JJ Honeyman & Associates

Level 5 / 300 George St Sydney CBD NSW 2000

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0292313344

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Established in 1973, we are a small, friendly firm centrally located at Wynyard in the CBD and dedicated exclusively to the delivery of prompt and personalised service.

Established in 1973, we are a small, friendly firm centrally located at Wynyard in the CBD and dedicated exclusively to the delivery of prompt and personalised service.

Our goal is to simplify and transact the legal processes with regular and effective communication so each stage and the satisfactory finalisation of the matter is achieved with minimum complexity and maximum efficiency, whether concerning a:

SALE – PURCHASE – MORTGAGE – LEASE – WILL – POWER OF ATTORNEY

Initial consultations are free of any obligation or charge to guide you on:

  • Negotiating the best price – Preliminary Steps – Preparing / Reviewing Contracts
  • Finance / Stamp Duties – Private Treaty – Public Auction
  • Pitfalls (eg: pre-purchase inspections – avoiding the lemon)

Wills – Powers of Attorney or Guardianship – Joint Owner/ Business Succession Agreements

These are expedient for financial or estate planning and may be documented at reduced cost in conjunction with a property settlement.

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Why you should start your Estate PLanning what do i do?

It’s time to address your Estate planning

‘Estate Planning’, it’s something that we put off.  Perhaps because we don’t feel like we have an ‘estate‘ or perhaps our ‘estate’ is too complex.  Some have lodged a will 20 years ago, the majority of us still haven’t ever got around to it.

The truth is, we find it daunting.  We think of it as confusing, complicated and expensive.  So we put it in the too-hard box.

With the CoronaVirus forcing us into mandatory self-distancing, there has never been a better time to get started.  Especially for those of us that are thinking about our own mortality of late.  End-of-life care is mandatory to start planning for and the earlier you start thinking about it, the better.

Why is it important to have end-of-life documents in place?

Because you could be leaving an expensive, time-consuming, emotionally draining, legally complex mine-field for your dear loved ones.  We’ve seen some of the

Let’s have a look at some of the things you should be considering as part of your end-of-life planning.

Powers of Attorney

In New South Wales a Power of Attorney is known as an Enduring Guardian. This covers the appointment of another person to make personal decisions or financial decisions (or both) on your behalf, in the event you no longer have the capacity to do so.

The appointed person you nominate is known as an “attorney”, and you can choose when their role as your “attorney” is to start.  For example, when the document is signed, or when you cease to have decision-making capacity, or on a particular date that you nominate.  It’s very important to nominate a Power of Attorney, even if you have full capacity now, as it will allow you to specify in detail the types of decisions you would like another person to make for you in the event of unforeseen circumstances.  Note you can appoint different Attorneys for financial and personal matters – you know your contacts, some are going to be great at the financial stuff, but possibly they are not going to know enough about your personal needs in relation to health and personal care!

Advance Health Directive

In contrast to the Power of Attorney / Enduring Guardian, there are Advance Care Directives.  The requirements do vary from state to state in Australia, but essentially it is about your future health care.  It should ideally be a constantly changing document that outlines what you would want or not want in the event that you were unable to make or communicate your own preferences in relation to your health care.

For example, if you had a type of cancer, at what point would you want to discontinue treatment?   At what point is the quality of life compromised for you? When on a life support machine, when would you want a DNR (Do Not Resuscitate) to be put in place?

The Advance Care Directive would not appoint someone to make decisions for you, it would merely state your wishes or direction for any health care you might receive for various conditions in the future.

For more information about the various state laws surrounding Advance Care Directives in your area, you will find forms, supporting information, guides, fact sheets and checklists.

Wills

We’ve all heard the horror stories about people dying ‘intestate‘ or without a Will.  But the sad fact is, that not a lot of us have a will in place!

Keeping an effective Will that reflects your true wishes is such an important duty you owe to those important to you.  Not only will it ensure your loved ones are appropriately provided for, but it will avoid any disputes arising in the event that you pass away.

As your life is constantly evolving, a will should be reviewed every 2-3 years to ensure that it reflects your intention – your wishes and your inclusions (any assets which may have changed over the time period).  It’s generally best to have an entirely new document prepared.

An executor will need to be appointed.  An executor will be the person that you nominate who deals with your estate or assets and will administer your Will.  You can nominate a professional executor (such as your accountant or your lawyer), or a close friend or family member.  It just comes down to selecting someone you can trust and will take the task at hand in a mature and methodical fashion.  If you elect to have a professional person administer your estate, you’ll need to include a clause to make payment to this executor at the time of administration.

Does your will consider things like:-

  • What happens if you remarry?
  • Do you have allocations for step-children?
  • What happens if your children marry?
  • Have you appointed a guardian for your children if they are under 18 years old?
  • Allocation of specific gifts of property, shares or cash
  • Do you want to divide your estate equally or in unequal shares?
  • Have you made your funeral wishes clear?
  • Do you need to create a trust to protect your childs inheritance until they turn 18 or 25?

Mirror Wills

For couples, a ‘Mirror Will’ maybe something to consider.  If you are married or in a defacto relationship, a will can essentially be mirrored if they say the same thing.  For example, if they leave everything to each other and then upon the death of both, the estate needs to pass to their children (if they have any).

Testamentary Trusts

Such a trust is formed to provide a greater level of control over the distribution of assets to your beneficiaries.  It begins after the Will maker dies, with certain provisions of the Will operating as the trust deed.  A key benefit of holding assets on trust is it attracts a lower tax rate (depending on the circumstances).

There are two main types of testamentary trusts commonly used:

Discretionary

Where the executor gives the beneficiary the option to take their inheritance (or part of the inheritance) via a testamentary trust.

Protective

Where the beneficiary must take their inheritance via the trust, and doesn’t have the option to appoint or remove trustees (unlike in a discretionary testamentary trust).  This type is better in situations where the beneficiary may be too young, or not capable of making informed decisions!

Death Benefit Agreements and Death Benefit Nominations

Superannuation Funds are not factored into your ‘estate’ when you pass away.  So it is very important that you check your super documentation and make sure that you have nominated your beneficiaries.

If there is no Agreement or Nomination in place, the surviving trustees are able to distribute the monies at their discretion.  This may not be what you had intended, as they may simply distribute it to themselves!

You should update the Agreements and Nominations regularly.  In fact, in some cases a binding Death Benefit Nomination may actually expire after 3 years if it is not confirmed.

A Death Benefit Nomination can be either binding or non-binding on the trustees who need to allocate the relevant amounts to be paid on your death.  It will also expire after 3 years (unless you confirm it); a Death Benefit Agreement, however,  is binding and remains permanent until a member revokes or replaces the agreement.

OK, I’m convinced, what do I do?

Fill in the contact form below and we can send you some recommendations based on your situation.  Alternatively, peruse our directory or Tools and Resources for further information.

Why you should start your Estate PLanning what do i do?

Loss of Capacity SMSF what do i do

Published on ClearLaw legal bulletin

Author: Maddocks Lawyers

 

A loss of capacity of a person can occur when a person is unable to understand the nature of a document or is unable to communicate a decision. As the population ages, issues can arise which can impact a person’s ability to make decisions – including a member’s ability to make decisions relating to their SMSF. Trustees have only 6 months from a person’s loss of capacity to take steps to ensure the fund remains compliant so it is important to have a contingency plan in place.

Alexandra Hodsman, Maddocks Lawyers

An aging population

The federal government has predicted that by 2022 there will be four million people in Australia aged between 65 and 84 years. The most recent ATO statistics show that at 30 June 2017, there were just over 1.1 million SMSF members, of whom 83% were 45 or older. The average member age was 58 years old.

In the coming years there will be a significant number of SMSF trustees entering an age where the deterioration of mental capacity is a probable risk. Planning for the eventuality of loss of capacity is just as important as estate planning.

Rules governing trustees and members of a sole-member SMSF

Section 17A(2) of the Superannuation Industry (Supervision) Act 1993 (SIS Act) states that for a sole-member SMSF to be compliant, the member must be one of only 2 trustees. Alternatively, the member can be the sole director of the corporate trustee, or one of two directors of the corporate trustee.

However, the SIS Act also contemplates a scenario where a person who has lost capacity can remain as a member despite needing to be removed as trustee. Section 17A(3) says that a SMSF will still be valid if a member loses capacity if:

  • the legal personal representative (LPR) of a member of the fund is a trustee/director of the corporate trustee; and
  • the LPR has an enduring power of attorney in respect of the member of the fund.

Accordingly, a SMSF will still be compliant where there is one sole incapacitated member with an LPR acting as trustee/director of the corporate trustee in place of that member.

For example:

Jane is the sole member of a SMSF and is one of two trustees. The other trustee is her husband John. She has recently been diagnosed with Alzheimer’s disease and has an enduring power of attorney in place appointing her daughter Emma as her LPR. In every case the deed should be reviewed relating to how trustees are removed and appointed, however the trustee with capacity should effect the replacement of Jane as trustee by appointing Emma in her place. Jane remains as a sole member and the SMSF remains valid.

Enduring power of attorney

An enduring power of attorney is a legal document by which a person appoints another person who can act – as legal personal representative – for the incapacitated member during the period of incapacity. It allows the attorney to make certain decisions on the person’s behalf. These decisions can be for either financial or personal matters, or both.

There are some points to note about the power of attorney:

  • it must be in force before the member loses capacity;
  • it must be current; and
  • it must accord with relevant state or territory legislation.

What if there is more than one attorney appointed?

Where an enduring power of attorney is executed in favour of multiple attorneys, one or more of those attorneys can be appointed as trustee/corporate director in place of the member – noting that the maximum number of SMSF trustees/corporate directors contemplated by the SIS Act is 4.

It is important to note whether multiple attorneys have been appointed to act ‘jointly’ or ‘severally’ under an enduring power of attorney, as this will affect the decision-making process by which they appoint one or more attorneys to act as trustee/corporate director. If one out of four attorneys has the power to act severally, then one attorney has the power to make decisions on behalf of the incapacitated member without consulting the other attorneys – and could conceivably accept an appointment to act as the only trustee/corporate director in place of the incapacitated member. However, if each attorney is appointed ‘jointly’ then all decisions must be made as a group – that group would need to make a decision about who is to be appointed as trustee/corporate director.

Once appointed, either as an individual trustee or director of a corporate trustee, those persons will be bound by legal and fiduciary obligations by virtue of their new position.

Steps to effect the change

Whether or not you can remove and appoint an individual or a corporate trustee will depend on the terms of the trust deed governing the SMSF. In the case of replacing directors of a corporate trustee, the constitution of the company will set out the process for removal and appointment.

Usually a SMSF trust deed will require any appointment or removal of trustees to be in writing.

You should also check the terms of the enduring power of attorney to ensure that it is valid and contemplates an attorney making financial decisions (whether jointly or severally) on behalf of the incapacitated member.

Lost capacity court applications what to do

The New South Wales Succession Act (“the Succession Act”) and associated regulations allows for an application to be made to the Court for protection of a person who has lost testamentary capacity. An order can only be made if the person who has lost capacity is alive at the time the order is made by the Court.

Under the Succession Act an application can be made to the Court for an order authorising:

  1. A Will to be made or altered, in specific terms approved by the Court, on behalf of a person who lacks testamentary capacity; or
  2. A Will or part of a Will be revoked on behalf of the person who lacks testamentary capacity.

The Court Application

In order to make the application a person must first apply to the Court for leave to make the application.

The application for leave must include the following information:

  1. A statement about the nature of the application and the reasons why the application is being made;
  2. Evidence of the lack of testamentary capacity of the person for whom the order is sought;
  3. Estimates of the size and character of the Estate of the person for whom the order is sought;
  4. A draft of the proposed Will or revocation that the applicant wants to be approved by the Court;
  5. Evidence of the person’s wishes including any previous Wills made by them;
  6. Evidence of the likelihood of the person acquiring or regaining testamentary capacity;
  7. Evidence of any person who would be entitled to benefit if the person died without a Will (i.e. died intestate).
  8. Evidence of any person who might reasonably be expected to be included in the Will; and
  9. Evidence of any charitable gift that the person might reasonably be expected to make in their Will.

It is apparent from the above list of requirements that a large amount of evidence is required to be put before the Court before they will even consider granting leave to make an application for an order.

This is why you need to seek expert legal advice from a Wills and Estates lawyer if you wish to apply to the Court for an order.  As the proceedings are heard in the Supreme Court this requires a lawyer with knowledge and proficiency in this jurisdiction who is aware of the procedural and legislative requirements to obtain a successful order.

The Court hearing of the application for leave

Once the application for leave has been made the Court will hear the application, grant leave to make the application and make the orders sought if it is satisfied on the following matters:

  1. There is reason to believe that the person is, or is reasonably likely to be, incapable of making a Will; and
  2. It is appropriate for the order to be made; and
  3. The proposed Will, alteration or revocation is one that would have been likely to have been made by the person if they had testamentary capacity; and
  4. Adequate steps have been taken to allow all persons with a legitimate interest in the application to be represented in the proceedings.

Our expert Wills and Estates lawyers have the experience you need to apply to the Court for protection of a person who has lost testamentary capacity.

At Heckenberg Lawyers we don’t take our clients’ confidence for granted: we work hard to earn it by providing an efficient, cost-effective service which puts your interests first and doesn’t cut corners. We take pride in achieving repeat custom and winning clients by word of mouth recommendation.

If you need advice about a Will or an Estate matter please call 02 9221 2779 or email info@hecken.com.au to arrange an initial consultation with principal lawyer Graeme Heckenberg at our centrally located Sydney offices.

See our Will Dispute Lawyer & Contesting Wills page for more information on the Wills & Estates services we provide or contact us for advice specific to your situation.