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Archive for the ‘Enduring Power of Attorney’ Category

My Will is My Business – the Essential Connection
Wednesday, January 20th, 2016

This one (2)

By Laura Di Cristofaro, Solicitor at Bowen Buchbinder Vilensky Lawyers

20 January 2016

We are constantly reminded of the importance of having a Will. The reality is, no adult is too young to make a Will and we must all confront our reluctance to plan for our succession.  Whilst the majority of us want to ensure that we provide security to our loved ones and our own legacy, many of us put executing a Will in our bucket list and never get around to actually doing anything about it.

So, what happens if you never execute a Will? Well, there are risks…

The most obvious risk is the complete loss of control of the distribution of your estate. If you die intestate, your estate is distributed in accordance with State Government Legislation. This means that your wishes or intentions have no relevance – the laws of intestacy dictate who gets your estate. Not only do you not have a say in who receives your estate, but you also lose control of imposing terms and conditions, such as age restrictions for beneficiaries to control their inheritance, implementing testamentary or special disability trusts or considering a fair and reasonable distribution between beneficiaries.

Without carefully addressing your Estate Planning, you also do not have a chance to properly consider binding death benefit nominations for your superannuation, Enduring Powers of Attorney for your financial affairs or Enduring Powers of Guardianship for your health and lifestyle needs.

Dying intestate may also instigate family disharmony and hardship, as your loved ones try to navigate through administering an intestate estate, or even may have to deal with a Family Provision Act claim being brought by a person seeking a portion (or a bigger portion) of your estate.

Beyond considering your personal estate is the need to consider any assets that your business entities may own.  There is a wide misunderstanding about who owns assets that form part of any business entity.   If you operate as a sole trader, the assets that you have to operate your business form part of your personal assets and accordingly form part of your estate. On the other hand, assets owned by a trust, partnership or company belong to those separate legal entities and not to you personally.

The question then is, how do you ensure that your loved ones benefit from your business assets? Those persons in control of your business entity decide how the assets are dealt with – it is therefore important to pass control of these entities to the right people, so that your intended beneficiaries eventually do receive the benefit of those assets.  This entails giving careful consideration to such mechanisms as gifting shares in a company, or giving units in a unit Trust, to your intended beneficiary, or appointing that beneficiary as the successive appointor of your family Trust.  If you die intestate and do not give thought to whom you will pass control of these entities, you may leave your business (and possibly your family’s source of income) floundering and miss opportunities to benefit your loved ones in the future.

As a shareholder of a company with multiple shareholders, it is vital to remember that if one of your fellow shareholders passes away and you or the remaining shareholders haven’t addressed a succession plan for the company then you could end up being in a business relationship with to whomever the deceased left his or her shares.  This may be his or her spouse, children or even someone entirely different. This can lead to significant disharmony and in turn could also lead to the company suffering severe financial and other prejudice because of a lack of proper management.  By implementing a Business Succession Agreement and the right insurances, one is able to ensure that they know exactly who they will be doing business with in the future and ensure the positive ongoing operation of the company and its officers.  Business owners are also able to execute documents such as Shareholder Agreements, so that they can monitor who may become a shareholder and thus avoid becoming involved in a business with someone with whom they would rather not be so engaged. By considering these matters during your lifetime and by properly planning your estate objectives you will ensure the success of protecting your business and any investments.

Estate Planning goes hand in hand with good business planning.

For more information or to discuss your Will and Estate Planning objectives and needs, please feel free to contact Laura Di Cristofaro at ldicristofaro@bbvlegal.com.au.

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The Disturbing Rise of Elder Abuse
Monday, April 14th, 2014

MorgSol

By Morgan Solomon, Director at Bowen Buchbinder Vilensky Lawyers

Article as published in The Australian on 12 April 2014

One of the most disturbing trends to exercise lawyers in recent years is the financial abuse of elderly people.  The rise of the largest, wealthiest, and most vulnerable generation of seniors in our history has been accompanied by a dramatic growth in cases where frail, older people are being ripped off by the very people to whom they have entrusted their financial affairs.  This is typically the son or daughter to whom they assigned an Enduring Power of Attorney (EPA).

The following statistics provide some sobering context:

  • Victims of financial and other abuse tend to be late retirees, living alone, and in 33% to 69% of cases suffering from dementia;
  • Australians aged 65 and older will grow from 12% of the population in 2001 to 21% by 2031;
  • Wealth available for inheritance will rise from $8.8 billion in 2000 to over $70 billion by 2030;
  • There are already over 300,000 Australians suffering from dementia.  That figure is expected to rise to 400,000 in 10 years and 900,000 by 2050.

“Strip mining”

So prevalent has financial abuse already become that it has even generated its own nomenclature.  “Strip mining” is the most serious, where there is clear intent by the perpetrator to strip a person of their assets of value, sell their house and contents, transfer cash and savings, control their superannuation, and then move the older person to a pensioner facility.  “Dump and run” is a similar ruse, where the family siphons off an older persons assets and then has them  placed in residential care, then they stop visiting and paying the care fees.

It is because of cases like these that the Standing Committee for Legal Affairs for the Parliament of the Commonwealth has described the Enduring Power of Attorney as ‘the most abused legal document in Australia.’

Grey areas

Not all examples are so clear cut.  What of the case of the elderly person who pays her friend $200 a week to do her grocery shopping, but regularly receives only $50 worth of items?  Can the financial gouging be counter-balanced to some extent by the benefit of regular contact with a friend who would not otherwise visit the very isolated person?

Similarly, what if an elderly person establishes a relationship with someone else who moves in with them and appears to be enjoying their wealth?  This doesn’t automatically constitute a case of financial abuse – although the children of the person may not see it that way as they watch their inheritance rapidly evaporate.

Legal remedies

In the past, lawyers were typically involved in estate litigation only after a person had died, the diminished size of their estate was revealed, and other beneficiaries began to question the conduct of the person to whom the EPA was assigned.  But as the stakes grow higher, and opportunity for financial abuse expands, more clients are flagging financial abuse as it occurs in what is becoming known as ‘’pre-death disputes”.

The way that lawyers handle these concerns varies from state to state.  In New South Wales and Queensland, for example, not only can their State Administrative Tribunals strip someone of an EPA, but they can also attempt to claw back the assets that were taken.  In Western Australia, while the State Administrative Tribunal only has the power to strip someone of an EPA, and very limited ability to claw back assets, other common law and equitable remedies are available.  These include claims for unjust enrichment, negligence, conversion, breach of fiduciary duty, restitution, undue influence and Unconscionable Dealing.

Perhaps a heartening trend in all this woe is the recent willingness of the Courts to expand and enlarge the prospects of success against a person who has abused their trust and financially taken advantage of an elderly person.  The Courts, being well aware of the changing landscape of increasing vulnerability, increasing wealth and increasing numbers of people taking advantage of the elderly, are more willing to overturn Wills written under unfair pressure, claw back assets transferred unconscionably and punish those who engage in such acts.

Prevention is better than cure

But prevention is always better than a cure.  Taking legal proceedings against a family member who has abused their mother or father is not only difficult and expensive, it is almost always very emotionally taxing too.  Far better to make an early intervention to help protect an elderly person who appears vulnerable.  Many of the abuses could be prevented by not allowing a predator to prey on the elderly in silence.

As Australia’s population ages, it is incumbent on all of us with elderly relatives to keep a watchful eye on their well-being.  Our awareness of the vulnerability of the young in our society, must be matched by our concern for the old.

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