Making a Will

One of the most important priorities in your life should be a Will. If you have assets and have not yet talked to a lawyer about drafting a Will, you should do so sooner rather than later. Arranging your affairs to provide for your family and friends by making a will can give you peace of mind.

Although making a legally valid will can be complicated, following are the basic requirements of a will.

1. Distribute your Assets

You will need to choose the people who will receive your assets (your beneficiaries). Usually these will be your children, spouse, close friends and loved ones.

You may also wish to make some specific gifts. For example, you may wish to leave a sentimental family heirloom, a collection or a classic car to a particular family member or a lump sum of money to your grandchildren.

Anything left over once your debts have been paid and specific gifts have been given Is referred to as the ‘residue’ of your estate. You will need to nominate a person or organisation to receive the residue of your estate.

Importantly, by law you may be required to adequately provide for dependents such your spouse and children (even adult children). Failure to do so may leave your will open to legal challenges.

2. Choose an executor, trustee and guardian

‘Appointment’ is the process of choosing individuals to carry out your wishes as expressed in your will.

  • An executor is the person who ‘executes’ the instructions in your will. They are responsible for ensuring that your beneficiaries actually receive what you have left them in your will.
  • A trustee looks after assets held in a trust for the benefit of other people. Your executor and trustee may be the same person.
  • Guardian: If you have children under the age of 18, the guardian(s) appointed in your will are responsible for caring for them.

It is important to talk to the people you choose to perform these duties to ensure that they are happy to be appointed. Choosing people with appropriate skill sets who will work well with the other appointees will help ensure that your estate is administered as you intended.

3. Meet the formal writing requirements

There are specific, formal writing requirements which must be met to make your will valid. If you do not meet these requirements the court may not give effect to your will. For a will to be valid, it must:

  1. Be In writing (handwritten or typed);
  2. State that the document is intended to be your will;
  3. Be signed by you (called execution) on each page in the presence of at least two witnesses, then signed by the two witnesses; and
  4. Dated at the time of signing.

4. Store your will in a safe place

Keep your will in a safe place which is also easily accessible. At Mid Mountains Legal we can store your will at no charge in our safe custody facility. This gives you security and allows you, or upon your passing, your executor, easy access to your will.

Managing Your Affairs

At certain points in your life, you may need help in managing your affairs. An Enduring Power of Attorney and an Appointment of Enduring Guardianship are two instruments which allow another person to do this.

An Enduring Power of Attorney (EPOA) gives a person you appoint permission to manage your financial affairs in situations where you are unable to do so, such as if you lose capacity. An EPOA is limited to financial affairs. An Enduring Guardianship should be sought when broader powers are required to manage a person’s lifestyle, health and medical affairs.

What now?

Having your solicitor advise you about and draft your will is a worthwhile investment in your family’s future. Contact us at Mid Mountains Legal and we will be happy to assist you.

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Co-ownership of property: Joint Tenants or Tenants in Common?

If you purchase property in NSW with two or more people, you need to consider how you will own the property together and in what proportions. The two options when purchasing property with others are to purchase as either joint tenants or tenants in common.

Joint tenants

If a joint tenant of a property dies, ownership of the property automatically passes to the survivor(s). The interest of the deceased in the property would not be dealt with under the terms of their Will.

Tenants in common

If the owners of the property are tenants in common, they each own a share in the property. Each owner’s share can be whatever proportion the owners have agreed.

If an owner dies, their share of the property would be dealt with under their Will or (if there is no will) under the rules of intestacy: it would not pass automatically to the other owners of the property.

Why choose joint tenants?

Purchasing as joint tenants is the most common option for married couples or couples in a de-facto relationship.

Transferring the interest of a joint tenant in a property to the surviving joint tenant(s) is a lot less costly and much faster than transferring the interest in the property under a Will. If a joint tenant dies, a Notice of Death is must be registered with NSW Land Registry Services to transfer the deceased’s share of the property to the survivor(s). Unlike a tenancy in common, a grant of probate is not required.

Why choose tenants in common?

Purchasing as tenants in common may be appropriate in circumstances such as where one of more of the owners:

  1. want to gift their interest in the property in a particular way in the event of their passing. For example, where the owners are a blended family (i.e. the couple have children from previous relationships);
  2. does not want the whole of the property passing to the other owners if they die. For example, where the owners are friends, a new couple, siblings, parents and children, extended family members, etc.;
  3. wish to record ownership of the property in different proportions. For example, if one owner contributes more of the purchase price than the other owner(s), the parties may wish to record this in the ownership proportions noted on title.

When do I need to decide?

You should decide before exchanging contracts for the purchase as the type of ownership is recorded in the contract for sale. There can also be transfer duty implications if the proportions noted on title are changed between exchange of contracts and settlement.

Can I change the type of ownership after completion?

It is possible to change between tenants in common in equal shares (.i.e. 50/50) and joint tenants after purchasing, by registering on title either:

  1. a Transfer Severing Joint Tenancy, to change from joint tenants to tenants in common in equal shares; or
  2. a Transfer Altering Tenancy, to change from either:-
    1. tenants in common in equal shares to joint tenants; or
    1. joint tenants to tenants in common in equal shares.

If there is a mortgage on the title, the mortgagee would need to formally consent to the registration of a Transfer Altering Tenancy.

Transfers that change the ownership proportions will attract transfer duty, calculated on the market value of the proportion being transferred.

What now?

Whenever purchasing a property with other persons, taking the time to work out how you will be purchasing together, and the impact that it has on your will and estate plan, can save you time and money later.

Contact us for advice on the pros and cons of each option.

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Mental Health and Cognitive Impairment

The Mental Health and Cognitive Impairment Forensic Provisions Act 2020 (NSW) (the Act) aims to divert people with mental health issues away from the criminal justice system and towards rehabilitation or other programs to assist their wellbeing.

Questions of mental capacity can arise at three stages during criminal proceedings:

  1. Whether an accused successfully raises the defence of mental health or cognitive impairment;
  2. Whether a person is fit to stand trial: and
  3. Mental health or cognitive impairment may be a significant factor in sentencing by dismissing charges or reducing moral culpability.

What Is a Mental Health Impairment?

The Act says that a person has a mental health impairment if:

  1. they have a temporary or ongoing disturbance of thought, mood, volition, perception or memory, and
  2. the disturbance would be regarded as significant for clinical diagnostic purposes, and
  3. the disturbance impairs their emotional wellbeing, judgment or behaviour.

Disorders which may give rise to a mental health impairment include the following:

  1. a substance induced mental disorder that is not temporary;
  2. an anxiety disorder;
  3. a psychotic disorder;
  4. an affective disorder, including clinical depression and bipolar disorder.

A person does not have a mental health impairment for the purposes of the Act if it is caused solely by:

  1. the temporary effect of ingesting a substance, or
  2. a substance use disorder.

What Is a Cognitive Impairment?

A person has a cognitive impairment if, due to damage to or dysfunction, developmental delay or deterioration of their brain, they have an ongoing impairment in:

  1. adaptive functioning; and
  2. comprehension, reason, judgment, learning or memory.

Conditions which may give rise to a cognitive impairment include:

  1. intellectual disability;
  2. borderline intellectual functioning;
  3. dementia;
  4. an acquired brain injury;
  5. drug or alcohol related brain damage, including foetal alcohol spectrum disorder; and
  6. autism spectrum disorder.

Fitness to Stand Trial

If someone would be incapable of understanding the nature or purpose of the proceedings or incapable of communicating with the court or counsel to conduct a defence, they would be considered unfit to stand trial.

The court, defence or prosecution can raise the question of fitness to stand trial in criminal proceedings in the Supreme Court and the District Court.

A person is unfit to be tried for an offence if they have a mental health impairment and/or cognitive impairment, or for another reason, they cannot:

  1. understand the offence the subject of the proceedings;
  2. understand the substantial effect of evidence given against them;
  3. follow the course of the proceedings so as to understand what is going on in a general sense;
  4. plead to the charge;
  5. understand generally the nature of the proceedings as an inquiry into whether they committed the offence with which they are charged;
  6. instruct their solicitor so as to mount a defence and give them/the court their version of the facts;
  7. decide what defence they will rely on and communicate that decision to their solicitor and the court;
  8. exercise the right to challenge jurors;
  9. make a defence or answer to the charge.

or any other ground a court considers to be relevant.

Mental Health or Cognitive Impairment Defence

The defence of mental health impairment or cognitive impairment is a complete defence. If at the time of the offence you were affected by a mental health impairment and/or cognitive impairment, you will not be held criminally responsible for the offence.

To raise this defence, you have to prove to the court on the balance of probabilities that you did not know the nature and quality of the act or that it was wrong.

If this defence is successfully raised and a special verdict of act proven but not criminally responsible is determined, the court may make at least one of the following orders:

  1. that the defendant be remanded in custody pending the making of a further order under the Act;
  2. that the defendant be detained in the place and manner that the court thinks fit until released by due process of law;
  3. the defendant’s unconditional or conditional release from custody; or
  4. any other orders the court thinks appropriate.

If the court orders a person detained at a mental health facility as a forensic patient, their detention will be reviewed by the Mental Health Tribunal every 6 months. The Mental Health Tribunal can order a person’s release if satisfied that they are not a serious danger to the community.

Mental Health Applications in the Local Court

A Magistrate may dismiss a charge under section 14 of the Act. This allows a person suffering from a mental health or cognitive impairment to avoid a criminal record.

A Magistrate will discharge the defendant:

  1. into the care of a responsible person, with or without conditions; or
  2. on condition that they attend on a person or at a place specified by the Magistrate for assessment, treatment, or support for their mental health impairment or cognitive impairment; or
  3. unconditionally.

Who is a Responsible Person? 

A ‘responsible person’ includes health professionals such as a psychologist, psychiatrist, counsellor or general practitioner. They can also be a parent or family member.

What is a Mental Health Treatment or Support Plan? 

A mental health treatment or support plan means a plan outlining programs, services or treatments or other support that may be required to address a defendant’s mental health impairment or cognitive impairment. It can last for up to 12 months and may include requirements such as regularly seeing a psychologist, psychiatrist, or counsellor or taking prescribed medication.

What if I Breach a section 14 Order?

If you fail to comply with a condition in a section 14 order within 12 months of your discharge a Magistrate may deal with your charge as if you had not been discharged, placing you at risk of being convicted or incurring other penalties. If you have been charged with an offence and believe that you suffer from a mental health or cognitive impairment it is important to get into contact with a lawyer. Contact us at Mid Mountains Legal for guidance and assistance applying for a dismissal of charges by a section 14 order.

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Subdividing your land

Subdividing your land (subdivision) involves the partition of a parcel of land into smaller portions. Once land is subdivided, a ‘title’ is created for each new portion which can be separately sold and transferred.

A subdivision may involve the creation of separate titles for a dual occupancy, the partition of a single lot into two or more, or a residential development for the construction of strata units.

Land is usually subdivided to optimise its permissible use and to generate maximum profit. As it is a significant investment, it’s important for landowners to understand the process and to receive professional advice specific to the land, their circumstances and their investment objectives.

If you are thinking of purchasing land specifically for development, you should carry out due diligence to ensure that:

  1. it is suitable for the intended purpose; and
  2. your proposed use is permitted.

An experienced property and construction lawyer can assist with this process.

The role of council

Local councils administer the subdivision approval and certification processes. Councils will also consider any objections to a proposed subdivision.

During the approval process, the local council may refer plans for assessment to government authorities which may have an interest in the proposal, such as those responsible for services and infrastructure (e.g. water, gas, electricity and roads).

The referral process ensures that an authority’s interests in the land or its assets are addressed when the council considers whether to approve the proposed subdivision.

Regulations and processes

Subdivision of land is governed by legislation, regulations, planning schemes, policies and controls administered by local councils and other state or territory authorities.

Most subdivisions require approval from the local council. Each council has its own requirements for matters such as minimum lot sizes, zoning and engineering standards. In New South Wales, the subdivision process is generally as follows:

  1. the council contemplates the proposed subdivision in light of the objectives for the development, the permitted use of the land and governing laws and regulations;
  2. the landowner retains a licenced surveyor to prepare a plan of subdivision in accordance with the objectives, legislation and regulations;
  3. the landowner lodges a Development Application with the local council. If approval is granted, it will generally be subject to various conditions;
  4. the council issues a Construction Certificate which is the approval for works necessary to complete the subdivision to be carried out;
  5. when the subdivision works are completed and all conditions contained in the Development Application approval have been met, the council issues a Subdivision Certificate, authorising registration of the plan;
  6. the plan of subdivision, the administration sheet and other prescribed information, is lodged with NSW Land Registry Services for registration.

Can my land be subdivided?

One of the first steps in a proposed subdivision is ascertaining what type of development is permitted on the land. This is generally determined by the land’s zoning, which is set out in the local planning scheme. A title search, plan of the land, and zoning certificate provides preliminary information about the land.

The proposed subdivision must also be consistent with local, regional and state planning objectives and policies, and address environmental and other aspects including the provision of open space, access to new lots, and other facilities. The capacity for existing utilities, and services and infrastructure to support the proposed development will also be considered.

A property or construction lawyer, in conjunction with a registered surveyor, will help identify and explain the legal and technical aspects of the proposed development. Your lawyer can also liaise on your behalf with council and other authorities.

The surveyor will prepare a proposed plan of subdivision which may include the creation of various roads, lots, reserves, and / or common property. Plans may include the creation, variation or removal of easements and / or restrictions to meet statutory requirements and to ensure that the proposed development is functional.

What now?

Subdivision of land involves complex legal and technical processes. Draft plans may need to be revised to comply with laws and regulations before works commence.

A property lawyer can help by working with your surveyor, preparing the necessary property documents and explaining legal and titling concepts.

Contact us for more information or if you need help or advice.

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Retirement Village Contracts and agreements

If you are considering moving into a retirement village in NSW, this article is for you.

The Retirement Villages Act 1999 (NSW) and the Retirement Villages Regulation 2017 govern retirement village contracts and regulations in NSW. These laws were created to protect retirees buying or leasing a retirement property and to regulate retirement village operators to ensure the proper disclosure of all rules, regulations, entry costs, recurrent charges and exit fees.

The Contract

The village operators must issue a standardised contract with easy to understand terms and conditions so that retirees interested in living in the village understand what they are signing, their rights, and the fees if they change their mind and/or move out of the village or pass away.

The Contract covers:

  • Recurrent charges;
  • The settling in period;
  • Services and facilities;
  • The type of ownership of the unit;
  • Alterations and additions;
  • Entry costs;
  • Repairs and maintenance;
  • Your share of any capital gain / loss; and
  • Departure fees.

The Contract must include:

  • The village rules;
  • A condition report;
  • A disclosure statement; and
  • A list of all the village services and facilities.

Important Clauses

Important clauses in a retirement village contract include those regarding:

  • The operator’s access to your unit;
  • Pets;
  • The notification of changes to your health to the operator;
  • Notification rules if you are going to be away for an extended period;
  • Visitors;
  • Sub-leasing;
  • Settling in period;
  • Exit charges.

Different retirement villages offer different types of ownership arrangements, including registered and non-registered ownership options. The type of ownership that applies to your unit provides different rights and obligations.

Contracts are very large complex documents and if you are considering a retirement village we recommend that you consult a lawyer and financial adviser regarding the benefits and risks of the contract before you sign.

Registered Unit Ownership

Some of the types of ownership options provide a registered interest (depending on the retirement village you are interested in) and include:

  1. Owner of a lot in a community land scheme – you become the proprietor of the unit via a sale of land contract;
  2. Owner of shares in a company title scheme – If the village is owned by a company, you must buy shares of the company to become one of the owners of the scheme that owns your unit. This gives you the right to occupy the unit;
  3. Owner of a lot in a strata scheme – you will become the proprietor of the unit via a sale of land contract;
  4. Registered long term lease – You will be a registered lessor of the unit, for a period of 50 years or more. This is known as a leasehold interest. You will be entitled to 50% or more of the capital gain.

It is important to understand your rights in relation to the unit. This affects when and how you can sell and the fee structure, including any exit fees if/when you choose to leave the village.

Unregistered unit ownership

Loan and Licence

Some retirement villages (usually those that are not-for-profit such as church or charity organised villages) offer units for loan and licence, rather than for purchase or leasehold.

In a loan and licence arrangement, you pay an ingoing contribution to the owner (usually an interest free loan) part of which is non refundable as a donation to the gift or charity. Regular recurrent charges will also be payable with this arrangement.

Rental arrangement

Some retirement villages allow you to lease a unit in the usual way via a form of residential tenancy agreement.

You can find more information about Retirement Villages on the NSW Fair Trading website. NSW Fair Trading have designed a calculator which can help you to determine all the costs and expenses involved in moving into and out of a retirement village. If you have the disclosure statement available from the retirement village you are considering, you can try the calculator on the NSW Fair Trading retirement village calculator web page.

We understand that the above information can be confusing and complex. We would be happy to meet with you to discuss the above and provide you with legal advice on a retirement village contract you are looking at entering into.

If you have any questions, or would like to arrange an appointment with us, contact us.

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Binding Financial Agreements in Australia

Binding Financial Agreement (BFA) is the term the Federal Circuit and Family Court of Australia (FCFCOA) uses for Pre-nuptial agreements (pre-nups), Post-nuptial agreements (post-nups); and cohabitation agreements. The Family Law Act 1975 (Cth) allows parties in a marriage or de facto relationship to enter into a BFA to avoid disputes about division of their finances in the event of a relationship breakdown. BFAs alter the normal avenue for division of property and other assets, deviating from the FCFCOA’s normal jurisdiction.

How do they work?

A BFA allows a couple to agree in advance on an acceptable division of assets. When a marriage or de-facto relationship breaks down, a BFA can allow a couple to amicably separate without the need for costly, time-consuming and stressful action in the FCFCOA.

Ensuring that a BFA is properly drafted and executed can provide certainty and prevent the FCFCOA from interfering with the agreed property distribution following the breakdown of a relationship.

When do the parties enter into a BFA?

BFAs can be entered into:

  • before the commencement of a marriage or relationship; or
  • at any point during the marriage or relationship; or
  • after separation or divorce.

How binding is BFA on the FCFCOA?

A BFA is binding if it has been correctly drafted and executed. To be binding, BFAs must meet certain requirements: if they are not met, the agreement may be set aside or void. To avoid the agreement being set aside, each party must obtain independent legal advice and have their solicitor sign a certificate of independent legal advice.

Parties should review BFAs entered into before the commencement of or during a marriage or relationship about every two years or after a significant event in the lives of the parties, such as the birth of a child or a party receiving an inheritance.

What can a BFA cover?

A BFA can specify how the parties agree to divide the asset pool if the relationship fails. They deal with property, financial resources and maintenance, which can include:

  1. The financial settlement (i.e. property settlement, including superannuation entitlements);
  2. The financial support (maintenance) of one spouse by the other;
  3. The agreed arrangements for the children; and
  4. Any incidental issues.

Issues a BFA can deal with include:

  1. Preserving family farms or other businesses for future generations;
  2. Protecting existing assets or likely inheritances;
  3. Ensuring that children of previous relationships inherit;
  4. Avoiding disputes about financial matters at the end of a relationship; or
  5. Providing more weight to the contribution of a higher income earner.

What your lawyer needs to know to advise you about a BFA

When your lawyer is advising you about a BFA and before they can draft an agreement, they may need to take the following into account:

  1. Both parties’ current assets including chattels, vehicles, shares, furniture, and valuables;
  2. The current value of these assets;
  3. Their superannuation entitlements;
  4. The current market value of property a party intends to own personally;
  5. Each party’s liabilities including any loans, mortgages or debts;
  6. Whether there is any other family law financial agreement which may apply;
  7. The date when cohabitation commenced;
  8. The date when the relationship commenced;
  9. Both parties’ occupations and future capacity to earn an income;
  10. Whether either party has been married previously; and
  11. The number and age of any children.

What are the benefits of a BFA?

In the event that a relationship ends, a properly drafted and executed BFA may give the parties a degree of certainty, making them feel more secure in knowing that the property they have accumulated before the relationship or marriage is safe. If parties agree in advance regarding the division of property after a separation, any issues arising are more likely to be resolved with less stress, argument and legal expenses, and no court delays.

Terminating a BFA

The Family Law Act sets out the circumstances in which the FCFCOA may set aside a BFA. These include:

  1. where the agreement has been obtained by fraudulent means, including material non-disclosure (e.g. by failing to disclose an asset);
  2. a party to the agreement entered into the BFA for the purpose of defrauding or defeating a creditor;
  3. the agreement is void or unenforceable (e.g. the BFA was not prepared properly and does not comply with the legislative requirements set out in sec 90G or sec 90UJ);
  4. circumstances have arisen since the BFA was made which make it impossible or impracticable for the BFA to be carried out;
  5. since the making of the BFA, a material change in circumstances has occurred (relating to the care, welfare and development of a child of the relationship) and, as a result of the change, a party to the agreement will suffer hardship if the Court does not set the BFA aside;
  6. a party’s conduct in the making of the BFA was, in all the circumstances, unconscionable;
  7. a “payment flag” is operating on a superannuation interest covered by the BFA and there is no reasonable likelihood that the operation of the flag will be terminated by a “flag lifting” under that part; or
  8. the BFA covers at least one superannuation interest that is an “unsplittable interest”.

Terminating Process

A Binding Financial Agreement can be “terminated” in one of two ways:

  1. the parties can enter into another financial agreement, provided that a specific provision is included in the new agreement stating that the former agreement is terminated; or
  2. the parties can enter into a “termination agreement” pursuant to sec 90J (for married couples) or sec 90UL (for de facto couples). As with the original BFA, for a termination agreement to be binding and enforceable, it must be signed by all parties, and each party must have received independent legal advice with respect to the termination agreement.

What now?

Contact us for advice and assistance in negotiating, correctly drafting and executing a BFA tailored to your specific circumstances.

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Family Law Property Division

The significance of gifts or contributions made by third parties

When determining an application to divide assets and liabilities between separated spouses/de-facto partners, the Federal Circuit and Family Court of Australia (FCFCOA), considers who made the contributions to the acquisition, maintenance and improvement of property.

The FCFCOA also considers the future needs” factors set out in s75(2) of the Family Law Act 1975 (the Act) when deciding whether to make an adjustment to one or both parties’ property ownership.

This article does not deal in detail with the circumstances in which the FCFCOA may make an adjustment based on the parties’ future needs.

What is a Contribution?

The FCFCOA will only make an Order for property division if it is satisfied that, in all the circumstances, it is just and equitable to do so. In determining whether an Order should be made, the FCFCOA looks at the contributions the parties made to the property pool. Contributions can be financial or non-financial and:-

  1. may be made directly or indirectly by or on behalf of a party to or a child of the marriage/ relationship to the acquisition, conservation or improvement of their property; or.
  2. made by a party to the marriage/relationship for the welfare of the family (comprising the parties and their children).

The FCFCOA determines what property division should be made on the basis of the contributions made by each party, also taking into account the adjusting factors set out in Section 75(2). However, it is not always a party to or a child of the marriage/relationship who makes contributions.

What about contributions made by someone who is not a party to the marriage or relationship?

Contributions can be made by third parties, most often the parties’ parents. Contributions made by or on behalf of a party to the marriage/relationship are taken into account. Contributions made by a third party must be attributed to one or sometimes both of the parties to the marriage/relationship.

Who gets the “credit” for contributions on behalf of a party can make a big difference to the outcome of property proceedings.

The parties welcome outside contributions when times are good but they become the subject of argument and disagreement when separation occurs and times are bad.

Who can make a contribution and who gets the benefit of that contribution?

The most common example of a contribution made by a third party is a gift from one party’s parents of money or specific property.

How will the court apply the benefit of such contribution? 

What was the Intention of the third party when they made the contribution?

The actual intention of the donor may not have been carefully considered at the time the gift was made. In circumstances where a property division is being considered, it is often asserted that what was intended to be a gift was actually a loan which must be repaid.

In determining the weight to be given to a gift to only one party the Court may:

  1. Allow the recipient of the gift to be credited with the value to which the gift had increased at the date of the hearing; or
  2. Give the recipient of the gift credit for its initial value; or
  3. If the gift has been mixed with other contributions over a long period, not attempt to give it a particular value, but rather consider it a fact to be taken into account along with other relevant factors.

Gift to both parties?

Even where the gift by a relative of one party is made to both parties, it is open to the FCFCOA, in certain circumstances, to treat it as a contribution by the party to whom the donor was related. In the marriage of Pices the Court took into account the relationship of the spouse and their parents in concluding that the gift from the parents should be regarded as a contribution by the related spouse. If however the gift was clearly intended to be given to both parties, the Court will regard it as an equal contribution.

Non-financial contributions by a third party

A non-financial contribution may be made by a relative. Provision of childcare or provision of accommodation, are examples of such non-financial contributions that can be made by a parent or relative and can assist one party or the other in property proceedings.

What now?

If you are engaged in a property settlement with your spouse/partner and a third party has made a financial or a non-financial contribution to the marriage/relationship, this can lead to a stressful and complex situation. Contact us for assistance and support with your family law property settlement..

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WHAT IS A PROBATE REQUISITION?

When someone lodges a probate application with the Supreme Court of NSW, there are exacting requirements for it to be complete and accurate. If the application is incomplete or inaccurate, the court will issue a probate requisition seeking additional information, documentation, or that the application be corrected. The process of obtaining probate of a will is delayed until the requisition is satisfied, and may increase the fees payable to the Court to obtain probate. This article explains the purpose of a probate requisition and highlights some common mistakes made in probate applications that lead to requisitions.

What is probate?

An executor appointed by a will or administrator of a will applies to the probate registry of the Supreme Court for a grant of probate to administer a deceased estate. A grant of probate verifies that the will is the most recent, valid testamentary instructions of the deceased. The process of applying for a grant can be complicated and a necessary requirement can be easily overlooked or a small mistake made. Even solicitors occasionally receive a requisition when seeking a grant of probate.

What is a probate requisition?

If a probate application is inaccurate, there can be considerable delays. Sometimes the Supreme Court issues a requisition which notifies the applicant that they have not fulfilled at least one of the requirements of the application. A requisition forces the executor to file further documents with the court or amend existing documentation. Even if the forms are perfectly filled out, a requisition may still be issued if the Court needs further information to clarify some aspect of the application. For example, a requisition may be issued simply because a will has an unexplained mark. Even a staple mark in the corner of a will may prompt a requisition because the court is concerned that there are pages missing.

A typical requisition is a one-page notice, which notes the case number and title of the application, and asks the recipient to answer specific requisition/s. A copy of the requisition is filed with answers to the requisition/s. Fees may be payable when lodging additional documentation.

You cannot ask the Court to further explain a requisition. In the 2001 case of Re Estate of Max Frederick Dippert, the Court reprimanded the solicitors for answering a requisition from the Registrar with a four-page request for further and better particulars on the requisition. The Court made it clear that this was not the appropriate way to respond to a requisition. The Court emphasised that if an applicant or solicitor is unsure of how to respond to a requisition, they need to consult counsel, not “interrogate” the Court.

How to avoid a probate requisition

If you are unfamiliar with the process of obtaining a grant of probate, it can be difficult to correctly complete the documentation.  We highly recommend that you consult an experienced solicitor to avoid mistakes. However, if you wish to apply without obtaining legal assistance, adherence to the following steps will limit the probability of requisitions:

  1. Locate the original will and death certificate and check them for any issues which could delay probate. Originals (not copies) must be submitted for probate. If there are any issues with the original will, such as damage, provide a sworn affidavit with a detailed, formal explanation of how the damage occurred.
  2. Exactly follow the required wording of the application to avoid miscommunication.
  3. Check that the names (and aliases) and contact details of the deceased, beneficiaries and executors are correct and complete. A testator may use an anglicised version of their name on some documents and their full legal name on land titles and death certificates.
  4. Check that the dates on the application match the date of the will and of the death certificate.
  5. Consider whether there are any unusual circumstances involved in the death of the testator. For instance, if the deceased died overseas, the affidavit should detail how the body was identified, etc.

Applying for a grant of probate can be intimidating, and small mistakes and omissions can be costly and time-consuming. We can help you make a probate application so that the process is as smooth as possible. We can also help if you receive a probate requisition. If you have been appointed as an executor of a will, contact us for advice and support.

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What is a Testamentary Trust?

Testamentary Trusts are created under a Will and therefore come into effect only after the death of the person who made the Will (the testator).

The principal objective of a Testamentary Trust is to hold and manage all or some of the assets and distribute them to the beneficiaries as per the terms of the Will. A trustee must be nominated to manage the Trust assets.

Who can be a trustee?

You can choose anyone to be a trustee, including the executor of your Will or your spouse. However it should be someone you trust, as the trustee acts in your beneficiaries’ best interests.

What is the difference between a Will and a testamentary trust?

A Will is a legal declaration by which a testator enforces their wishes to distribute their assets upon their death. It also appoints an executor and identifies the beneficiaries of your Will.

A Testamentary Trust is where the assets of the Will are held and managed by the trustee.

Who can be beneficiaries of a Testamentary Trust?

The same beneficiaries that you have outlined in your Will.

What types of assets are held in a Testamentary Trust?

  1. Investments;
  2. Land or property;
  3. Cash; and
  4. Other valuable assets, including paintings, furniture and jewellery.

What are the advantages of a Testamentary Trust?

1. Flexibility for the beneficiaries

A Testamentary Trust gives you flexibility in distributing assets to the beneficiaries.

You can set up a trust to suit your own individual requirements> you can also allow your children to use it for their own benefit.

2. Asset protection

Assets held by a Testamentary Trust are protected up to a certain level because they are held by a Trust – they are not owned by the beneficiaries. Consequently, assets held by the Trust are unavailable to the creditors or spouse of the beneficiaries following the breakdown of a marriage or de facto relationship.

3. Protection from irresponsible beneficiaries

The trustee holds the assets on behalf of beneficiaries who the testator considers likely to:

  • Be unable to handle their share by themselves, or
  • to spend their share irresponsibly.

4. Income tax benefit

The principal benefit of this kind of trust is the income tax redemption.

In a normal Will, beneficiaries usually invest the funds they receive to earn an extra income, which is added to their salary, and they pay tax at the usual marginal rates.

In a Testamentary Trust, the trustee distributes the Trust income to its beneficiaries. If the beneficiaries further distribute the funds to their children who are not working, then they can receive an income tax benefit for each child.

5. No cost for transferring assets to your trust

There are tax advantages to using a Testamentary Trust. Assets can be paid into the trust without paying transfer duty or Capital Gains Tax because the transfer takes place through your Will.

6. Superannuation & life insurance

Generally, superannuation proceeds fall outside of the assets in a deceased estate, and the distribution of the proceeds are determined by the rules of the fund. However, a testator may elect to direct the trustee of the superannuation fund to pay the proceeds of the deceased’s superannuation or death proceeds to their Legal Personal Representative (i.e. the executor).

The executor would distributed the proceeds in accordance with the terms of the Will. If the Will includes a testamentary trust, the executor may direct the proceeds to the trustee of the trust rather than distribute them directly to the beneficiary. Those assets would then be held in the beneficiary’s personal capacity.

The proceeds would then be distributed to the executor, who would have the discretion to distribute the proceeds using the testamentary trust established in the Will.

7. Incapacity

Where the beneficiaries are incapacitated, the Trust allows the family of the beneficiaries to manage the assets for their benefit (rather than relying on an external agency).

Can a Testamentary Trust be contested in NSW?

Yes, as a Testamentary Trust is established by a Will, it can be challenged or contested under the usual legislative provisions.

If you are contemplating setting up a Will with a Testamentary Trust, contact us for advice and assistance.

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Mediation in Family Law

What to expect

Mediation is the process where a mediator (usually an experienced family lawyer, barrister or former Judge) assists people in dispute to negotiate a mutually satisfactory resolution and avoid Court proceedings. In Family Law disputes the process is called “Family Dispute Resolution” (FDR) and mediators are called Family Dispute Resolution Practitioners (FDRP) but in this article we use the terms “mediation” and “mediator”.

It is normal to feel anxious about attending a mediation with your ex-partner, especially If you have never taken part in one before.

The mediator does not take sides in the dispute or make a decision about which party is right or wrong. They work with you and your ex-partner (and possibly your lawyers) to reach agreement as part of your separation.

The mediation

There is no one fixed mediation process: different mediators use different processes and have different skill sets and styles. Your lawyer will help you to select the right mediator given the nature and complexity of the issues and the dynamic with the other party (and their advisor).

The mediator may initially choose to meet with both parties separately (often by telephone or video conferencing) for an ‘intake session’ to discuss your concerns and your desired outcomes. The mediator will use the information gleaned from these conversations to help them decide how to conduct the discussion and negotiation.

The mediator may ask both parties’ lawyers to open with statements on their clients’ behalf. The goal is to:

  1. work out what the main issues are; and
  2. narrow down the issues to those about which the parties disagree.

The mediator may then ask each party to consider options for settlement. They may also ask one party to make an offer. Offers will be exchanged until agreement is reached. The aim of this process is to resolve the issues in dispute.

Negotiations can be in a joint session or separately, either in person or remotely by video or telephone conferencing.

If you choose to do the mediation separately the mediator will convey the offers back and forth between the parties and may make suggestions on the framing of offers. This approach tends to be preferred in family law disputes because a spouse may not feel comfortable, or may be emotional or fearful of the other person and so unwilling to be on the same call as them.

Each party is in a different room with their lawyer and the mediator goes back and forth. This can also be done by separate phone or video calls between the parties and the mediator. Each spouse can make decisions without pressure and with the assistance of their legal advisor.

Can I bring a support person?

You are welcome to bring a friend or family member with you to the mediation if you believe it will help you on the day. You should discuss this with your lawyer beforehand. If you choose to bring someone with you, they must not obstruct the prospects of a settlement or inflame the dispute. Before the mediation you should discuss with your lawyer the name and your relationship to your proposed support person. The mediator may require enough time for them to obtain the other party’s agreement to the inclusion of your proposed support person.

What is my lawyer’s role?

Your lawyer plays an integral role in managing the negotiation process, taking into account their experience and their knowledge of the mediator and the other lawyer.

As mediation aims to reach a mutual consensus, mediation is very different from Court and your lawyer will act differently to how they would in Court. Rather than advocate as they would in Court, they will most likely calmly discuss the case with other practitioners. Your lawyer will guide you through the process respectfully and work with the other lawyer and the mediator to positively problem solve. An aggressive approach at mediation is likely to reduce rather than enhance the prospects of settlement.

What is my role?

Assisted by the mediator and your lawyer, you can be best informed to decide whether to reject or accept offers of settlement and what (if any) counter-offer you wish to put on the table. Reaching agreement often requires both parties to compromise. The mediator will inform you of the other party’s offers and counter, but the final decision is up to you.

You should not feel pressured to agree to an offer if you do not feel comfortable with it. If during the mediation you feel uncomfortable, you should tell the mediator so they can try to resolve your concerns. If you are feeling fearful, overly anxious or overwhelmed, you can take a break, giving you a chance to clear your head, calm down, or refocus.

Reaching agreement

Once agreement has been reached at mediation, the lawyers set out the terms of the agreement in writing, usually in the days immediately following the mediation. The documents are then signed by the parties and their lawyers. If the matter is in Court and the next hearing is imminent, the signed documents may be handed up to the Registrar or Judge at the next hearing. If the matter is not already in Court, the documents are filed electronically in Court. The agreement is not final until the Order is made.

Agreement not reached

If the parties do not reach agreement at mediation, your lawyer will discuss the next steps with you. You will need to work with your lawyer to determine a strategy which may include making further offers, or litigation culminating in Court Orders.

Where to now?

We are there to prepare you for and support you through the mediation process. Preparation and obtaining all the information you need to make informed decisions and negotiate the issues is key to a successful mediation. We will work with you before the mediation so you are well prepared and know what to expect. Contact us to speak to a lawyer about mediation in family law.

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