Family Law Super Splitting

What are the superannuation splitting laws?

The superannuation splitting laws allow separating de facto or married couples to value and divide their superannuation after a relationship break down. One partner may split the amount remaining in their superannuation fund and make a payment to the other partner’s superannuation fund.

The Family Law Act treats superannuation as if it were property, although it differs from other types of property as it is held in trust. Splitting superannuation does not convert it into a cash asset: the super funds are still subject to superannuation laws and the usual conditions of release.

Am I entitled to a superannuation split? Do I have to pay super to my ex-partner?

You may be entitled to a superannuation split, or legally obligated to split your superannuation if you were married or in a de facto relationship and have separated. The Family Law Act defines a de facto relationship as two people not married to each other, not related by family, and sharing a relationship as a “couple living together on a genuine domestic basis”. A person seeking superannuation splitting orders must have been in a de facto relationship with the other person for at least 2 years unless:

  • there is at least one child of the relationship; or
  • a party makes a substantial contribution

In that case an application can be made seeking superannuation orders even if the relationship broke down before two years.

How much of my ex-partner’s superannuation am I entitled to/might I have to pay?

In a long relationship, where neither party had substantial superannuation at the beginning of the relationship, a superannuation split will often be calculated which equalises their superannuation interests. The parties add the value of all their superannuation interests, divide the total by two and split one party’s superannuation to the other party’s fund of choice to equalise their superannuation interests.

Alternatively, parties may negotiate a superannuation split tailored to their needs which forms part of an overall package of property settlement. For example, one party may wish to retain a greater share of the cash assets to purchase a property, while the other may be approaching retirement and prefer to retain their super. The party wanting more cash assets may concede their superannuation entitlements to negotiate a greater share of the cash assets.

The Courts have a wide discretion to determine a just and equitable division of the parties’ superannuation interests. If a Court determined the matter, a four-step process would be applied to determine each parties’ entitlement:

  1. the superannuation must be valued; then
  2. each parties’ financial and non-financial contributions to the acquisition, conservation and improvement of the superannuation fund must be assessed; then
  3. the Court will consider factors under s 75(2) or 90SF(3) of the Family Law Act, including:
    1. each party’s age and state of health;
    1. each party’s income earning capacity;
    1. if there are children of the relationship, with whom they live; and
    1. each party’s existing financial commitments and responsibilities.
  4. The Court determines whether in all the circumstances the settlement is just and equitable.

What if we cannot agree about how to divide superannuation?

If you and your ex-partner cannot reach agreement about how to divide your superannuation interests, you can apply to the Court for an order. The Court will apply the four step process to determine a just and equitable division of superannuation.

How long after a separation or divorce can I make a claim for superannuation?

If you were married:

  • If you have separated but not divorced, you can make a claim for superannuation at any time;
  • If you have divorced, you should make a Court application for superannuation orders within 12 months after the divorce.

If you were in a de facto relationship, you should make a Court application for superannuation orders within 2 years after you separated.

The Court may grant leave for a party to a marriage or de facto relationship to apply for a superannuation order after the limitation period if they can establish hardship. However, this can be a very expensive and complicated process, as a special application must be made to the Court seeking leave to proceed out of time and there is no guarantee that leave will be granted.

How can I obtain information about the value of my or my partner’s superannuation fund?

You can apply to the trustee of the superannuation fund for information about a superannuation interest of a member if you:

  • are an ‘eligible person’; and
  • have a genuine reason for needing the information.

An ‘eligible person’ includes:

  • the member;
  • the member’s spouse;
  • if the member or spouse is deceased, their legal representative; or
  • a person intending to enter into a superannuation agreement with the member.

To apply for information about the member’s superannuation interest, the eligible person will have to declare that they require the information in order to either

a) properly negotiate a superannuation agreement, or

b) assist them in connection with family law proceedings relating to the superannuation interest.

The applicant will also have to provide the member’s full name and date of birth.

What if my ex-partner has a defined benefit super fund or a self-managed fund?

Defined benefit funds provide benefits to members in accordance with a formula set out in the fund’s trust deed. The formula accounts for the member’s length of employment and their salary level at retirement. These funds are difficult to precisely value, and a forensic accountant may need to be engaged to value the superannuation interest.

Self-managed super funds are private funds arranged and managed by the parties themselves (often by a lawyer and/or accountant). The parties invest the fund monies by purchasing property, shares, bonds etc. to increase the value of the fund. The value of a self-managed super fund is the total value of the assets held by the fund.

How can my ex-partner and I formalise the agreement we reached to split our superannuation interests?

An agreement regarding the division of their superannuation interests can be formalised by parties entering into a Financial Agreement or applying to the Court for Consent Orders.

Alternatively, you can file an Application for Consent Orders with proposed Consent Orders in the Federal Circuit and Family Court of Australia. Once approved by a Registrar of the Court, the Orders become legally binding and enforceable on both parties and on the superannuation fund trustee.

Alternatively, parties can record their agreement in a Binding Financial Agreement (an Agreement). An Agreement is not filed with the Court. However, each party must be provided with independent legal advice before entering into an Agreement for it to be binding and enforceable. The advice must address the effect of the agreement on the rights of the parties and it’s advantages and disadvantages when the advice was provided.

What is the process for splitting superannuation?

Before finalising an Agreement or filing Consent Orders you must provide the trustee of the superannuation fund with ‘procedural fairness’ by writing to them advising that you are seeking superannuation splitting orders. You should provide the trustee with:

  • the member’s number and date of birth; and
  • the specific orders sought.

The trustee has 28 days to object to the proposed orders by writing back to you or attending the court hearing (if any). The letter from the trustee agreeing to the proposed orders is filed with an application for consent orders.

A party (generally the person who financially benefits from the split) provides the superannuation orders made by the Court to the trustee of the superannuation fund to implement.

What do I do now?

Mid Mountains Legal have extensive experience in a wide range of superannuation matters, including complex matters involving self-managed and defined benefit funds. Ask us for advice about your options and entitlements to empower you to make informed decisions.

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What is a Caveatable Interest?

What is a caveatable interest?

It is important to determine whether you have a caveatable interest in land before you lodge a caveat.

The NSW Real Property Act provides that a person may lodge a caveat with the Registrar-General if they are entitled to a legal or equitable interest in land. A caveat notifies others that you have a proprietary interest in the property and prevents them from dealing with the property without your knowledge or consent. The Registrar-General will not register any dealings (other than some statutory exceptions) that are inconsistent with your caveatable interest.

How do I determine if I have a caveatable interest?

Caveatable interests include:

  • a buyer’s interest under an agreement for sale;
  • a seller’s lien; and
  • a buyer’s lien.

Examples of non-caveatable interests are:

  • possession of a building site by a contractor;
  • the interest of a person who has improved someone else’s land; and
  • rights arising from an agreement to share profits on the resale of land.

Only those with an express interest in the property (such as a chargee or mortgagee) can claim a caveat. An express interest is where the parties agree to the lodgement of a caveat over the property.

A court judgment against another person does not create a caveatable interest in that person’s property. If you have obtained a judgment against someone, you may be able to negotiate and agree to create a caveatable interest in their property. You can then lodge a caveat to protect your interest.

How do I lodge a caveat?

In NSW, a subscriber to an Electronic Lodgement Network Operator (such as a solicitor or conveyancer) completes the online form provided by NSW Land Registry Services including the following information:

  • The details of the property that you claim to have an interest in and the registered proprietor of the property. You should check this information by conducting a title search.
  • The caveator’s name and address, including the address where notices relating to the caveat may be served. This is required for service of court documents.
  • The nature of the interest you claim and how it arose (e.g. is it a legal or an equitable interest).

What should I consider if I want to include a provision in an agreement charging someone’s land?

Someone owing you money is not in itself sufficient to give you a caveatable interest. If you provide goods and services, and wish to create a caveatable interest and charge the customer’s real estate, you should consider the following:

  • The agreement should contain a clause obliging the customer to grant and register a caveat over the property.
  • Is there an agreed mechanism for withdrawal of the caveat?
  • your agreement should take into account that each State has different requirements for lodging caveats.

A caveat does not arise by specifying the folio identifier and street address in the agreement. A caveat must be lodged in a particular form and manner, satisfying any formal rules.

The agreement should specify who is responsible for drafting and lodging the caveat and who pays the lodgement fee.

How do I remove a caveat?

A caveat can be removed in several ways, most commonly when the property owner issues a lapsing notice which is served on the caveator. The caveator has 21 days from the date of service of the lapsing notice to seek an order from the Supreme Court of NSW for an order extending the operation of the caveat.

What if the caveat has not been lodged properly?

If you lodge a caveat without having a caveatable interest or a reasonable cause, you may be liable to compensate any person who suffers a resulting pecuniary loss (e.g. if you take steps to lodge a caveat over a property without having a caveatable interest, which stops the settlement or sale of the property, you may be liable to pay damages to the injured proprietor for any loss suffered. Also, you will most likely be liable for their legal costs [in addition to your own]).

 

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Removing or extending a caveat in NSW

What is a Caveat?

A caveat is a formal registration of a legal or equitable interest in land. If you are the owner of land in NSW and someone has lodged a caveat on your land, the Registrar-General will send you written notice. Lodging a caveat can prevent further dealings with the property until it’s removed. Following are ways to remove a caveat in New South Wales.

How do you remove or withdraw a caveat in NSW?
1.    Formal Withdrawal

The person lodging the caveat (the caveator) can withdraw it by instructing a solicitor or conveyancer who subscribes to an Electronic Lodgement Network Operator (ELNO) (such as PEXA) to lodge a Withdrawal of Caveat form electronically with NSW Land Registry Services [NSWLRS] (the fee is $147.70 as at October 2021).

Who else can apply to withdraw a caveat?
  • if joint tenants hold a caveat and one caveator dies, the surviving caveator;
  • the executor, administrator or trustee of a deceased caveator;
  • the Australian Securities and Investment Commission (ASIC); and
  • a trustee when the caveator is an infant or is deemed mentally incapable.

This process is only suitable for a caveator who wishes to withdraw the caveat. Where the registered owner, or another party with a relevant interest, wishes to remove the caveat, then the other methods set out below should be used.

2.    Lapsing

You may also remove a caveat if it lapses. This can occur when:

  • the caveator’s interest is satisfied because another party registers another dealing (e.g. if a caveator is an unregistered mortgagee and the mortgage is discharged);
  • the registered owner or a party with registered interest lodges an Application for Preparation of Lapsing Notice; or
  • a party lodges a dealing that the caveat prevents together with an Withdrawal of Caveat.

If the caveator refuses to withdraw formally, the property owner or another interested party may lodge (electronically via an ELNO) an Application for Preparation of Lapsing Notice to remove the caveat. The property owner may register another dealing on the land, which the caveat prevents, and apply for the lapsing of the caveat. The caveat will lapse and expire 21 days after the Notice has been lodged.

3.    Court Orders:
a.    Extending a Caveat

A caveator can apply to the Supreme Court of NSW seeking an order to extend the caveat. They must make the order and lodge it with the Registrar within 21 days from receiving the lapsing notice. A court will only honour a caveator’s order if the claim has ‘substance’. The onus of proof is on the caveator, and the court will decide whether the balance of convenience favours retaining the caveat.

Where a caveator is served with a lapsing notice and does not want their interest removed, they can give their written consent to extend the caveat. Such consent must include:

  • the full name of the caveator and registered number of caveat;
  • type of dealing consented; and
  • caveator’s signature (or their solicitor).

The consent must be absolute without any conditions. Removing a caveat by lapsing is most appropriate where it is unlikely the caveator will fight back or commence proceedings, and will instead either consent or allow the caveat to lapse willingly. Alternatively, lapsing is the best option where you cannot locate the caveator or they no longer exist (e.g. deregistered company).

b.    Withdrawing a Caveat

A party can apply to the Supreme Court for an order that a caveat be withdrawn. The party must lodge the application with the court together with a request form. This option is suitable if the need to remove the caveat is urgent, or where a party expects opposition from the caveator. The caveator bears the burden to establish a caveatable interest and reasonable cause (i.e. an interest in the land). (see Real Property Act Part 7A)

Summary

Deciding which process to use to remove a caveat depends on the circumstances. If:

  • the caveator no longer has an interest or wishes to withdraw, they can do so by a formal withdrawal;
  • you wish to remove the caveat and consider a dispute unlikely, you should file an Application for Preparation of Lapsing Notice;
  • the need to remove the caveat is urgent, or you anticipate a dispute, an application to the Supreme Court may be the best option.
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What is a Caveat?

A caveat is a type of statutory injunction preventing the registration of particular dealings with real property (i.e. real estate). It is a formal public notice or warning advising that there is an interest on the property for a particular reason.

The word caveat means ‘beware’ and lodging a caveat warns anyone dealing with the property that someone claims a priority interest in that property. The person lodging a caveat is a caveator.

Reasons for Lodging a Caveat

If you have a genuine interest in land (such as a registered mortgage), you may lodge a caveat to prevent registration of another dealing and protect your legal position. This is known as a caveatable interest.

Caveatable interests include:

  • a registered or equitable mortgage
  • a transfer
  • a purchaser under an agreement for sale
  • a tenant (in certain circumstances);
  • a registered proprietor and
  • contractual rights.

In NSW, the Real Property Act 1900 governs caveats. When a caveat is lodged at NSW Land Registry Services (NSWLRS), it prevents the registration of further dealings on the property’s title until the caveat:

  • is formally withdrawn by the caveator;
  • lapses;
  • is removed by a court order; or
  • the caveator consents to a registration by another party dealing with the property’s title.

Anyone with an interest in land or who wishes to claim an interest may lodge a caveat. A caveat can also be lodged by someone with an Australian court order restraining a registered proprietor from dealing with the property.

In NSW lodgement of caveats is electronic by a subscriber to PEXA (such as a solicitor or a licensed conveyancer).

What Detail Does a Caveat Require?

In NSW, when lodging a caveat, you need to include:

  • the caveator’s name and residential address or registered office, including an address for service of notices;
  • the name and address of the registered proprietor (we suggest that you do a title search to ensure the correctness of the information);
  • reference details for which the caveat relates;
  • particulars of the legal or equitable estate of interest;
  • a verified statutory declaration; and
  • the signature of the caveator, lawyer or another agent of the caveator.

What if I Incorrectly Lodge a Caveat Without a Caveatable Interest?

Only someone with a caveatable interest can lodge a caveat. Lodging a caveat without reasonable cause is a serious matter. A court may order you to compensate anyone who suffers a financial loss as a result of your incorrect caveat.

Challenging or Removing a Caveat

Ways in which a caveat can be challenged or removed include the property owner issuing a lapsing notice and the caveator submitting a withdrawal of caveat form.

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Parents lending to their children

Parents making loans to children

To protect your loan to your children do a legally prepared loan agreement.

A Loan to my child seems harsh

There is nothing wrong with helping your children financially. It is becoming increasingly popular to help out children with a home deposit, but giving away the money has real risks. With loans to children, don’t rely on a verbal agreement. A loan agreement protects the money in case for example:

1. a child divorces;

2. a child goes bankrupt;

3. a child develops a drug dependency or a mental illness; or

5. you run out of savings to pay for assistance required in your old age

Documenting loans to children

Rather than giving your children money, why not lend them money ‘payable on demand’? Treat yourself as if you are a bank, and your children are borrowers. You can then call in the loan if something goes wrong.

A loan agreement protects your interests by putting rules about the loan in writing. In future you can forgive the loan, either during your lifetime or in your Will.

Any tax issues?

There are none if the interest rate for the loan is ‘as advised by the Lender’.  Whilst the interest rate is zero there are no income tax issues.

What is the status of a loan agreement vis-a-vie a mortgage?

If you lend your child money and a bank is also providing them with a loan, the bank lodges a mortgage over the property.

Making a Loan Agreement payable “on demand” does not change the precedence of a mortgage over the property over your rights to repayment. However, repayable ‘on demand’ rather than specifying circumstances for repayment (e.g. house sale, separation, divorce) protects you as it extends the circumstances in which the loan is repayable.

Your loan agreement should give you a right to lodge a caveat over any real estate your child owns in Australia. If there is an existing mortgagee it will be difficult to lodge a second mortgage over the property.

Does the bank (with a mortgage over the home) need to be consulted about a Loan Agreement?

Second mortgages are complex, expensive and rare. An alternative is to lodge a caveat over the property with the loan agreement attached after the settlement.

If your child separates, a professionally prepared loan agreement should ensure that the loan is paid out prior to any payout to their ex-partner.

How to lodge a caveat or mortgage in NSW using a loan agreement

  1. All parties sign the Loan Agreement.
  2. Engage a subscriber to PEXA (such as a lawyer) to electronically register a caveat or mortgage against the title of the property with NSW Land Registry Services.
Conclusion

When making loans to children:

1. talk with all your children about the proposed loan;

2. to protect you and your children – lend (not gift) them money

3. don’t rely on verbal agreements –engage a solicitor to draft a loan agreement

Child Loan Agreement on back of an envelope?

Recording a ‘minute’ or IOU on a piece of paper is not sufficient evidence of the existence of a loan. Only a legally prepared loan agreement satisfies the ATO, Bankruptcy Courts and Federal Circuit and Family Court as to the existence of a loan.

Son refuses to repay father

In Berghan v Berghan [2017] QCA 236 a son refused to pay back money he borrowed from his aged father.

The son’s company suffered financial stress. The father lent his son money. The son then spent more using his father’s credit card.

The District Court held that there was no written loan agreement, the father failed to prove a legal binding agreement, and that the monies were a gift.

The Judge determined that:

  • The son’s promise to look after his father in old age was just a moral obligation.
  • In making the payments to the son, for the benefit of the company, the father was simply discharging his parental obligations. This is because the son’s daughter was an employee at the son’s company. The money was therefore of a charitable nature. The father was protecting the son’s company so his daughter would keep her job.
  • The father allowed the son to use the credit card when the son was injured and impecunious. These circumstances are charitable.

The Court of Appeal overturned the District Court decision, holding that the amounts were loans and that a child loan agreement was inferred.

In setting aside the decision, the Court determined that:

  • The lengthy period it took the father to demand the money did not count against his assertion that a breach of contract existed. Post-contractual conduct is not taken into account when interpreting the terms of a contract.
  • The father’s motivein transferring the money to the son was not relevant.

The Court said that it was an “inescapable conclusion” that the monies were paid with an understanding that they would be repaid. The transactions amounted to a loan contract.

This decision illustrates the perils of not signing a loan agreement.

Additional money to help child buy first home

If you want to help your child with the deposit on their home or they need more equity, you can do a loan agreement and lodge a caveat over the property after the mortgagee has registered the mortgage.

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Capital Gains Tax Rollover Relief

Capital Gains Tax

Capital Gains Tax (“CGT”) is payable pursuant to the Income Tax Assessment Act 1997 (“ITAA”) on the disposal of assets purchased after 20 September 1985. CGT is payable on and is applied to the profit made from the sale, transfer or disposal of an asset to another person or entity. It applies to all assets but there are exceptions including:

  • the parties’ main residence (i.e. the former matrimonial home);
  • cars and motorcycles;
  • personal assets (such as a boat or household furnishings) purchased for under $10,000.00; and
  • collectables (such as artwork, jewellery, antiques or a wine collection) valued at less than $500.00.

An adjustment of property between parties to a marriage or a de facto relationship involving the sale, transfer or disposal of an asset may give rise to a CGT event.

The former Matrimonial Home

If the former matrimonial home has been the parties’ main residence, it is one of the exceptions under the ITAA and selling, transferring or disposing of it will not attract CGT. If however the property was not the main residence of the parties for a period, the situation may be different. If, for example, the property is rented out as an investment property before the parties live in it as their main residence. In such a situation, a sale, transfer or disposal may attract CGT but the assessment will be restricted to the period during which the property was rented out.

Investment Property

CGT will be assessable on the profit from the sale of an investment property or another non-exempt asset as part of a family law property settlement. It is important that a property settlement considers the payment of CGT on the sale of an asset. If the property is in the parties’ joint names (or an entity controlled by both parties), then both parties will be assessed to pay CGT on their share of the profit. If the property is in the name of only one party (or an entity controlled by one party), then that party will be assessed to pay the CGT. Discounts may apply to reduce the ‘profit’ on which the CGT is assessed.

CGT rollover relief

Where a CGT-liable asset is transferred between the parties (rather than sold) then normally CGT would apply to the transfer. If, however, the transfer of the asset is a consequence of the breakdown of a relationship, then sec 126 of the ITAA allows for “rollover relief” on the transfer. CGT can be disregarded until the party receiving the asset sells, transfers or otherwise disposes of it.

For example, CGT is not payable at the time when an investment property is transferred to a party following the breakdown of a relationship. The party receiving it will be liable to pay the tax on any gain made on a subsequent sale or transfer of the asset.  The CGT is calculated as though that party had owned it since their former partner acquired it, including using their former partner’s cost base for the asset.

Rollover relief only applies if:

  • If the asset is transferred between parties to a marriage or a de facto relationship or from a company or a trust to one of the parties; and
  • The transfer is made in accordance with a court order, an arbitration award, or a financial agreement under the Family Law Act.

Will CGT be included in the property pool?

The leading authority on CGT is the case of Rosati and Rosati, where the Full Court of the Family Court outlined the following principles:

  1. Whether the incidence of CGT should be taken into account in valuing a particular asset varies according to the circumstances of the case, including the method of valuation applied to the particular asset, the likelihood or otherwise of that asset being realised in the foreseeable future, the circumstances of its acquisition and the evidence of the parties as to their intentions in relation to that asset.
  2. If the Court orders the sale of an asset, or is satisfied that a sale of it is inevitable, or would probably occur in the near future, or if the asset is one which was acquired solely as an investment and with a view to its ultimate sale for profit, then, generally, allowance should be made for any capital gains tax payable upon such a sale in determining the value of that asset for the purpose of the proceedings.
  3. If none of the circumstances referred to in (2) applies to a particular asset, but the Court is satisfied that there is a significant risk that the asset will have to be sold in the short to midterm, then the Court, whilst not making allowance for the capital gains tax payable on such a sale in determining the value of the asset, may take that risk into account as a relevant s 75(2) factor, the weight to be attributed to that factor varying according to the degree of the risk and the length of the period within which the sale may occur.
  4. There may be special circumstances in a particular case which, despite the absence of any certainty or even likelihood of a sale of an asset in the foreseeable future, make it appropriate to take the incidence of capital gains tax into account in valuing that asset. In such a case, it may be appropriate to take the capital gains tax into account at its full rate, or at some discounted rate, having regard to the degree of risk of a sale occurring and/or the length of time which is likely to elapse before that occurs.”

Whether CGT will be taken into account in calculating the net asset pool will depend upon the circumstances of that individual case.

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Priority Notices in NSW

A priority notice is a form of land dealing which, once registered on title:

  • acts as a notice to the public that someone intends to lodge a dealing on a title (e.g., a transfer, lease or mortgage); and
  • temporarily (i.e. for the period of the priority notice) prevents the registration of other dealings to preserve the priority-on-title of the dealing covered by the priority notice. Subsequent dealings are noted as ‘unregistered dealings’ until the priority notice is withdrawn or lapses.

So if for example you intend to lodge a transfer, you can register a priority notice to hold the transferee’s place on title until settlement.

Lodgement, duration and cost

Priority notices can only be lodged online via PEXA.

A priority notice’s initial priority period of 60 days from the date of registration can be extended once for 30 days. However, it can be withdrawn before the end of the 60 days (or a 30 day extension).

Priority notices cost $40.31 to register, $16.70 to extend, and $16.70 to withdraw. Lodgement and withdrawal of a caveat costs $147.70 to register.

Pros and cons

Pros

  • they are cheaper to register than caveats
  • they are quick and easy to lodge
  • registration of a priority notice does not require a caveatable interest–the only requirement is that you are a party to a land dealing
  • a single priority notice can remain on title for 60 to 90 days, and
  • sequential priority notices can be lodged without limit in relation to the same land dealing (when a previous priority notice lapses).

Cons:

  • unlike a caveat, a priority notice is time limited and lapses, and
  • priority notices do not prevent registration of all subsequent dealings (e.g. a caveat is not subject to a priority notice and there can be competing priority notices).

Priority notices vs caveats

One disadvantage of priority notices is automatic lapsing. After a priority notice is registered, subsequent dealings lodged for registration are noted on title as ‘unregistered dealings’ until the priority notice dealing is registered or the priority notice lapses or is withdrawn.

If the relevant dealing cannot be registered within the priority notice period, an unregistered dealing noted on title can be registered immediately on the lapse of the priority notice before a second priority notice can be lodged.

Consequently, if there is a caveatable interest, it may be preferable to lodge a caveat than a priority notice, especially if the registration date of the dealing is uncertain. A caveat remains on title indefinitely, preventing virtually all dealing with the title until it is either withdrawn (e.g., when the caveator receives payment) or is lapsed by the owner or an interested person. As lapsing can be complex (involving court proceedings if the caveator defends their caveatable interest), a caveat gives stronger protection than a priority notice for the priority of a proposed dealing.

Priority notices and caveats have distinct purposes:

  1. the priority notice preserves the priority of a dealing to be lodged for registration later;
  2. the caveat acts as a form of security and a warning to third parties that the caveator claims an equitable or legal interest in the land.

Where there is a caveatable interest, either can be used to protect the priority of an impending dealing. However, where a caveatable interest exists, registering a caveat is a safer bet.

Conclusion

Although priority notices can be used as a quick and cheap tool to preserve a future dealing’s priority on title, it is important to consider whether:

  • the dealing will be registered within the priority notice period, and
  • whether, in the circumstances, a caveat should be lodged instead.
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What is a Reseal of Probate?

The effect of a Grant of Probate or a Letter of Administration.

When a person dies the executors named in the person’s Will must apply to the Supreme Court of NSW for a grant of probate for the Will made by the deceased to be recognised. A Grant of Probate allows the executors to withdraw the assets from different entities. Until it is issued, none of the assets of the deceased can be distributed to the beneficiaries named in their Will.

If the deceased did not have a will, a letter of administration is granted to an administrator.

What is a Reseal of Probate?

A reseal of probate is the expression used when you need to apply to another state’s Supreme Court, so that a Will that has already obtained a grant of probate in one state, can be recognised in another state. Once a reseal of probate has been granted, the executor can also deal with the assets under the Will that are not located in the state where the original grant of probate was issued.

Obtaining a Reseal of Probate in NSW

The executor or administrator of deceased estate in another jurisdiction obtains the grant of probate or administration in the state or country where the deceased passed away.

However, a grant of probate is state-based and probate laws can differ between states and countries. A deceased’s assets, such as shares or investment properties, may be in various locations. Assets not located in NSW cannot be dealt with under a NSW grant of probate

Rather than requiring a fresh application for a grant of probate in NSW, you can apply to the Supreme Court of NSW asking that it recognise the original grant by resealing the original grant with the seal of the Supreme Court of NSW.

Not all foreign grants can be re-sealed. The Supreme Court of NSW will only recognise grants made in one of ‘Her Majesty’s Dominions’ (being certain Commonwealth countries and other Australian States and Territories. Probate granted in Western Australia , Northern Territory, South Australia, Queensland, Victoria , Australian Capital Territory or Tasmania can be resealed with the seal of the Supreme Court of NSW.

Why do I need to obtain a Reseal?

The Grant of Probate is proof that the named executor or administrator is authorised to deal with the estate’s assets. The asset holder (such as a bank, nursing home, share registry or NSW Land Registry Services) may require the grant before releasing the asset. If the Grant has been obtained outside NSW, the asset holder may require the Supreme Court to approve the Grant.

What is the effect of a Reseal of Probate or Reseal of Administration?

A re-sealed grant of probate or grant of administration made in another state or country has the same effect and operation in NSW. A resealed foreign grant must be accepted as if it had been made by the Supreme Court of NSW. The executor can then gain access to and distribute to beneficiaries the deceased’s assets located in NSW.

Can I avoid having to obtain a reseal in NSW?

Depending on the type, size and value of the asset(s) located in NSW, you may be able to avoid having to obtain a reseal in NSW by signing a declaration and/or indemnity as required by the asset holder. Each asset holder will have their own requirements. You should provide them with proof of the original grant and death certificate and ask them what their requirements are to release the assets. Shares may be released or transferred without the need for the grant to be resealed in NSW if it has been obtained in Australia and a section 1071B statement (which may be downloaded from the share registry) is completed.

How can I obtain a reseal in NSW?

An application for Reseal of probate must be made using the Court form accompanied by the information required by the legislation and rules of court. The process involves filing Court documents and advertising requirements.

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Home ownership and your Will

Real estate is one of the most valuable assets people own during their lifetime. Property owners may not realise that whether or not real estate passes to the beneficiaries named in their Will depends on the type of ownership.

Sole Ownership, Joint Tenants or Tenants In Common?

There are different ways to be the legal owner of a property asset. Each form of ownership has a different implication when it comes to deceased estates, so it is important to understand which applies to you.

Sole ownership means the property is exclusively owned by a single person and no other person has any interest in the property asset. If the deceased person was the sole owner of the property, the asset usually forms part of the estate for distribution in accordance with the Will (if there is one).

There are two ways of holding joint property. Where two or more people own property, they can hold it jointly as joint tenants or as tenants-in-common. The mode of ownership is significant and dictates what happens to the property on the death of one of the joint owners.

joint tenancy is the more common form of ownership and can be thought of as similar to a joint bank account. Ownership as tenants in common can be with two or more people and in equal or unequal shares.

Property Ownership as Joint Tenants

Joint tenancy comes with the ‘right of survivorship’. Owning a property as joint tenants means that when one joint owner dies, their interest in the home passes to the surviving joint owner, irrespective of what is in the deceased person’s Will. The deceased person’s share is not included in the deceased estate for distribution to beneficiaries.

The property will usually transfer to the surviving joint tenant without having to go through the courts. A copy of the death certificate is generally required as proof of the death.

Property Ownership as Tenants in Common

If the deceased person owned a property with someone (e.g. a spouse, partner, or someone else) as ‘tenants in common’, each owner (or ‘tenant’) owns a portion of the property asset. The ownership need not be in equal shares – it can be split any way the tenants in common agreed on when they purchased the property.

What happens to deceased estate when a tenant in common dies?

If a property is owned as tenants-in-common, there is no right of survivorship. If one of the joint owners dies their share of the property does not automatically go to the surviving owner. The deceased owner’s share of the property becomes an asset of their deceased estate for distribution in accordance with their Will (or if the person has no Will, as per the laws of intestacy).

What if joint owners’ circumstances change?

Owning property as joint tenants may be preferable for many people. However, difficulties can arise if circumstances change. For example, in the event of a relationship breakdown, a joint tenant may no longer want their share of the property to pass automatically to their estranged spouse or partner on their death.

 Can ownership be changed from joint tenants to tenants-in-common?

It is possible to apply to NSWLRS to have the ownership changed from joint tenants to tenants-in-common without the consent of the other property owner(s). Once registered at NSWLRS, a new certificate of title will be issued showing the registered owners as tenants in common (expressed in parts such as “1/2”).

There is a risk in that a person may believe their property will pass according to their Will, but in reality it may not. If you are in doubt about the mode of holding for any jointly owned property you have, and want to confirm what implications this has on your Will, seek advice by calling Anthony Steel on 0451 118 644.

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Superannuation and estate administration

Superannuation is becoming an increasingly significant asset. For many Australians, their super is one of their largest cash assets. Part of the administration of an estate may require superannuation to be dealt with.

How do I give superannuation away when I die?

Your Will is a legal document that deals with and distributes assets that you own. Superannuation does not normally form part of your estate and you can’t include it in your Will. It usually goes directly to the person that you nominate to receive the benefit from your superannuation.

Superannuation can not be left to someone in your will. If you don’t understand how you can distribute this money to your beneficiaries and erroneously include it in your Will it can cause problems.

Why can’t I leave Superannuation in my Will?

Unfortunately, when making a Will, the Will-maker can mistakenly believe that super is owned by them and will be distributed along with the rest of their estate. However, your superannuation isn’t considered as one of your assets and cannot be included in your estate.

Due to the way in which Superannuation schemes are set up the money in your Superannuation Account is not owned by you personally. It is owned and managed by the trustee of your Superannuation Fund person who holds it on Trust on your behalf. Only the trustee can distribute the money in your account. They can distribute your superannuation to your beneficiaries, but not as part of your Will.

The Trustee cannot simply do as they like with this money; there is legislation in place to protect your super.

How can I bequeath my superannuation?

Superannuation does not automatically form part of your Estate. You should ensure that you contact your Super Fund with information about your beneficiary or Estate.

What is a death benefit nomination?

A death benefit nomination is a non-binding nomination made by you. In it you express your wishes to the trustee of your superannuation fund about who you would like to receive your death benefit on your death.

What is a binding death benefit nomination?

A binding death benefit nomination is a binding nomination made by you directing the trustee of your superannuation fund who to pay your death benefit to on your death. Traditionally, binding death benefit nomination lapse after three years, so you need to update it before it expires. However, some funds now allow for non-lapsing binding nominations which need not be renewed.

A binding death benefit nomination specifies that the trustee must distribute superannuation in your account to the beneficiaries you nominate.

How do I ensure that my super is distributed according to my wishes?

You can ensure that your Superannuation is distributed according to your wishes by notifying your Superannuation Fund with your Binding Nomination and by inserting a Superannuation Will Clause in your Will.

In your Will you can stipulate who is to receive the benefits of your superannuation account. You nominate through your superannuation fund your legal representative as the beneficiary of your superannuation, who can then distribute it according to your Will.

For this strategy to work, your Will must include a superannuation clause and you must keep the binding nomination and the beneficiaries in your Will up to date.

A simpler option is to make a binding death benefit nomination with your superannuation fund and the money will be distributed to the named beneficiaries on your death.

There are only certain types of people who you can nominate under a binding death benefit nomination. These include a spouse, a de facto, children (in some circumstances including step children), dependents, inter-dependents, and your estate.

How do I make a Binding Nomination with my super fund?

You nominate someone using a death benefit nomination form or a binding death benefit nomination form.

What happens if I don’t make a Binding Nomination?

If you don’t make a binding nomination or it has expired at the time of your death, the trustee of the super fund has the ultimate discretion about who will receive that benefit. They can either pay the money directly to your estate or decide which of your beneficiaries should receive it.

Mid Mountains Legal are experienced in working with Wills and Estates and can ensure your peace of mind with comprehensive legal advice and guidance.

Contact Mid Mountains Legal on 02 47593742 or 0451118644 for a free phone consultation about your Will and distributing your Superannuation.

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