assets acquired pre-marriage or post separation can also be brought to account by the Court.

What is an Asset for the Purposes of Property Settlement?

Some of the more common assets are

  • real estate
  • motor vehicles
  • personal property (artwork, jewellery, furniture, antiques and personal possessions of value)
  • shareholdings in publicly listed or private companies
  • savings/deposits
  • superannuation (save and except in de facto property cases in Western Australia)

The following may also be deemed an asset of a relationship

  • goodwill of a business
  • interest in a partnership, franchise or other business
  • property held overseas or interstate
  • surrender value of a life insurance policy
  • patents and copyrights
  • antiques and artwork
  • lump sum redundancy/long service leave payments, provided they have already been received
  • lotto winnings or other windfalls (such as insurance payments and inheritances in certain circumstances)
  • contingent assets such as loan accounts in family trusts
  • vested interest in an estate, such as a life interest in property
  • frequent flyer points
  • water rights for rural properties
  • livestock

The assets taken into account by the Family Court include those owned by either party prior to the marriage, accumulated during the marriage or acquired post separation.

The Court also has regard to the resources of a party, which may include the following

  • benefits which may flow from family or discretionary trust or other entity
  • benefits received as a company director (company car, computer, phone)
  • inheritance shortly to be received
  • superannuation (in de facto property cases in Western Australia)

What is a Liability for the Purposes of Property Settlement?

Some of the more common liabilities are

  • mortgages
  • credit cards
  • personal loans (car loans and hire purchase leases)

The following may also be deemed a liability of the relationship

  • current outstanding taxation liabilities including income tax liabilities and capital gains tax
  • tax liabilities which may arise upon the division or transfer of assets
  • capital gains tax to be incurred from the sale of a property or shareholdings
  • outstanding land tax
  • HECS/Fee Help debt
  • monies owed to family entities

Ultimately what forms part of the net asset pool varies on a case by case basis.  A careful analysis of your financial position is prudent.  You may also need to speak with your accountant to help you prepare a schedule of your assets and liabilities.

For advice about property settlement please contact me to discuss your individual circumstances at aspashett@bbvlegal.com.au.

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