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Archive for the ‘Wills & Estate Planning’ Category

Owning Properties in Different Countries – Heirs and Places
Thursday, February 9th, 2017

This one (3)

By Daniel Yazdani, Solicitor at Bowen Buchbinder Vilensky Lawyers

9 February 2017

In today’s globalised world, an increasing number of people own real estate in more than one country at any one time.

As a result, there has been an increase in the number of people who have both an Australian Will and a Will in a foreign country to dispose of real estate owned by them. The intention (subject to the manner in which the Wills are drafted) is usually for the foreign Will to dispose of real estate in that foreign country and for the Australian Will to dispose of all other assets of that person.

However, if you first make an Australian Will that only deals with your assets in Australia, and later make a second foreign Will that states that it revokes all previous Wills and deals solely with your real estate in that other country, what is the status of your Australian Will? Has your Australian Will been revoked by the later foreign Will?

This interesting predicament has been considered by the Australian Courts, which have set out principles to reduce the uncertainty that this creates and have determined that the question of whether a later Will revokes an earlier Will ultimately depends on the intention of the Will-maker: did he or she intend to revoke the earlier Will?

In Australia, in so far as real estate is concerned, such issues are generally referred to the law of the place where that real estate is situated (the legal principle of ‘lex situs’).

It has also been recognised since the 19th century that a general revocation clause in a Will (e.g., ‘I hereby revoke all Wills heretofore made by me and declare this to be my last Will’) is not sufficient of itself to revoke a prior Will if the Court is satisfied that the Will-maker did not intend by the later Will to revoke the earlier Will.

In determining the intention of the Will-maker, the Courts will look at a variety of factors, including:

  • whether the Australian Will deals only with your Australian estate;
  • whether the foreign Will deals only with your real estate in the foreign country;
  • whether the later Will is sufficient by its terms to cause a revocation of the earlier Will (which is a question of interpretation of the foreign Will by the Courts);
  • whether the foreign Will was ever intended to affect the Australian Will (which is to be determined as a matter of evidence according to Australian probate law);
  • whether the foreign Will was made in the language of that country and not in English; and
  • the terms of both Wills and the circumstances of their execution and signing.

The practical significance of this is that, if you own assets in Australia and also own foreign real estate, it is imperative that you obtain competent estate planning advice so as to avoid the risk that, at a later time, either your Australian or your foreign Will is deemed to have been revoked, when your intention and estate planning objectives may be clearly otherwise.

Should you have any questions or require further advice, please contact Daniel Yazdani at dyazdani@bbvlegal.com.au.

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Enduring Power of Attorney – Registering Your Interest?
Tuesday, January 24th, 2017

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By Les Buchbinder, Director, with the assistance of Giuseppe Graneri, Associate at Bowen Buchbinder Vilensky Lawyers

24 January 2017

The Australian Law Reform Commission (“ALRC”) has been conducting a review into elder abuse.

One of the proposals that the ALRC is considering is the establishment of a national register of Enduring Powers of Attorney (“EPAs”). The purpose of this register system is to reduce opportunities for appointed attorneys, or other people who may not be legally appointed, from using the power created in EPAs as a “licence to steal” from their elderly parents or friends. The proposed register will apply to enduring documents, (ie documents that survive the creator’s loss of mental capacity) including EPAs and Enduring Powers of Guardianship (“EPGs”).

There have long been calls for a national register of EPAs as there is presently no way of checking the validity of such a document when an elderly person’s relative, friend, or carer attempts to withdraw or transfer money to undertake the transaction in the name of the donor under the power of the EPA.

Arguments against the ALRC’s proposal for a national register of EPAs include debate about how effective a preventative measure, such a register, will be and whether or not developing such a registration system will increase the overall cost of having an EPA.

What is an EPA?

An EPA is a legal document that enables a person to appoint another trusted person to make financial and/or property decisions on their behalf in circumstances when they themselves are not in a position to make those decisions or undertake those actions. An EPA can be executed by anyone over the age of 18 and can be either of broad general effect or can be restricted to certain transactions only.

The benefit of an EPA is that unlike an ordinary Power of Attorney, it will continue to operate even if the donor (the person giving the power) loses mental capacity. However, an EPA ceases to be of effect on death of the donor.

An EPA does not permit an attorney to make personal and lifestyle decisions, such as decisions (for example) as medical treatment or residential decisions. The authority of the attorney is limited to decisions about the donor’s property and financial affairs.

EPAs can be revoked but there are certain formalities to be complied with in order to do so.

How does an EPA Differ from an EPG?

An EPG is a legal document that authorises another person to make important personal, lifestyle and treatment decisions on your behalf should you ever become incapable of making such decisions yourself. This person is known as an Enduring Guardian.

An Enduring Guardian can be authorised to make decisions about things such as where you live, the support services you have access to and the treatment you receive. Unlike an attorney appointed by an EPA, an Enduring Guardian is not authorised to make property or financial decisions on your behalf.

EPGs typically permit the Enduring Guardian to:

  • decide where you live, whether permanently or temporarily;
  • decide with who you wish live;
  • make treatment decisions on your behalf to any medical, surgical or dental treatment or other health care (including palliative care and life-sustaining measures such as assisted ventilation and cardio-pulmonary resuscitation); and
  • seek and receive information on your behalf.

What Happens if you don’t have an EPA or EPG?

Many people run successful businesses and companies that have in place detailed policies and procedures to manage the company. What is most surprising is that these same people often have not implemented the same planning for their own family and personal affairs.

The cost of failing to have a proper succession plan, including a current Will, EPA and EPG can be significant. In particular:

  • There is an obvious economic cost that results from families scrambling to obtain a valid legal authority to act on behalf of someone who does not have capacity; but also
  • It is the human and emotional cost that can often be more significant and telling.

There are examples of children who during their parents lifetime become impatient and seek to claim their perceived inheritance before they are lawfully entitled to receive it. This often has disastrous consequences for the parents and has the real potential to destroy families. It is therefore vitally important that a carefully worded EPA and EPG are put into place as part of an overall Estate plan and that the correct people are chosen to receive these powers. It is also important to ensure that affected people are aware of the existence of an EPA and EPG and who are the recipients of these powers.

Those who do put into place a detailed and carefully considered succession plan which includes an EPA and/or an EPG will benefit from the knowledge and peace of mind that if they do not have sufficient mental capacity then they have appointed others in whom they trust and in who they have confidence to successfully navigate the circumstances at hand for them. If a national registration scheme, such as that contemplated by the ALRC, comes into effect in the near future, this will likely enhance the confidence in EPAs and provide a level of comfort to those who will be affected by them.

If you would like to discuss obtaining an EPA or EPG or to discuss you estate planning circumstances, please do not hesitate to contact us.

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The Importance of a Sole Director Having a Will
Monday, October 17th, 2016

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By David Vilensky, Director at Bowen Buchbinder Vilensky Lawyers

17 October 2016

Companies that have a person registered as both the sole director and sole shareholder could be taking a big risk if the director dies without leaving a Will.

The company could have difficulty continuing to operate or it could be wound up.

Under the Corporations Act, if a single director of a company dies, the executor or personal representative appointed to administer the deceased’s estate may appoint a new director to the company having obtained a grant of Probate from the Supreme Court. The transitional director has all the powers, rights and duties of the deceased director and can keep the company functioning until shares are transferred to beneficiaries who may then appoint new directors. But if there is no valid will, a relative or other person would have to apply to the Supreme Court for letters of administration to manage the estate. This generally takes longer than an application for a grant of Probate.

While an option would be for the Public Trustee to be appointed to administer the estate, this procedure could take several months. A trading company in this situation would be unable to proceed with financial arrangements, might lose valuable work or incur penalties because it is unable to complete contracts.

It is therefore vitally important that a sole director who is also the sole shareholder of a company makes a valid Will. The Will can even nominate who the testator wishes his or her executor to appoint as a replacement director.

The Curse of Homemade Wills
Friday, July 15th, 2016

This one (3)

By Daniel Yazdani, Solicitor at Bowen Buchbinder Vilensky Lawyers

15 July 2016

In today’s economy, people aim to save and avoid unnecessary costs and expenses. Some consider that one such unnecessary expense is instructing a solicitor to draft your Will. This suggestion may stem from the belief held by some that we are all able to write our own Wills (particularly if our affairs are simple) without any legal assistance or we can simply purchase a cheap ‘will-kit’ from the post office or local newsagency, in which all that has to be done is to fill in the blank spaces and to sign it.

There are, however, numerous risks associated with this course of action. These risks were clearly identified in the recent decision of the Supreme Court of Western Australia in Rogers v Rogers Young [2016] WASC 208. In this case, the Testatrix (‘Will-maker’) utilised a ‘will kit’, which is a type of homemade Will that can be purchased from most post offices and newsagencies. In her Will, the Will-maker gave the residue of her Estate to her daughter (her only child), and stated that in the event that her daughter were to predecease her, then the Will-maker’s nieces and nephews were to inherit her Estate. However, the Will also stipulated that, if at the time of her death any beneficiary of the Will was under the age of 18 years, then that beneficiary’s share would be held on trust for that beneficiary’s support, welfare and education until they reach the age of 25 years. As it turned out, at the time of the Will-maker’s death, her daughter who was to inherit her Estate was 16 years old (thereby being a minor). This meant that, on the face of the Will, a trust would need be administered for the daughter’s benefit until she reaches 25 years of age. However, as was mentioned in this case, it has been settled law since the middle of the 19th century that if the beneficiary of a trust is over the age of 18 years and has an absolute vested and indefeasible interest in that trust, then he or she can request that the trust be terminated and the trust property be transferred to him or her.

Given the legal uncertainty which arose from the Will, the Executor of the Will made an application to the Supreme Court, seeking directions from the Court as to the proper interpretation of the Will pursuant to s 45 of the Administration Act 1903 (WA) and s 92 of the Trustees Act 1962 (WA).

Ultimately, the Court held that the daughter acquired an absolute vested and indefeasible interest in the trust property upon reaching the age of 18 years and not 25 years, despite the apparent intentions of the mother that her daughter should not receive the residuary estate until she has reached the age of 25 years.

In this decision, the Court made the following damning observation about homemade wills:

On numerous occasions when dealing with so-called homemade wills, I have observed they are a curse. Homemade wills which utilise what is sometimes known as a ‘will kit’ are not much better. This case proves the point. The disposition effected by the will is not complicated and no doubt the testator had clearly in mind what she intended to achieve. But the way the will is drafted is difficult, and the parties have been put to the trouble and expense of coming to the court seeking directions as to its proper interpretation. If the will had been drafted by a competent legal practitioner, this problem would not have arisen and the parties would have been spared a great deal of trouble and expense.

This case, therefore, highlights the problems that arise if people decide to draft their own Wills, namely:

  • Uncertainty as to the meaning of certain words or clauses in the Will, which leads to a dispute as to its proper interpretation;
  • The time and expense of having to go to Court in order for the Court to determine the correct and proper interpretation of the Will;
  • The risk that the Court might declare that the clause in question (or possibly the entire Will) is void or inoperable, giving rise to a partial or full intestacy, which means that that part of the Estate which was dealt with under the inoperable clause will now have to be determined under the intestacy rules in the Administration Act 1903 (WA); and
  • The risk that the testamentary wishes of the Will-maker may not be given effect to.

It is therefore self evident that the benefits of avoiding the ‘curse’ by having an experienced estate planning lawyer draft your Will and effectively arrange your estate planning objectives greatly outweighs the potential consequences of not doing so.

Please contact Daniel Yazdani at dyazdani@bbvlegal.com.au if you wish to discuss this matter further or wish to go through your estate planning objectives.

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Blended Complications – Tetris for Estate Planners
Friday, May 27th, 2016

This one (3)

By Daniel Yazdani, Solicitor at Bowen Buchbinder Vilensky Lawyers

27 May 2016

Today, there are increasing numbers of blended families, which often causes confusion and concern when decisions must be made as to who will be provided for in a Will and in what proportions. The definition of a child in the eyes of the law obviously includes biological children. However, it also includes adopted children. Therefore, any such “child” has standing to bring a claim against their deceased parent’s Estate.

An example of a child’s right to adequate provision under a parent’s Will is the decision of Mead v Lemon [2015] WASC 71 which saw the Supreme Court of Western Australia determine that $25 million was adequate provision for mining heiress Olivia Mead – the daughter of mining magnate Michael Wright (“the deceased”) – who commenced proceedings in the Supreme Court under the Family Provision Act 1972 (WA) for further provision from her late father’s Will.

In this case, the deceased died on 26 April 2012. The deceased married four times in his life. He had three children from one marriage and Olivia (his youngest child) was the result of a relationship the deceased had with Olivia’s mother. Olivia’s mother and the deceased never married.  In the deceased’s Will, Olivia was to inherit $3 million (subject to strict conditions), compared to her half siblings who stood to inherit approximately $400 million each. The Executor of the Will has appealed the Court’s decision to award Olivia $25 million and the matter is currently before the Court of Appeal.

This case highlights that making appropriate provision for your children is a crucial consideration in the estate planning process. It also demonstrates that, failing to make adequate provision for your children – even though you may not have had a close relationship with them – may result in those disinherited children bringing a claim against your Estate.

Another issue arising from blended families is the provision for stepchildren.  Until recently, stepchildren were unable to make a claim under the Family Provision Act. The recent amendments to the Family Provision Act provide that a stepchild can make a claim in specific circumstances and usually in circumstances where the stepchild was financially dependent on the stepparent, or where the stepchild’s biological parent left his or her entire estate to their new spouse or partner, who in turn does not leave adequate provision for that stepchild.  Accordingly, even though a stepchild may not be a “child” in the eyes of the law, he or she may still be able to bring a claim against your Estate.

The fact that your children and other close family members can challenge your testamentary wishes highlights the reason why it is crucial to seek sound legal advice when dealing with your estate planning and business succession planning. The benefits of carefully and effectively arranging your estate planning far outweigh the dire consequences of not doing so and leaving important matters unaddressed.

Please contact Daniel Yazdani at dyazdani@bbvlegal.com.au if you wish to discuss this matter further or wish to address your estate planning objectives.

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Who Inherits Prince’s Diamonds and Pearls?
Monday, May 9th, 2016

This one (2)

By Laura Di Cristofaro, Solicitor at Bowen Buchbinder Vilensky Lawyers

9 May 2016

Despite achieving the status of music royalty, Prince’s untimely death at the young age of 57 years has once again highlighted the simple fact that no one can avoid the emotional and financial hardship invariably suffered by a deceased’s family when the deceased dies without a Will.

Whilst hard to believe that a superstar of Prince’s status would not execute a single document to say who inherits his wealth,  his family have filed papers to declare that Prince died without a Will. This means that Prince died ‘intestate’ and his family and the Courts are left to deal with the resulting mess that is likely to take years to sort out.  Whilst there have been many tributes in the media as of late, the media is more consumed with the twists and controversies of Prince’s intestate estate – not a legacy that Prince is likely to have wished to leave behind.

So, the question is, what happens to Prince’s ‘Little Red Corvette’ and other assets?

Prince’s Estate will be distributed in accordance to the laws of intestacy (in Minnesota).  Had Prince died in Western Australia however, there is a formula imposed by section 14 of the Administration Act 1903 that dictates who inherits the Estate and in what proportions. Although each person’s intentions are different, it is very unlikely that this formula will mirror exactly what each person wishes to happen to their estate.

Relying on the section 14 formula can be problematic in many different scenarios, including for blended families, de facto partners or even for a widowed spouse. For example, if Prince died in Western Australia leaving a wife and children, the wife would receive a statutory legacy of $50,000 and one third of the remainder of the Estate. The other two thirds would be divided between his children. For many widows or widowers left behind, $50,000 plus a third of the Estate would not be a sufficient distribution.  In fact, the statutory legacy of $50,000 has not increased since 1982.  The sum of $50,000 was definitely a ‘Sign o’ the Times’ in the 1980′s as it represented the median house price was considered a sufficient distribution.

If a beneficiary is not sufficiently provided for by the section 14 formula, their only recourse is to commence proceedings under the Family Provision Act 1972, which normally incurs significant legal costs and lengthy delays in finalising the Estate.

The lesson to learn from this unfortunate story is that everyone should have (at the very least) a basic estate plan.  This is even more so the case with respect to those individuals with interests in entities such as businesses and family trusts. By delaying the crucial exercise of making a Will, you run the real risk of dying intestate.  A current and complete estate plan, including an up to date and valid Will,  is vital to your estate being distributed in accordance with your wishes and in an efficient and cost effective mannerwhilst at the same time protecting potentially vulnerable beneficiaries and the estate assets at a time where arguments over money should not take precedence over mourning the loss of a loved one. 

Please contact Laura Di Cristofaro at ldicristofaro@bbvlegal.com.au if you wish to discuss your estate planning objectives.

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Business Succession – My New Business Partner
Wednesday, April 27th, 2016

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By Les Buchbinder, Director, with the assistance of Giuseppe Graneri, Associate at Bowen Buchbinder Vilensky Lawyers

27 April 2016

When starting a business the last thing that many new business owners give consideration to, or sufficient consideration to, is what will happen in the future when the new business owner or an existing joint business owner either wants to exit the business or, through death, illness or disablement, is forced to exit the business.

A recent Succession Report prepared by Pitcher Partners in conjunction with Swinburne University revealed that 51% of business owners do not have a business succession plan in place.

An important part of any business succession planning is putting in place as early as possible an agreement between the business owners setting out an agreed process for what is to happen when one of the business owners wishes (or is forced) to exit the business and, importantly, what is to happen to that business owner’s interests in the business.

Can’t I give my interest in a business to someone else in my Will?

Business owners are in many instances able to bequeath or gift their business interests to someone of their choice under a Will.

However, this method of business succession has a number of pitfalls, the most significant of which is that it may well leave the surviving business owners in a business arrangement with a person or persons with whom they are not familiar and with whom they may not wish to have an ongoing business relationship.

For this reason it is important for businesses to have an agreed business succession plan in place. A commonly used way of achieving this is through the use of a Buy/Sell Agreement.

A Buy/Sell Agreement will take precedence over the Will because the deceased’s business interests will be transferred in accordance with the Buy/Sell Agreement and will not form part of the deceased’s estate.

What is a Buy/Sell Agreement?

A Buy/Sell Agreement is in effect part of a business succession plan. It is a contract that provides for the future payout or sale of a business owner’s interests to his or her business partner(s) on the happening of certain events. Typically these events include such things as the disablement or death of one of the business owners. A Buy/Sell Agreement will also often set out an agreed mechanism for the succession of one business owner’s interest in the business to the remaining owners of the business or to a third party.

Buy/Sell Agreements are also frequently linked to insurance policies which are put in place where a trigger event will (or is likely to) have a significant financial impact on the business.

If you own a business and you’re concerned about how the death, disablement or retirement of one of your business partners may have on the operation of your business, then a Buy/Sell Agreement can assist you. Not only does it allow you to purchase your business partner’s share if any of these things trigger events were to happen, but it can also help you avoid your ex-business partner’s spouse or children moving into your business.

However, business owners must seek competent accounting advice in relation to any capital gains tax implications before entering into a Buy/Sell Agreement.

Are all Buy/Sell Agreements the same?

Standard-form legal documents written with generic terms and conditions often do not take into account the particular circumstances in a given case and therefore risk being ineffective in the particular circumstances and are often unclear and confusing.

In particular, the risk with standard-form Buy/Sell Agreements is that the document:

1.will not be prepared for your particular  business with all of its unique circumstances and your specific needs; and

2. may in the end be found to be legally unenforceable making the whole exercise a waste of time and money.

Therefore, it is advisable, and makes commercial sense,  to have a Buy/Sell Agreement prepared specifically for your personal and business circumstances by a lawyer experienced in preparing such documents.

What are the main advantages of having a Buy/Sell Agreement?

Buy/Sell Agreements:

1. provide certainty for the business owners by reducing the risk of succession disputes;

2. reduce the risk of the transfer of an outgoing owner’s interest in the business being undervalued with devastating financial consequences;

3. reduce the risk of the business suffering significant financial loss , or even having to be wound up, because no agreed mechanism is in place to deal with business succession thereby resulting in all the business owners suffering financial harm.

There are many good reasons to have a current business succession plan in place for your business and to include a carefully and properly prepared Buy/Sell Agreement as part of that business succession plan.

If you would need business succession planning advice or have any questions about Buy/Sell Agreements for your business, please do not hesitate to contact Les Buchbinder on 08-93259644 for further information.

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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 Do You Mean It’s Not Mine?
Thursday, February 25th, 2016

This one (2)

By Laura Di Cristofaro, Solicitor at Bowen Buchbinder Vilensky Lawyers

25 February 2016

With the increase in sophisticated financial plans and the heightened awareness of the benefits of asset protection strategies, what seems like a simple question actually requires careful consideration – what do you own?

This question is important when considering your estate planning objectives. Is it your vision for your children to take over the family business? Have you taken out life insurance to ensure your spouse is looked after? Who will take control of your family trust after your death? When you own, or have an interest in, what are commonly referred to as ‘Non-Estate Assets’, additional planning is required…

An ‘Estate Asset’ is an asset owned personally in your name.  You may transfer ownership of Estate Assets in your Will to your preferred beneficiaries.  An Estate Asset includes any asset that you own solely in your name or, if with someone else, as a tenant in common, such as:

  • real estate;
  • personal belongings;
  • shares;
  • cash investments; or
  • car

If you do not own an asset in your personal capacity (i.e. in your name) then that asset is a ‘Non-Estate Asset’. A Non-Estate Asset includes:

  • assets owned with someone else as a joint tenant;
  • assets owned by a Trust;
  • superannuation (subject to binding nominations and trustee discretion);
  • life insurance proceeds; and
  • assets owned by a company.

It is not possible to transfer ownership of a Non-Estate Asset by your Will as technically it is not yours to give away.  For example, company assets belong to all of the shareholders of a company, trust assets belong to all beneficiaries of that trust and superannuation does not automatically form part of your estate.

So, how do you deal with Non-Estate Assets and achieve your estate planning objectives? It is crucial to seek appropriate legal and financial advice with respect to succession of these entities and distribution of these assets. By discussing your objectives with an experienced estate planning lawyer, you can work together to create a strategy, in combination with the appropriate financial advice, to reach your goals and ensure that your legacy is secured and passed on to those who you would like to receive it.

If you would like to discuss your estate planning objectives, please contact Laura Di Cristofaro of our office at ldicristofaro@bbvlegal.com.au.

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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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What Happens if you Die Just Before Signing your Will?
Friday, November 20th, 2015

This one (3)

By Daniel Yazdani, Solicitor at Bowen Buchbinder Vilensky Lawyers

18 November 2015

The recent WA decision of Re The Estate of Allan John Young [2015] WASC 409, which was handed down on 3 November 2015, deals with the interesting question of what happens if a person unexpectedly dies before signing his or her Will. Is the unsigned document valid? Can the unsigned document be admitted to Probate, thereby allowing the Executor to administer the Estate as per the Will?

Briefly, the facts of the case were that Allan Young (‘the deceased’) lived in Hopetoun, WA and had his Will prepared by lawyers in Perth. Just a few days before his unexpected death, he spoke with his accountant and said words to the effect: “I have read the documents and I am happy with it as long as you are happy.” The accountant replied that he had no problems with the Will. On 21 May 2014 – the day before he died – he spoke with one of his neighbours whom he would see daily. He told her that he had decided to sign his new will, saying: “I suppose I’m going to sign this will … I will get it finished.” The next day, he died.

Given that the deceased had not signed the Will, it did not satisfy one of the fundamental statutory requirements in the Wills Act 1970 (WA) – namely, the need for the deceased to sign the Will and have his signature witnessed by 2 people. Thus, the only way in which this unsigned Will could be admitted to Probate was if it satisfied the requirements of being an ‘Informal Will’ under s 32(2) of the Wills Act 1970 (WA). In order to be admitted as an Informal Will in WA, the Court must be satisfied that the deceased intended the document to constitute his last Will.

In the end, the Supreme Court was satisfied that the document in question was an Informal Will and ordered that the Informal Will be admitted to Probate.

This interesting case highlights a number of points, including:

  • A Will should be signed as soon as possible after it has been prepared and settled;
  • The importance of having a validly signed and current Will – this will minimise the costs arising from court proceedings to try and prove a document as an Informal Will;
  • Whilst Informal Wills can be admitted to Probate in some circumstances, there needs to be clear and cogent evidence that the draft Will or other documents reflect the deceased’s testamentary intentions; otherwise it is unlikely that such a document will be admitted to Probate. Therefore, in some instances, the failure to have a validly signed Will (even if it has been drafted) will result in an intestacy and the Estate being divided up according to the intestacy rules in the Administration Act 1903 (WA).

For more information on this subject or to discuss your Will and Estate Planning requirements, contact our Daniel Yazdani at dyazdani@bbvlegal.com.au.

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You Want a Divorce? Things to Keep in Mind
Tuesday, February 10th, 2015

AnnaW

By Anna Westphal, Solicitor at Bowen Buchbinder Vilensky Lawyers

10 February 2015

For many people, the finality of ending a partnership that was intended for life can invoke various conflicting and unexpected emotions. Dealing with these emotions is tough enough without having the added delays and stress caused by not knowing about the divorce process.   Many individuals (and couples) apply for a divorce themselves, while others choose to engage a lawyer. Whichever way you go, what are some of the key points you need to keep in mind?

Some General Requirements

  • You and your spouse need to be separated for at least 12 months before you can apply for a divorce. Make sure you are clear on the actual date of separation, as one party may object to the divorce if the date is ambiguous. You do not need to be divorced to settle financial and child care arrangements.  See the blog by my colleague, Damien Bowen on exactly this point.
  • Before granting a Divorce Order, the Family Court (‘the Court’) needs to be satisfied that your marriage has broken down irretrievably and that there is no reasonable likelihood of you and your spouse resuming married life.
  • If you and your spouse have been living separated under the same roof, you may need to provide the Court with additional supporting information (eg Affidavit from a third party).
  • You can apply for a divorce on your own (sole application), or together with your spouse (joint application).
  • You need to make sure you and/or your spouse satisfy certain citizenship requirements.
  • If you and your spouse have been married for less than two years, you will need to attend counselling or seek permission of the Court before you can apply for a divorce.

Attendance at Court

If you apply for a divorce on your own and have children under the age of 18 years, you will need to attend at the Court for a Divorce Hearing. If you apply for a divorce jointly with your spouse and you have children under 18 years of age, you will not need to attend Court (unless you wish to do so). The Court will usually want to make sure that proper arrangements have been made for the children, specifically in relation to their physical care and financial support. If you are required to appear at a Divorce Hearing, the Registrar may ask you questions in relation to your children. If you apply for a divorce on your own and you do not have children under the age of 18, you will not be required to attend Court.

 Service

If you apply for a divorce on your own, the Court will want to make sure that your spouse has been served with your divorce application correctly. Your spouse must be personally served at least 28 days before the allocated Court date if they are within Australia, and at least 42 days before if they are outside Australia.

If you cannot find your spouse or they avoid service of your divorce application, you may need to apply to the Court to dispense with service or for ‘substituted service’. If granted, the latter will allow you to serve your spouse through other means (eg through family members).

Timing

If the Court grants a Divorce Order, it does not come into effect until one month and one day after the Order is made. It is important to remember that you cannot get re-married until the Divorce Order has come into effect. The Court may shorten this time period in special circumstances.

Other

Once your Divorce Order comes into effect, you have only 12 months to commence proceedings in the Court for Orders in relation to property and spousal maintenance. After this time, you must seek leave from the Court to do so. It would be prudent to speak with a family lawyer in relation to your entitlements.

A Divorce Order invalidates an existing Will unless it is made in contemplation of divorce. It would be wise to speak with a lawyer practising in Wills and Estates once you and your spouse separate. Morgan Solomon is an experienced Wills and Estates lawyer in our firm and will gladly assist you if you wish to speak to someone about this.

The above points are a general guide only and do not cover all factors that must be considered when applying for a divorce. The Family Court of Western Australia provides useful information on their website, including a ‘Divorce Kit’ (see: http://www.familycourt.wa.gov.au/). Applying for a divorce may be fairly straight forward if care is taken, but complexities may arise. If you find the divorce application process difficult or confusing, feel free to speak to any of the family lawyers in our firm.

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You’ve Told Him It’s Over… Now What?
Wednesday, June 25th, 2014

PatS

By Patricia Schrape, Associate at Bowen Buchbinder Vilensky Lawyers

25 June 2014

Whether it comes out of the blue for one of you, or you’ve both been avoiding the elephant in the room that is your broken relationship for months or years on end, the moment when it is finally acknowledged that the end is here can be a mighty big relief.

But what to do to extricate two separate lives from one which has been forged jointly?

If you haven’t done so prior, you should strongly consider getting confidential legal advice from an experienced family lawyer. Seeing a lawyer doesn’t mean you are committed to anything, and in most cases should be able to provide you with a good idea of what is ahead of you and what your rights and entitlements may be.

Obviously every couple have factors which will be more or less pressing, and the degree of animosity will determine how urgently action needs to be taken, but below are some things to keep in mind:

Finances/Property

  1. Think about joint bank or share trading accounts – if things are amicable, perhaps a broad discussion about usage will suffice. If there are accounts with significant funds, consider changing them so that both signatures are required to transact. Also consider each of you having your salary paid into accounts in your sole names, a first step towards practical financial independence;
  2. If you are living under the same roof for the time being, think about setting up a PO Box for your personal mail. If you’re moving out, be sure to redirect all of your mail;
  3. If you have a prolific online presence, be sure to change all of your passwords, even if you think your significant other doesn’t know them;
  4. Same with pin numbers for bank and credit cards;
  5. Cancel secondary credit cards if you suspect a vindictive shopping spree may be on the horizon. If possible, give a little notice before doing so to avoid their experiencing the embarrassment of a refused transaction and that embarrassment turning into wrath towards you;
  6. Change your Will to reflect your new circumstances, keeping in mind that unless the Will is drafted ‘in contemplation of a divorce’,  a Divorce Order will invalidate it;
  7. Contact your superannuation fund to change the nominated beneficiary for your super – superannuation does not form part of a deceased estate, so your Will can’t deal with it;
  8. Once your financial and property division has been agreed, be sure to have it legally documented so that all loose ends are tied up and everything is properly finalised. This can be done via Family Court Consent Orders or a Binding Financial Agreement.

Parenting

If you and your partner have children, this often introduces a whole other kind of complexity to the end of your relationship.

It is in everyone’s best interest to present a united front to the children, being supportive of them and each other as parents whilst you guide them through what will invariably be a big change in their lives. Try to agree with your partner on a routine, and stick to it.

Sometimes, however good the intentions, issues arise in relation to children.

There are numerous private and government agencies who provide counselling, mediation services and other helpful programs.

If things regarding the children look like they may become contentious, try to keep a record of arrangements – who they’re spending time with and for how long etc. In stressful times such as these, memory often falters.

Should the situation deteriorate, lawyers can assist in negotiating arrangements, and if necessary bring proceedings in the Family Court.

If the arrangements for the children are agreed, be sure to write them down clearly and concisely, so everyone is on the same page. You should seriously consider getting Family Court Consent Orders, which provide much greater certainty.

A final note on Facebook and social media. As much as your hundreds of friends and followers may happily provide support to you in this difficult time, it is usually best to stop altogether, or carefully limit usage. A tipsy posting about an estranged partner can all too easily get back to them and cause all manner of grief.

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Bowen Buchbinder Vilensky’s team of family lawyers is comprised of Partner Damien Bowen, Senior Associates Catriona Kilgallon and Sam Fahey, Associate Patricia Schrape and Solicitors Vince Bradley and Anna Westphal. You are welcome to telephone to make an appointment with any one of us.

 

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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