Much has been made of the recent developments for de facto couples in Western Australia, who are now a step closer to being able to split their superannuation entitlements following the breakdown of their relationship.
There has also been a recent development for married couples, providing for increased visibility of superannuation interests.
As of 1 April 2022, a party to a marriage may apply to the Court to request superannuation information from the Australian Tax Office (ATO) about their former spouse.
Such an application must be made in the context of existing Family Court proceedings.
In response to the application, the ATO provides the requested information to the Family Court, who pass that information to the requesting party, their spouse, and their legal representatives if applicable.
This process allows a spouse to efficiently identify superannuation interests held by the other party. This is a welcome development for those who have concerns about superannuation assets being concealed.
Once the applying party knows the identity of each fund their spouse holds an interest in, they can obtain further information about the value of those interests by applying directly to the fund for that information.
Unfortunately, at the time of writing, like superannuation splitting, this process remains unavailable for de facto couples in Western Australia.
For more information, see the below information on the ATO and Family Court of Western Australia website (current as at 1 June 2022):
Perhaps the cost of having a Will prepared has put you off doing so, or maybe it is just one of those tasks that you just haven’t got around to doing yet? Beware that there can be significant and distressing consequences of not having an up-to-date Will in place.
What is a Will?
A Will is a legal document that expresses a person’s wishes as to how their assets are to be distributed after their death. A Will also appoints a legal representative to manage the estate assets until the final distribution to beneficiaries has taken place.
Why do I need a Will?
Statistics show that approximately 50% of Australians die without a Will. One of the most common reasons for people not making a Will is because they feel as though their current assets do not warrant one. A person’s assets do not need to be substantial for it to be necessary for them to make a Will. Anyone that has assets, be it a bank account, property, motor vehicle or personal effects, needs a Will. A Will saves time, money and stress for your loved ones and provides you and your family with peace of mind that your wishes will be given effect (to the greatest extent possible).
What happens if I die without a Will?
No Will? Insert An Outdated Formula For Distributing Assets 2
If you die without a Will, you are considered to have died ‘intestate’. If you die intestate, a person entitled to your estate must make an application to the Court for letters of administration. In these circumstances, your estate will be distributed according to the intestacy provisions contained in the Administration Act 1903 (WA) (“the Act“) – a formula determined by the Government.
The Act is in most cases inconsistent with a deceased person’s wishes and where there is a husband, wife, or de facto partner, it will likely result in financial hardship during an already distressing time. This is largely because these provisions have not been amended since 1982 and are not reflective of asset values today.
The common position is that a husband, wife or de facto partner, generally wishes to leave their entire estate, or at least the matrimonial home, to their surviving spouse. In these circumstances, it is often intended that children will only inherit once both parents have passed away.
The example below illustrates the inadequacy of, and issues associated with, the current intestacy provisions.
Mary dies without a Will and leaves behind a husband and 4 children. She leaves an estate worth $650,000 the value of which is primarily the family home owned in her sole name. According to the Act, Mary’s estate will be divided as follows:
Her husband receives the first $50,000 and all household effects. Of the residue ($600,000), the husband receives one-third ($200,000) and the 4 children receive two-thirds ($400,000) in equal shares – $100,000 each. The family home must be sold to make the distributions to the children and her husband cannot afford to purchase another home with only $250,000.
Had Mary prepared a Will in which the family home was left to her husband, the distressing scenario that her husband finds himself in could have easily been avoided. Many are of the view that the entitlement of a surviving spouse needs to be increased significantly to reflect today’s cost of a modest house. In no other State or Territory in Australia is the entitlement of a surviving spouse on intestacy so low.
Whilst the Administration Amendment Bill 2018 (WA) (“the Bill“) was introduced in June 2018 for the purpose of amending the Act to reflect today’s asset values, it remains before Parliament. Whilst the Bill will see the amount increased from $50,000 to $435,000 where an intestate dies with a surviving spouse and children, the changes are yet to be implemented and it is not certain when they will be. For many Western Australians, their homes are also now worth far more than $435,000. There simply is no better way to ensure that your loved ones are looked after than by having in place a Will reflective of your current wishes. Now is the time to contact Bowen Buchbinder Vilensky to arrange an Estate Planning review with one of our experienced Solicitors.
A Will is a legal document which sets out your wishes as to how your assets will be distributed on your death. Read our Wills – Informally Yours article for more information.
A Will must meet a number of formal requirements under the Western Australian Wills Act 1970 which includes that it be in writing and be signed by you as the Willmaker in the presence of two independent witnesses.
However, what happens if your Will fails to meet one or more of these formal requirements?
A person who does not leave a Will at all is said to die Intestate and their assets are distributed in accordance with the provisions of the Western Australian Administration Act 1903. This Act sets out a formula of relatives who are to receive a share of your assets on your death. This may mean that persons to whom you want to leave something may not receive it and those to whom you may not have wanted to leave anything may benefit from your Estate.
Where a document fails to meet the formal requirements of a valid Will, it may nevertheless still be deemed to be valid. In such a case it is referred to as an Informal Will.
However, the procedure required to have an Informal Will approved to be Probated may be very costly and become drawn out. A person seeking to have an Informal Will Probated must convince the Supreme Court of Western Australia that the document satisfies the criteria of an Informal Will. That is, the Will must:
(a) be contained in a document or part of a document;
(b) set out the testamentary intentions and wishes of the deceased; and most importantly
(c) it must be demonstrated that the deceased intended that document to constitute their Will.
A document may be any record of information including anything on which there is writing or anything on which there are marks, figures, symbols etc. In the technological age in which we now live, what may constitute an Informal Will has become much broader and less well defined. For example, in 2017 the Supreme Court of Queensland held that an unsent text message that had been saved in the drafts folder of the deceased persons mobile phone constituted an Informal Will under similar Queensland legislation (Re Nichol; Nichol v Nichol & Anor (2017) QSC 220).
One of the hardest elements to prove is that the deceased intended the document to constitute their last Will. Whilst there may be some indications in the document itself that this was the intended last Will of the deceased through the words used, invariably it will be necessary for friends and relatives of the deceased to give evidence about the deceased and what he or she may have told them at various times about his or her testamentary intentions.
Take Away
Where doubt exists as to whether or not a document will be found to be an Informal Will the assets that you leave can be swiftly consumed by legal costs. The best way to avoid the uncertainty, anxiety and unnecessary expense of having to bring an Application to the Supreme Court of Western Australia for an Order that a document is an Informal Will is to ensure that you have in place a properly drafted valid Will. This ensures that all of the relevant legal requirements are met and that your assets upon your death will go to your named beneficiaries.
The introduction of voluntary assisted dying legislation in Western Australia was very contentious and divisive. Now that the new legislation is in force, when does it apply and what is the process involved?
On 1 July 2021 the Voluntary Assisted Dying Act 2019 came into effect and eligible West Australians gained access to voluntary assisted dying.
Voluntary assisted dying allows eligible adults to request and access medical assistance to end their life if they are suffering from an advanced, progressive disease, illness or medical condition that is expected to cause death within 6 months (12 months for neurodegenerative diseases). The disease, illness or condition must also cause suffering to the person that cannot be relieved in a manner that the person considers tolerable.
The Process
To initiate the process, a patient must make the first clear and unambiguous request to an eligible medical practitioner for access to voluntary assisted dying.
After the first request is made the patient is assessed by at least two independent and appropriately trained medical practitioners. First, the medical practitioner that accepts the request, referred to as the coordinating practitioner, and if they are satisfied then secondly, the consulting practitioner.
Throughout the process, the patient must make 3 separate clear and unambiguous requests for voluntary assisted dying. The first request mentioned above, a written declaration that is witnessed by two people and can be made after a patient is assessed as eligible, and a final request. The final request can only be made after the end of the designated period (currently a 9-day period beginning on the day that the patient made the first request).
Voluntary
One of the key criteria required to access the voluntary assisted dying process is that it must be voluntary. The person must have the requisite enduring capacity to make the decision for themselves and the decision must be made without coercion.
A person cannot access the voluntary assisted dying process if they have lost their decision-making capacity.
Where possible, every person should carefully consider their treatment wishes while they have decision-making capacity and should ensure that they have valid and up to date estate planning documents, which may include a will, enduring power of attorney, enduring power of guardianship and an advanced health directive, that reflect their current wishes. You may also wish to ensure that your families and health practitioners are aware and informed of your treatment wishes should you become terminally ill, bearing in mind that they cannot access voluntary assisted dying on your behalf.
For legal advice on the voluntary assisted dying legislation, please contact our Wills and Estates team.
Our Wills & Estates Lawyers in Perth provide specialist advice and assistance on a range of estate planning, wills and probate areas on a Fixed Fee Price basis. Our Wills & Estate Lawyers in Perth can help you with understanding, advising and planning:
Given the spread of the coronavirus (“Covid-19” ) and the public health emergency that it has created, like many other organisations, Bowen Buchbinder Vilensky (BBV) is taking active steps to help ensure the safety, health and wellbeing of our people and clients.
To support the health and wellbeing of our people, clients and the community around us, our professional and support staff are currently working remotely from home.
While we are working remotely, to the fullest extent possible it will be business as usual in terms of our professional services and our client service. We are still ready, willing and able to take on new clients. While we cannot meet you in person, we are still able to conduct consultations with video conferencing technology. Our current platform of choice is Zoom.
We have taken steps to ensure we have the training, technology, and support in place to assist our staff working from home for an extended period.
Our office at Level 14, 251 Adelaide Terrace, Perth is currently closed. However, please continue to call us on (08) 9325 9644 and you will be directed to whichever member of our team you wish to speak to in the usual way.
These are indeed challenging and uncertain times but for us at BBV it is business as usual, and we will be doing our best to continue to provide our range of legal services.
As the COVID-19 virus continues to spread throughout the world, people can no longer avoid considering their estate plan. The spread of this virus has completely changed the world and the way in which we live here in Australia in an unprecedented way within a matter of weeks.
With a significant amount of uncertainty ahead of us, it is more important than ever that you ensure that your estate planning documents are up to date.
If you already have a Will, you should review this to ensure that it reflects your current wishes. In doing so, you should also take into account any recent changes in the value of your assets.
If you do not already have a Will, it is advisable that you put one in place to ensure that your estate is left to who you wish, rather than being distributed pursuant to the intestacy provisions of the Administration Act 1903 (WA).
The COVID-19 virus also highlights the importance that an Enduring Power of Attorney, Enduring Power of Guardianship and Advance Health Directive plays in your overall estate plan, particularly if you are classified as a person at increased risk of serious illness should you contract the virus.
Unlike a Will which takes effect upon your death, these documents operate during your lifetime and allow you to appoint a trusted family member, friend or advisor to make important decisions regarding your finances, health and treatment decisions, at a time where you are unable to do so yourself.
These are incredibly challenging and unprecedented times that we are experiencing and we encourage you to take the time to ensure that your affairs are in order and to offer peace of mind knowing that if the worst were to happen, your wishes will be carried out and your loved ones looked after.
As tempting as it may be during these times to complete a DIY Will Kit online or from the local post office, these can be fraught with danger for many reasons, one of which being that they may fail to satisfy the requirements of the Wills Act 1970 (WA) for a valid Will. At BBV we are making it easier than ever to have your estate planning documents prepared. Contact Alana Shaddick by telephone (08 9325 9644) or email (ashaddick@bbvlegal.com.au) today to get started and schedule a virtual meeting, following which you can leave the rest to us.
Preparing a Will requires careful thought on the part of the person or persons for whom the Will is being prepared but it also demands great care and skill by the lawyer who is preparing the Will.
With people generally now living much longer and being prone to deteriorating mental health careful consideration must be given to whether or not the person for whom the Will is being prepared has the required level of mental capacity to make a legally valid Will (referred to as testamentary capacity). This is not only an increasingly important issue for lawyers, but it is also an equally important issue for accountants, financial planners, family doctors and other advisors.
One must appreciate that the assessment of a person’s testamentary capacity is a legal test rather than a medical test. The opinion of a treating or reviewing medical practitioner is certainly relevant, but it is not determinative of itself. An assessment of a person’s testamentary capacity may include obtaining an appropriate doctor’s opinion, but it very likely will also require evidence from other sources including people who know or have known the person concerned and who can inform the Court (if necessary) about the day to day activities and responses of the person concerned.
Not infrequently, testamentary capacity can be a borderline issue. This may leave the person for whom a Will is being prepared or has been prepared vulnerable to those who may seek to exert influence over the Will maker and what they put into their Will. Where the Court is called upon to determine a person’s testamentary capacity it will try and look at the full picture (sometimes with the benefit of hindsight) which often involves hearing from a wide range of witnesses.
For family members, as well as financial, medical or other advisors, this means making sure that at the time that the Will is executed there are comprehensive written records of the Will maker’s testamentary capacity – the Will maker should be engaged in conversation and if possible detailed written notes kept of responses to questions and the reactions to events that are happening around them at the time. It may also be valuable to take video of the person concerned at or about the time that they execute their Will to support the conclusion that they then have the necessary testamentary capacity.
These simple precautions can assist to prevent a Will later being declared invalid by the Court because the Court is not positively satisfied that the person making the Will had the required level of testamentary capacity.
The consequence of a Will being declared invalid by the Court can be significant and expensive. This may be especially so where there is a sizable Estate at hand and/or where there are potential vulnerable beneficiaries who may miss out on receiving a benefit from the Estate of the deceased. The intended testamentary wishes of the person making the Will may be lost and their Estate distribute in a manner which is far less satisfactory and possibly even contrary to their expressed testamentary wishes.
Therefore, anyone who provides professional advice to others must carefully consider the mental capacity of the person being advised to properly understand the advice provided, appreciate the consequences of following that advice and be capable of providing coherent and reliable instructions to the advisor. In the case of a person who is making a Will, it is the required level of testamentary capacity of that person that is crucial. It is, of course, equally important to ensure that the Will together with all other estate planning documents are regularly reviewed and updated so as to ensure that the person’s Estate will be distributed in accordance with their current testamentary wishes.
PLEASE CONTACT
For more information or to discuss any particular concerns contact Les Buchbinder at lbuchbinder@bbvlegal.com.au.
Superannuation has become a major asset for an increasing number of Australians since the introduction of compulsory payments by employers since 1992 by the Australian Government.
Contrary to popular belief, superannuation is not an estate asset and it does not automatically form part of your estate upon your death. Rather, payment of superannuation upon death is a matter determined by the trustee of the superannuation fund in accordance with the governing rules of the respective fund and relevant law.
Should your fund allow them (there are a few commercial funds that don’t), a binding death benefit nomination (BDBN) is a way in which you can, during your lifetime, override the trustee’s discretion.
A BDBN is effectively a written notice given by a member to the trustee of their fund which directs the trustee to pay the member’s death benefit, often comprising both superannuation and associated death benefits such as life insurance, in accordance with their wishes outlined in the BDBN.
The trustee of the fund is required to follow the instructions outlined in the BDBN, provided that it has been correctly prepared and executed. A valid BDBN remains in effect for three years from the date it is signed, last amended and confirmed. In some instances, a non-lapsing binding death benefit may also be available and appropriate.
For members that have not made a BDBN with their fund, the trustee of the fund has the authority and discretion to decide whether to pay any benefit payable on your death to one or more of your dependants, or to your estate.
Dependants in this context include a spouse, children of any age, any person financially dependent on the member, any person in an interdependency relationship with the member, and the member’s legal personal representative.
There are a number of advantages to making a BDBN. These include the peace of mind and certainty as to who will receive your death benefit once you die and the ease and speed at which a death benefit can be paid.
Unlike those assets that form part of your estate, a Grant of Probate or Grant of Letters of Administration is not required to be obtained in order for a beneficiary to access your superannuation death benefit. Similarly, a BDBN can protect your superannuation and associated death benefits from any claims made against your estate.
For further advice or guidance on superannuation and the implications for an estate, executor or beneficiary, please contact Alana Stallard on astallard@bbvlegal.com.au or (08) 9325 9644.
PLEASE CONTACT
Contact Alana Stallard at astallard@bbvlegal.com.au if you wish to discuss this matter or your estate planning objectives further.
Arguably one of the most controversial and challenging of the formal legal requirements of a valid Will is whether or not the person making the Will has sufficient testamentary capacity at such time that they make their Will. A Will is not valid unless the person making it has testamentary capacity. That is, they must:
(a) understand the nature of the act and its effects;
(b) understand the extent of the property of which he or she is disposing; and
(c) be able to comprehend and appreciate the claims on his or her Estate to which he or she ought to give effect.
However, what happens if a person has no Will and no longer has the required testamentary capacity?
One option of course is that no steps are taken. In this case, when that person dies his or her Estate will be distributed in accordance with a prescribed formula set out in the Administration Act (“an Intestacy”). But, what if dividing this person’s Estate or an Intestacy does not adequately provide for certain family members or non-family persons or organisations? Further, what if the person already has a Will in place but their personal and/or financial circumstances have significantly changed since the time when the earlier Will was made and it is now no longer relevant or appropriate?
This issue arises more and more frequently as our population ages, people’s financial circumstances become more complex, and the family unit continues to disappear.
In this situation, consideration can be given to whether an application should be made to the Court for what is called a Statutory Will. This is a Will which is made by the Court for the person concerned. This option first became available in Western Australia in 2008.
Upon such an application being made by any person, the Court, pursuant to section 40(1) of the Wills Act 1970 (WA) has the power to make, alter, or revoke a Will of a person who lacks testamentary capacity provided that the person concerned:
(a) lacks testamentary capacity;
(b) is alive; and
(c) is over 18 years of age.
The power for the Court to make a Statutory Will enables the Court to ensure that there is a valid Will in place which:
Gives effect to the previously stated or more obvious wishes of a person lacking testamentary capacity;
Avoids a full or partial intestacy;
Avoids a future dispute as to the adequacy of provision or interpretation of an existing testamentary document;
May allow for appropriate structuring to be put in place, such as testamentary trusts, which can have significant benefits for beneficiaries of the Estate; and
Deals with changes in circumstances that may have occurred since a last Will was made by the Will maker.
However, in the last 10 years there is only one reported case in Western Australia which has addressed this matter. In that instance the Court declined to make the Will as sought. The lack of applications to the Court for a Statutory Will may reflect a lack of familiarity with such applications, or that the cost and complexity of these Applications can be prohibitive in many instances. Nevertheless, Statutory Wills can be a useful estate planning tool that should, at the very least, be considered in the appropriate circumstances.
Please contact Alana Stallard at astallard@bbvlegal.com.au if you wish to discuss this matter or your estate planning objectives further.
PLEASE CONTACT
Contact Alana Stallard at astallard@bbvlegal.com.au if you wish to discuss this matter or your estate planning objectives further.
Several significant changes to the superannuation rules became effective from 1 July 2017.Do you really need to know about them? Yes, you do!
Not only will the changes impact on your plans for your superannuation and retirement, but they will very likely also impact on your estate planning objectives and arrangements.
Ok, So What Has Changed?
In summary, the new rules after 30 June 2017 in relation to pensions include the following:
1. A person cannot start a pension with an account balance supporting a pension of over $1.6m (or continue such a pension after 30 June 2017).
2. This limit is called a person’s “transfer balance cap”.
3. When a person starts a pension after 30 June 2017, they will have a “transfer balance account”. This will track key events in relation to the person’s pension, to see if the person exceeds their transfer balance cap (either on starting the pension or at a date on starting an additional pension).
4. If someone exceeds their transfer balance cap, they will need to take action to rectify the problem (that is, by commuting part of their pension).
5. If the person does not take action, the Commissioner of Taxation can force the fund to rectify the problem (by issuing a “commutation authority”).
6. The rectification action that can be taken will involve commuting some or all of the pension to a lump sum.
7. Except in relation to pensions resulting from the death of a member, such a commutation can generally be retained in the superannuation system.
What Does This Mean For Me?
What this means in practical terms is that where the death benefit exceeds the recipient’s transfer balance cap (currently set at $1.6 m), then any excess must be cashed out as a lump sum. This will impact in particular on those wishing to keep benefits in superannuation by reverting or paying a pension to their dependants upon their death.
How Will This Affect My Estate Planning Decisions?
There are a number of ways in which these changes may impact on estate planning decisions. For example:
1. It will be necessary to review and possibly update death benefit nominations and Wills;
2. It may be necessary to review and update Self Managed Superannuation Fund Deeds to bring them up to date with the new legislation and to allow estate planning objectives to be achieved. For example, often older Deeds do not allow for non lapsing Binding Death Benefit Nominations;
3. Where members of a superannuation fund have balances exceeding the transfer balance cap, they may need to consider setting up a Self Managed Superannuation Fund for their pension interest and retaining their remaining accumulation interest in their existing fund. However, care will need to be taken as this could trigger tax issues and accordingly appropriate tax advice should be sought to determine the tax implications of each strategy. A good estate planning strategy can sometimes be a disaster from a tax planning perspective; and
4. Where a death benefit is required to be paid as a lump sum this may force the sale of non-liquid assets where there are insufficient liquid assets to satisfy the lump sum. In such a situation a strategy needs to be developed to prevent this occurring.
These are examples of some of the impacts the new superannuation rules will have on estate planning strategies, but in individual circumstances there are likely to be other impacts as well.
Conclusion
Estate planning is not a set-and-forget process. Rather it is an ongoing evolving process, which must necessarily respond to changes in individual personal, financial and other circumstances, as well as to changes in the law.
The changes to the superannuation rules will have far reaching effects for those who hold, or who anticipate holding, significant funds in superannuation. Therefore, for those who are, or might soon be, affected by these changes it becomes critically important to respond and carefully review your estate planning arrangements and strategies. This review may necessarily extend to reviewing business structures and business succession arrangements.
Those who choose to ignore the new superannuation rules and/or who choose not to regularly review their estate planning and business succession arrangements do so at their own peril. They also do so at the peril of their families and loved ones with potentially significant detrimental financial consequences.
PLEASE CONTACT
For more information or to discuss any particular concerns contact Les Buchbinder at lbuchbinder@bbvlegal.com.au.
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