Owning Properties in Different Countries – Heirs and Places

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 Has your Australian Will been revoked by the later foreign Will?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.

PLEASE CONTACT

Contact us at bbv@bbvlegal.com.au if you wish to discuss this matter or your estate planning objectives further.

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Choose Now Whilst You Can! – Your Future Decision Makers

Most of us are aware that a Will is a document that captures our wishes for the disposition of our assets (amongst other matters) once we die. It is not common knowledge, however, that there are also documents that one can execute in order to preserve our wishes for when we are still alive.

These documents are called an Enduring Power of Attorney, Enduring Power of Guardianship and Advanced Health Directive (sometimes called a Living Will).

For anyone who is addressing their estate planning objectives (and that should be all of us) it is important to consider the protection of your person and estate during your lifetime, as well as considering what happens to your assets once you die. To only execute a Will, and not consider what measures you take to protect the estate during your lifetime, is only addressing part of your estate plan.

Enduring Power of Attorney

An Enduring Power of Attorney allows you to appoint a person that you trust implicitly (usually a spouse or a child) to have authority to deal with your financial affairs.

This means that your ‘attorney’ (the person you appoint) has the authority to deal with your assets as if they were standing in your shoes. Your attorney may access your bank accounts, investments and (if you lodge the document with Landgate) deal with your real estate, if you ever lost the capacity to do so yourself.

Although this may not seem rational in reality, provided that your attorney is a reliable person to be given such a power, it is an important document that may assist you in times of emergency. If you were ever in a position where you could not make decisions for yourself, and you have outstanding financial obligations that need to be addressed, your attorney may step in and address those requirements on your behalf.

An Enduring Power of Attorney will provide you peace of mind in knowing that in a time of crisis, your financial obligations are being attended to by someone you trust and in whom we you have confidence.

Enduring Power of Guardianship

This document is similar to an Enduring Power of Attorney, however it relates to health and lifestyle decisions only. When you have capacity, you are able to make decisions relating to your own health and treatment and lifestyle decisions. For example, where you live, what medical treatment you undertake or what entertainment you will enjoy, etc.

Should you become incapacitated, you will have selected the person whom you trust to make these decisions on your behalf.

Although you may think that this document is unnecessary and when the time comes your family will be able to make those decisions for you, it is important to remember that decisions of these nature are particularly personal and you must consider reasonably whether it would be prudent to appoint particular people to preserve your wishes regarding your health and lifestyle.

Advance Health Directive

An Advance Health Directive is a document in which you set out, in advance, what treatment decisions you choose in certain circumstances where you cannot communicate those decisions at the time. The types of treatment decisions set out in these documents relate to the situation where you may be on life support or in a vegetative state. You may set out that you consent to, or do not consent to, treatments such as resuscitation, artificial feeding, blood transfusion, and similar treatments.

Your treatment decisions in your Advanced Health Directive must be followed by a medical practitioner and you therefore control the way you are treated in the event that you require life sustaining measures to be kept alive.

PLEASE CONTACT

Contact us at bbv@bbvlegal.com.au if you wish to discuss this matter further.

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Before Taking the Plunge: What are Pre-action Procedures?

Googling Pre-action Procedures will bring up formal documents that have been published by the government relating to Family Law called “Before you File” (the link to the Family Court of Western Australia version is at the end of this article).

Pre-action Procedures set out what couples are directed to do by the law to avoid going to court about their settlement, if possible.  Couples are expected to engage in family dispute resolution.

If a person doesn’t take part in the processes described in the Pre-action Procedures documents, there are consequences that range from having a legal fight when they should have been able to avoid it, to having to pay legal costs for the other party’s lawyer.

Many couples have it clear in their minds that they don’t want to go to court but are not sure how to avoid that process.

This article is about three steps to set you on the way to a successful settlement.

Your particular case: which process to use?

The first step is to provide my client with a clear picture of the processes that can be considered in their particular case.

There will be discussion about the options of mediation and collaboration and negotiation outside of those processes.  These are different approaches to a negotiated settlement.  Both mediation and collaboration is designed to empower the parties with the skills of their professional advisors and in mediation, the mediator.  Negotiation (without mediation or collaboration) is a less formal process.

The ethical approach of the professionals, the lawyers and other experts, provides support for what can be a difficult process to be as smooth and comfortable as possible.

For some couples, some water needs to go under the bridge before they can deal with issues.  Often one partner will become frustrated at the speed at which the other wants to proceed.

Often legal advice is required urgently to deal with immediate practical problems or issues, even though it may be some time before settlement can be contemplated.

The first step towards a successful settlement is assessment of the best approach to take.

Time lines: how much time should be spent?

The second step is to establish the time line that is going to suit the situation and circumstances.  Before the settlement process can properly get underway there has to be “disclosure”. The Pre-action Procedures document lists what paperwork each party has to provide to the other.

It may seem odd to be giving your ex documents that they may already have or have seen, and confronting to give over documents to the other party that they have never seen before.

Disclosure is about ensuring that there is a level playing field for the couple.  One spouse or partner is usually across the financial details more than the other.

Until there is proper disclosure and the opportunity for reflection and advice about the disclosure, a person shouldn’t be asked, confronted or challenged to say what they want.

In a successful settlement process, it is not so much about what a person wants, as having the opportunity to find out and understand what is reasonable and fair in the particular circumstances and to explore all the options that are available.

Couples who have an out of court settlement can generate options that may not be available to parties in contested litigation.

For whatever reason, a time line necessity may require fast tracking of Pre-action Procedures and a limited time for settlement negotiations before litigation, while a last resort, has to be considered.

Disclosure and Resources

The third step in preparation for settlement is to achieve disclosure and to access relevant resources.

Disclosure usually takes some time and can be complex and time consuming.  Valuations are usually needed. Consideration may be given to instructing financial advisors to assist in establishing the asset pool.

There are services and resources that can assist in preparation of a couple for engagement in their negotiation and settlement processes.

As part of the preparation to be able to engage properly, I encourage my clients to access relevant services and often to seek counselling support, having in mind that most people go through a difficult adjustment during this time.

Finally

Any person in the circumstance of considering a separation from their partner should access legal advice even if they are still uncertain about the future of their relationship.  As lawyers we are duty bound to assist you to consider whether marriage and relationship counselling might help you.

We can also reality test your circumstances with you and talk about what might happen, without you making any final decisions.  Because separation is a complex and difficult step, advice about the way to separate can be of great assistance.  It can support a process that will ultimately lead to a final settlement by agreement.

The Family Court of Western Australia website www.familycourt.wa.gov.au provides downloadable access to the brochures with the link as follows: www.familycourt.wa.gov.au/B/brochures.aspx

Brochure 2 in Children’s matters: Before you file- Pre-action procedures for Parenting Cases

Brochure 2 in Financial cases: Before you file-Pre-action procedures for Financial Cases

If you would like any further information in relation to this topic please feel free to contact the author to discuss the matter further.

PLEASE CONTACT

Contact Rhonda Griffiths at [email protected] if you wish to discuss this matter or your estate planning objectives further.

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Marriage Breakdown – Keeping it in the Right Perspective

Separation and relationship breakdown is one of the most difficult situations that a person can find themselves in, even if it is not apparent from the outset.  Unfortunately, the majority of cases involve litigants who are usually at one of the most vulnerable points of their life.

It is of utmost importance to maintain perspective and composure in legal disputes. This is particularly in the case in family law matters.

In the case of parenting disputes involving the care and custody of children, lawyers are increasingly being retained to assist a party where the primary issue of dispute between the parties relates to their level of communication and understanding of their respective situations. Obviously, there are those cases where, due to issues such as family and domestic violence, addiction, use of illicit drugs, or mental health issues, the parties are unlikely to be able to effectively communicate with each other concerning their dispute.

It is important in all cases that the parties assess their ability to effectively communicate with each other, even on the smallest of levels, and take steps to address those issues.

There are also an increasing number of parenting matters where the parties have engaged one or more other professionals to assist them in resolving their legal dispute. In particular, the use of family counselling to provide therapeutic intervention for the parties themselves (and with the children if that is what is recommended as necessary and agreed by the parties) seems to be steadily rising.

The Family Court has the power to order family counselling in certain circumstances.

There are a variety of private and public services that are available for parties to consider that are available to teach strategies, not only individually, but as parents together, to assist in improving their communication and understanding.

It is also particularly helpful for parties to consider individual counselling in this regard, if they consider that they need assistance in maintaining their perspective, or indeed to assist them in dealing with issues that may pose a risk to the children.

It is also important to consider issues of a practical nature, which will impact the legal ramifications of their dispute.

A good example is in financial and property settlement cases involving clients who retain lawyers on the basis that an agreement has been reached with their spouse in the absence of legal, or other professional, advice. The current economic climate, and particularly the real property market, has created numerous problems with parties who are attempting a series of complex property transfers and refinancing in order to implement their agreements.

In the midst of all the tension and angst and possible relief of the parties in agreeing in principle, it is necessary for the parties to consider, as the initial step, whether or not the property transfers are able to proceed by giving due consideration to the practical hurdles and consequences, such as the overall ability to refinance and possible capital gains tax consequences on investment properties. This may mean that retention of property in a settlement may not be possible.

The above issues also highlight the importance of taking professional advice in your legal dispute at an early stage.  An experienced family lawyer will be able to raise these issues with you, and discuss with you options to address these issues and the benefits and detriments to you in your family law case.  They should also be able to assist by referring you to other professionals to provide assistance in family counselling, or the accounting, taxation or other financial advice that may be required.

It is important to seek such advice early on in the piece as this will greatly benefit you in your negotiations with the other side, whether they are conducted directly, or with the assistance of legal representation.

PLEASE CONTACT

Contact us at bbv@bbvlegal.com.au if you wish to discuss this matter further.

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Blended Complications – Tetris for Estate Planners

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

Contact us at bbv@bbvlegal.com.au if you wish to discuss this matter further.

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Who Inherits Prince’s Diamonds and Pearls?

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 fallout from dying 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 – not a legacy that Prince is likely to have wished to leave behind.

So, what happens to Prince’s ‘Little Red Corvette’ and other assets?  That will be up to the law in Minnesota… but what would happen if Prince lived right here in Western Australia and held his assets here?…

If Prince lived in Western Australia, 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 and therefore will most likely be problematic.

For example, if Prince died leaving a wife and children, the wife would receive a statutory legacy of $50,000 and one third of the remainder of his estate. The other two thirds would be divided between his children. Interestingly, the statutory legacy of $50,000 (which represented the median house price in the 1980s – definitely a ‘Sign o’ the Times’) has not increased since 1982.  For many widows or widowers left behind, $50,000 plus a third of the estate is simply not enough to maintain the same standard of living that the widow or widower may have become accustomed to whilst the deceased was alive.

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 entails lengthy delays in finalising the estate.

By delaying the crucial exercise of making a Will, you run the real risk of dying intestate.  It is unfortunate when fighting over money takes precedence over mourning the loss of a loved one. To actively attempt to avoid disputes with respect to your estate, everyone should have (at the very least) a basic estate plan, including a valid and up to date Will.

PLEASE CONTACT

Contact us at bbv@bbvlegal.com.au if you wish to discuss this matter further.

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The Will to Challenge

Modern life (and the complexities that come with it) mean that we must consider our estate planning very carefully.   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 they should have received more.  Where a person dies without a Will, it is also a real possibility that someone may feel that the laws of intestacy do not leave them with adequate provision from the deceased’s estate. 

The aim of the Family Provision Act 1972 (WA) (the Act) is to make provision for the maintenance and support of the dependants of a deceased person where those dependants do not receive an adequate inheritance from the deceased’s Will (or by section 14 of the Administration Act 1903 (WA) if the person died without a Will). 

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; or
  • 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 by the Court.

The Court has a wide discretion to determine what is fair and adequate provision and will consider 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; and
  • 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 experienced estate planning lawyer in order to ensure that all measures are taken to protect your estate from potential legal fees after your death – an ineffective Will can be expensive to your estate!

The existence of the Act also highlights the importance of seeking appropriate legal advice 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.

PLEASE CONTACT

Contact us at bbv@bbvlegal.com.au if you wish to discuss this matter further.

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My Will Is My Business – The Essential Connection

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 people 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.  This gap between what the law says and what you might have wanted for your beneficiaries may quite possibly result in disharmony between beneficiaries and hardship for your administrator, as they try to navigate through administering an intestate estate.

Without giving thought to 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.

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, your business assets are your personal assets and accordingly do form part of your estate. On the other hand, assets owned by (for example) a trust 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 take the opportunity to give thought to whom or how you will pass control of these entities, you may leave your business (and possibly your family’s source of income) floundering.

As a shareholder of a company with multiple shareholders, it is vital to remember that if one of your fellow shareholders passes away and the shareholders haven’t addressed a succession plan for the company, then you could end up being in business with whomever inherits the deceased’s 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 financial loss and other prejudice because of a lack of proper management.  By implementing a business succession agreement (and the right insurances if necessary) or a shareholders agreement, 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.

It is quite clear – estate planning goes hand in hand with good business planning!

PLEASE CONTACT

Contact us at bbv@bbvlegal.com.au if you wish to discuss this matter further.

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