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TYPES OF WILLS: CHOOSING THE RIGHT ONE THAT SUITS YOUR CIRCUMSTANCE

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Various studies conducted by the Public Trustee in WA and NSW show that up to 45% of Australians do not have a will. Of those that do have a will, many are outdated and not sufficiently flexible to suit the more frequently complex nature of many will maker’s families and financial circumstances.

Wills can be generally to drafted to suit a wide range of aims the will maker may have, whilst also being structured with the testator’s personal and financial circumstances in mind.

What is a Simple Will?

Whilst undoubtedly the predominant type of will is a simple will, this structure generally has little to no asset protection built into its terms and tends not to distribute the estate in a very tax advantageous way.

If your spouse or one of your children goes through a subsequent relationship breakdown or enters into bankruptcy proceedings, for example as a result of a failed business venture, whatever they have inherited from your estate may be at risk of being subject to a Family Court order or open to dissipation by a Trustee in Bankruptcy.

What is a Testamentary Trust?

Whilst it is never possible to account for every possible contingency and thereby “rule from the grave”, if protecting assets and attempting to retain them in the family is of major importance to a client, a testamentary trust can be of great benefit. This is particularly the case where the estate is valued at more than $500,000, holds diversified assets, such as investment properties, or the will maker has descendants who are minors (under 18).

A testamentary trust is a trust that is created by a will and only comes into existence on the death of the will maker. It can run for varying lengths of time, provided it does not run over the 80 year rule against perpetuity

Benefits of a Testamentary Trust

Typically the two major benefits of a testamentary trust, that other types of wills do not generally include, are asset protection and taxation benefits.

Testamentary trusts can be mandatory or optional, generally at the election of a “Primary Beneficiary” – the beneficiary that you want to primarily benefit under your estate such as your spouse or child – and can hold all or part of your estate.

Provided the Primary Beneficiary has reached “preservation age” – being the age you decide they have sufficient financial responsibility to control the assets – and is not “automatically disentitled”, for example by being embroiled in a relationship breakdown or being declared bankrupt, the will can advance them your beneficiary the option to use the testamentary trust from which their gift of your estate will be transferred, or instead to avoid the trust altogether and take their gift absolutely.

A testamentary trust can of course be made mandatory if additional asset protection is required.

Important positions within the trust include the trustees, as this party will have the discretion to determine if and to whom distributions will be made. To improve asset protection, an independent party or someone the will maker particularly trusts may be appointed to act as the trustees until such time as the Primary Beneficiary has reached preservation age (and is not disentitled). After this time, unless the Primary Beneficiary triggers a risk event such as those I’ve referred to, they effectively control the trust.

In the event of a risk event, such as relationship breakdown or bankruptcy, a Primary Beneficiary becomes automatically disentitled to hold important offices within the trust, thereby aiming to protect the assets of the testamentary trust from the reach of various creditors or from the actions of the Primary Beneficiary themselves.

The other benefit of a testamentary trust, as opposed to bequeathing assets absolutely, is taxation minimisation. Transferring the assets to a testamentary trust can allow income or capital generated by the trust to be distributed amongst beneficiaries in the most tax effective way, for example to non-income earning spouses or children. Children in particular receive significant taxation benefits under a testamentary trust, as currently they are entitled to the full adult tax free threshold and marginal tax rates thereafter. In the 2015 financial year, a child could therefore receive $18,200 tax free from a testamentary trust.

If you have multiple children or grandchildren, it is easy to see the significant taxation benefits that can be obtained through the use of a testamentary trust as opposed to bequeathing assets absolutely to a spouse or child under a simple will.

ABOUT THE WRITER

Kelvin has over 14 years’ experience practising law in Western Australia. He is the founder and Principal Partner of Tang Law based in Perth, Western Australia. Kelvin is a Registered Migration Agent (MARN: 1386452) and has extensive experience in providing service on Commercial Law, Dispute Resolution & Litigation, Family Law, Wills & Estate Planning and Settlements.

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How Do You Protect Yourself Or Your Children From Domestic Violence?

BestFamilyLawyer, BestLawyerPerth, Blog & Articles, Child Support, Divorce, Family Court, Family Court Case, Family Disputes, Family Law, Family Law Perth, 家庭法

DOMESTIC VIOLENCE

Around one in five Australian women and one in twenty Australian men have experienced violence at the hands of an intimate partner

(Statistic obtained from ABS, 2013)

 WHAT IS DOMESTIC VIOLENCE?

 

Broadly speaking, family and domestic violence is conduct that is violent, threatening, coercive, controlling or intended to cause the family or household member to be fearful. Domestic violence should not be tolerated in any form and any person who is subject to domestic violence should seek help (to the extent it is safe to do so) immediately.

 

HOW DO YOU PROTECT YOURSELF OR YOUR CHILDREN FROM DOMESTIC VIOLENCE?

If your safety or another person’s safety is at immediate risk, you should contact the police now!
If the situation is continuing and your safety is not at immediate risk, you may consider seeking appropriate orders from the courts to protect you or your children.

Restraining orders

Restraining order is the most commonly sought protection in domestic violence situations.
A restraining order is a court order intended to protect you (and your children or other family members) from harm from someone who has, or is likely to, hurt you. Generally, there are two types of restraining orders:
·         violence restraining order (VRO); and
·         misconduct restraining order (MRO).
A VRO application is usually made in person in the Magistrates Court but in some urgent situations it can be made through a police officer by telephone. Often, a VRO application in the Magistrates Court is made on an ex parte basis (meaning it was made without giving any notice to, and in the absence of, the person to be restrained). If your application is successful, an interim VRO will be granted which will be valid until the next court date and the police will serve the interim VRO order on the person to be restrained.
The aim of obtaining a VRO is to prevent the other person from committing or further committing an act of abuse towards you so the common conditions the Court imposes include stopping the other person from:
·         coming within certain distances of you;
·         attending or being near your home or place of work; and
·         contacting you in any way (including via Facebook or Twitter).
The fact that the court makes a VRO against another person does not, in itself, mean the other person has committed a criminal offence (although sometimes the police may decide to charge the other person for his/her abusive conducts). However, breaching a condition of the VRO is a criminal offence and may result in a fine and/or imprisonment being imposed.
A MRO operates similarly to a VRO with the main differences being:
·         you are not required to prove an act of abuse (which usually involve some elements of violence), rather, you will need to prove that the other party is likely to act in a way that is intimidating or offensive towards you or may cause damage to your property;
·         breach of a MRO may result in a fine being imposed but not imprisonment, which makes it less serious. 

Injunctions

In addition to restraining orders, in Family Court proceedings in relation to children you may seek an injunction for personal protection.
An injunction is an order made by the Family Court to restrain your former spouse/partner from doing certain acts or things. Under the Family Law Act, the court has the power to grant an injunction to protect the welfare of a child. The injunction may be:
·         for the personal protection of the child, the child’s parents or other carers;
·         to restrain a person from entering or remaining in a place; or
·         to restrain a person from relocating with the child or taking the child overseas.
Often, an application for injunction has to be made urgently and on an ex-partebasis.
Please note that injunction is not available to you if you do not already have Family Court proceedings on foot.
In addition to seeking orders from the courts, there are other organisations which provide supports to victims of domestic violence and it is important that you reach out for help as soon as possible.

About the Writer

Kelvin Tang

Kelvin has over 14 years’ experience practising law in Western Australia. He is the founder and Principal Partner of Tang Law based in Perth, Western Australia. Kelvin is a Registered Migration Agent (MARN: 1386452) and has extensive experience in providing family law advice to clients, making divorce applications and applying for Consent Order. Kelvin is able to offer his clients clear and practical advice in relation to children’s disputes, property settlements between married and de-facto couples, spousal maintenance and child support.
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How To Deal With Interests In Superannuation?

Australian Super, BDBN, binding death nomination, Blog & Articles, Building Disputes Litigation, Deceased estates, Estate disputes, SISA, Succession Planning, Superannuation, Supervision Act, Wills and Estates Planning

DEALING WITH INTERESTS IN SUPERANNUATION

It is a common misconception that superannuation automatically forms part of your estate when you pass away. Unless you have a binding death nomination entitling your legal personal representative to your superannuation benefits, or the trustee of your superannuation fund makes a decision to pay your benefits to your estate, your superannuation will not be considered an asset of your estate.  

Failing to have an estate plan that deals with your superannuation therefore leaves your superannuation entitlements at risk of being distributed otherwise than in accordance with your wishes. 

 

The only way to guarantee your wishes are followed is to have a valid binding death nomination (BDBN) in place. Even if your will includes a reference to the beneficiaries you would like to receive your superannuation, this is non-binding on the trustees of a superannuation fund unless you have a valid BDBN in place.  Failing this, your intended beneficiaries may be left with substantial uncertainty awaiting a decision from the trustees of the fund.
Without a valid BDBN, the trustees of the fund will have discretion as to whom, and in what shares, to pay your benefits to. The class of people entitled will depend upon the rules of the superannuation fund and the Superannuation Industry (Supervision Act) (SISA) and Regulations.
The SISA specifies “death benefit dependants” as the member’s spouse or de facto spouse, any child of the member, or any person who was in an interdependency relationship with the deceased (where both provided financial, domestic and personal support to one another).  

An example highlighting why a BDBN is essential is found in the case of Katz v Grossman. In summary, an elderly man passed away with approximately $1 million in his self-managed superannuation fund (SMSF). The deceased member’s daughter was the sole surviving trustee of the SMSF.

 

The deceased member’s will stated his wish for his superannuation benefits to be split between his two adult children, however he did not have a BDBN.

 

Due to the requirements imposed by the SISA as detailed below, the daughter acted quickly to appoint her husband as another member and trustee of the fund and promptly paid out the entirety of the father’s benefits to herself with no provision made for her brother.

 

In litigation commenced by the son, the Court ultimately found that the deceased’s members will was non-binding on his daughter as the remaining trustee of the fund, and that she had acted lawfully within her powers as the surviving trustee.

 

Without a BDBN in place, your beneficiaries will often have limited recourse against a trustee who decides to act in their own interests at the expense of other family members.

 

There are a number of cases similar to this, including in Western Australia, that show you cannot necessarily rely on even close family members to carry your wishes into effect if they are not enshrined in a binding death benefit nomination.

 

Provided a BDBN has been prepared in strict accordance with the requirements of the fund and SISA, the instructions should be binding on the trustee. This should provide greater certainty to your beneficiaries that if you were to die without a BDBN in place.
                                                                                                                                                                   

REQUIREMENTS OF THE SISA

All members of a self-managed super fund are required by the SISA to be trustees of the fund, or directors of the corporate trustee of the fund. If the fund is a single member fund, the member must be one of two individual trustees or a single director of the trustee company.

 

When a member dies or is incapacitated the member can no longer be a trustee or director of the trustee company which means the fund is no longer compliant with the Act.

Section 17A(4) of the Act gives the fund a period of 6 months after the death of a member to either distribute the member’s benefit, convert to a single member fund (in the case of a 2 member fund) or appoint the legal personal representative of the member as the replacement trustee or director. If this is not done within 6 months of death, the fund will no longer be compliant with the Act for which there may be taxation implications.

 

Where the fund is a two member SMSF, the remaining trustee has six months to introduce new members to retain its status under s 17A(1) or convert to a single member fund under s 17A(2) and pay out the deceased members entitlements – either in accordance with a BDBN or if none is in existence, at the trustee’s discretion.

 

With single member funds, major issues can arise in trying to ensure the fund remains compliant under the Act after the expiry of 6 months, most particularly where the member dies without a will. Not only does an application for administration of an Estate tend to be more complex where someone has died without a will, but delays in appointing a replacement trustee or director of a corporate trustee for a SMSF often result where there is a dispute between the administrators about how the superannuation entitlements are to be paid out.

 

I’ve seen a number of these disputes arise particularly with blended families, where a current spouse and adult children from a previous marriage may all be entitled to administration. In these circumstances negotiations can drag on for many months over how the superannuation will be distributed.
                                                                                                                                                                   

SUPERANNUATION AND FAMILY PROVISION CLAIMS

Despite the pitfalls that accompany superannuation, it is an asset that can be of great assistance to testators who anticipate family provision claims being made against the estate.

 

This is because, as mentioned earlier, superannuation is typically dealt with outside of the estate, unless there is a BDBN nominating the legal personal representative or the trustees of the fund determine that the benefits are to be paid to the estate.

 

Having a BDBN in place will ensure the payment of the superannuation benefits is not easily open to attack by a disgruntled party. 

 

Furthermore where superannuation is the largest asset to which the deceased was entitled and is dealt with outside of the estate pursuant to a valid BDBN, a potential claimant may not consider it worthwhile to commence an application for family provision. This may be so where the estate is not of a significant value – as currently any order for family provision would apply only to assets of the estate and would not extend to assets dealt with outside the estate.

 

Using superannuation can be of particular assistance to remarried spouses who wish to protect one another from family provision claims by step-children. Since 16 January 2013, step-children have been included as “entitled parties” to apply for provision from a step-parents estate where (a) they were financially dependent on the step-parent; or (b) the step-parent received more than $460,000 from the natural parent’s estate (where the natural parent predeceased the step-parent).

 

An estate plan can be structured so that, if the superannuation entitlements are large enough, they can provide solely for the spouse rather than bequeathing the spouse substantial assets through the estate – which may thereby leave it open to a family provision claim. In this way the step-parent avoids receiving any substantial benefit directly from the estate and can protect their own estate from a family provision claim by a step-child.

Writer:

Kim Samiotis is the Senior Solicitor of TANG Legal. Her areas of practice include Building Disputes Litigation, Wills and Estates Planning, Succession Planning, Deceased estates and Estate disputes. There are many criteria and conditions that apply to each of the categories and the experienced solicitors at Tang Legal are happy to provide further information on your eligibility to make or defend a claim.

T:  (08) 9328 7525 | E:  enquiries@TangLegal.com.au

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6 Key Ingredients to Successfully Collecting Your Debt

Avoid Future Debts, Blog & Articles, Consolidation Advice, Debt Problems, Debt Recovery, Default Notice letter, General Procedure Claim, Legal Letter

From overdue accounts to aged debtors, and from aged debtors to bad debts.   It is a common and repeating problem amongst all businesses.  It can be very frustrating indeed.

Here are the key ingredients to improve your chance of successfully collecting a debt.
1.         Effectively Communicate with Your Debtor
Make sure the debtor is aware of the outstanding account or the debt.   He or she may not have received your accounts.
Best way to communicate is to put your intention in writing and followed by a phone call to make sure the debtor has received your letter.
2.         Valid Legal Basis For Payment
There must be a valid legal reason for you to collect your debt.    You need to have an entitlement to be paid.  For example, a contractual right or an agreement that entitles you to claim payment.
Identify your rights and state it clearly – for example, describe the agreement, date of the agreement, terms of the agreement that the debtor is supposed to pay, particulars of your invoices, the date payment was due, and the fact that payment has remained outstanding.
Also remember to reserve these rights that you have identified.
3.         Compelling reasons for debtor to do something NOW
You need to make it compelling for the debtor to pay you, or at least respond to you and resolve the issue.   Some of the methods to compel a debtor to respond:
·         Your intention to hand over the matter to your lawyer
·         Your intention to commence legal action
·         You will hold the debtor responsible for additional costs incurred due to his or her non-compliance to your demand
·         Generally, a legal demand from a law firm has more weight because it conveys a firm message to the debtor that you are serious about the non-payment issue and the debtor should act quickly.
·         You may even attach a draft Summons of the Court.  It strengthens your message to the debtor that you are getting very serious and you will not entertain any bad excuses.
It is important that you are exercising your legal rights in demanding payment, and not “threatening” for payment.  Threats and extortion are prohibited and illegal.
4.         Set Time Limit
You should set a reasonable time frame for the debtor to reply to you.  Generally, 7 days to 14 days would be adequate.  By setting a time limit, it gives the debtor a sense of urgency to act on it immediately.
If you have a contract, you need to be aware of any terms of the contract that may have prescribed the steps and procedures you have to take in the event of a default.
You should diarise the time limit you have stipulated for the debtor to reply.  Thereafter, you may need to consider taking the next step – passing it to your lawyer for further legal action.
5.         Does the debtor have a valid reason to refuse?
Are you aware of any possible legal reason the debtor is refusing to pay you?  Some of the common reasons include:
·         It was not agreed. For example, variation or changes to the original agreement not recorded in writing.
·         Negligent on your part or failing to meet the minimum standard of care.
·         What was delivered did not match what they expected.  For example, poor quality, does not correspond to description, poor workmanship, etc.
         You may already know what reason it may be that the debtor is refusing to pay.  Be prepared for it.
6.         Be Prepared to Negotiate
If you get a response from the debtor to your legal demand, be prepared to negotiate.  Getting something is better than nothing.  You want to encourage that they respond to you and be upfront, as opposed to completely ignoring you.
You may be able to resolve it by offering a discount if the debtor pays within certain time frame, enter into a payment plan, or “make-good” whatever the debtor may not be happy about.  It is a chance to strengthen your relationship with your customer!

 

About the Writer

Kelvin Tang

Kelvin has over 14 years’ experience practising law in Western Australia. He is the founder and Principal Partner of Tang Law based in Perth, Western Australia. Kelvin is a Registered Migration Agent (MARN: 1386452) and has extensive experience in providing service on Commercial Law, Dispute Resolution & Litigation, Family Law, Wills & Estate Planning and Settlements.

About the Writer

Kelvin Tang

Kelvin has over 14 years’ experience practising law in Western Australia. He is the founder and Principal Partner of Tang Law based in Perth, Western Australia. Kelvin is a Registered Migration Agent (MARN: 1386452) and has extensive experience in providing service on Commercial Law, Dispute Resolution & Litigation, Family Law, Wills & Estate Planning and Settlements.

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How to Recover Your Debt In An Effective Way?

Avoid Future Debts, Blog & Articles, Consolidation Advice, Debt Problems, Debt Recovery, Default Notice letter, General Procedure Claim, Legal Letter

Why You Need Tang Legal to Assist Recovering Your Debt?

In 2014-2015, the Australian Financial Security Authority revealed a total of 28,228 personal insolvency activities. Of which, over 17,000 ended up in bankruptcies.

If a person is declared bankrupt, his or her financial affairs will go into the hands of the bankruptcy trustee.
Consequences, if you are a creditor, are that:

  1. You cannot bring lawsuits against the person (debtor);
  2. If you are unsecured, you join the queue with other unsecured creditors; and
  3. You know you will almost have to write-off the entire overdue account as another bad debt.

It is extremely unlikely a debtor (especially those in financial troubles) would volunteer to pay your outstanding accounts.
In fact, the longer you wait, the harder it is to collect your debt. It is time consuming and not pleasant to chase for payments, and it is very likely the debtor will simply ignore you and avoid you anyway. But it has to be done, sooner than later. This is where a formal legal demand from a law firm acting on your behalf may compel the debtor to respond to you. For general debts, there is a 6 years limitation period from when the debt is accrued before you lose your legal rights to sue.


3 Reasons to Engage a Lawyer Recover Debt


Reason 1: Effectiveness
A formal letter of demand on a law firm’s letterhead conveys the seriousness of non-payment and gives a real sense of urgency. It compels the debtor to do something.

Reason 2: Effectiveness
Forget about all the fancy arrangements with debt collectors, your objective is simple – recover your money. Appoint a lawyer, exercise your legal rights and get your money back.

Reason 3: Yes, still Effectiveness
Lawyers understand the court procedure and process. Good lawyers WILL help you save unnecessary costs and effectively resolve your matter.

Please do not wait, ACT NOW! Call us at (08) 9328 7525 for more information.

April 2016 PROMOTION- $ 99 Fixed Fee Letter of Demand


For the month of April 2016, we are pleased to promote our fixed fee letter of demand – $99.00.
Letter of Demand is a legal demand and serves as final notice for your debtor to make payment within a stipulated time.
You may include a DRAFT General Procedure Claim to the Letter of Demand for an additional fixed fee of $495.00. This adds to the seriousness of and strengthens the demand.
It conveys your determination to take action, forcing the debtor to reply immediately to avoid further Court action.
Please feel free to contact our Senior Lawyer, Mrs Kim Samiotis, or our Partner, Mr Anfernee Lai at (08) 9328 7525 for more information.

About the Writer

Kelvin Tang

Kelvin has over 14 years’ experience practising law in Western Australia. He is the founder and Principal Partner of Tang Law based in Perth, Western Australia. Kelvin is a Registered Migration Agent (MARN: 1386452) and has extensive experience in providing service on Commercial Law, Dispute Resolution & Litigation, Family Law, Wills & Estate Planning and Settlements.
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