My brother and I and a third associate have a small but increasingly successful business. We are all committed to the business but we’re concerned about the welfare of our families if any one of us should die or become disabled. Apart from having the usual life and disability coverage, how can we protect the interests of our families and our partners if one of us did face an unforeseen tragedy?

This is a problem that’s easily solved by the use of what’s known as a “Buy/Sell Agreement.” This tool assures the fair and orderly transfer of ownership interests in a private business. It operates like a pre-nuptial agreement for business owners and states the terms under which the remaining owners, or even the business entity itself, will buy out your interest. It preserves continuity of ownership and insures that everyone is fairly treated, buyers as well as sellers.

You’ll want your buy/sell agreement to provide how the business is to be valued, how the buy out is going to be funded (with insurance), and under what circumstances you may invoke the agreement. Death is reasonably obvious but what if one of you just disappears or how disabled must you be to make your partners agree to buy you out?

The agreement can be between the business and its owner or among the various owners. Frequently, the agreement will be backed by life insurance policies on all the principals so as to guarantee the capacity of the buyer to pay if the need arises. Tax issues will apply to a buy/sell agreement so careful drafting by a good lawyer will be necessary if this strategy is used.

I am a self funded retiree and have decided to financially assist some of my children now rather than later. Is it necessary to document arrangements with members of my own family?

It is not necessary to document loans you made to members of your own family. Whether it is wise not to do it is another issue.

Some of the benefits of documenting what you are doing include:

Clarification of the agreement in written form, establishing whether the money is a gift or a loan or a loan or part gift or part loan, whether there is any interest to be paid, whether the loan or any interest is to be repaid during your lifetime or regarded as a debt to your estate, whether you have any security in return for the money you are lending, and clarification of who the borrowers are.

Documenting your agreement is particularly important especially if you are offering this assistance and you have more than once child. It is possible that the other child or children may or may not receive a similar benefit from you. If that occurs, the document is clear evidence about the agreements, terms and conditions. This helps reduce the prospect of argument and loss of memory about details some time in the future.

The document will also help clarify the position as to whether or not the loan is to be repaid during your lifetime. This is particularly important so that your intentions are carried out. For example you may also need to alter your Will to reflect these changed circumstances.

The document should also state what interest or security you are receiving to ensure that the money can be repaid should you require it. For example, the document may provide that you are entitled to place a caveat on the title of your child’s property. Alternatively, you may wish to register a mortgage on the title of the property.

The documentation is also of particular importance should your child be involved in a marriage that fails. The document will clearly state whether or not it is your child and their spouse that are the borrowers.

Finally if you have entered into an arrangement like this and it is not documented you should consult your solicitor as soon as possible to enquire about documenting your agreement to cover the issues outlined above.

I was the nominated executor in my aunt’s will. She died over a year ago leaving a substantial and complicated estate. I have spent a great deal of time and effort in finalising her financial affairs. Can I be compensated in any way?

It is not uncommon for executors in complex estates to spend a lot of time and effort in finalising the financial affairs of a deceased friend, family member or client. It can sometimes be quite an emotionally traumatic time as well. The court may allow for an executor of an estate to be paid commission for the ‘pains and trouble’ he or she has gone to in administering the estate of the deceased.

The general rule is that commission will not be granted unless the executor has distributed a substantial portion of the estate to the beneficiaries and has filed the accounts of the estate with the court. This involves balancing the books so that the court can be sure the estate has been administered correctly. The executor must also provide the court with a detailed affidavit outlining the extent of the work the he or she has undertaken.

The court does not automatically grant commission after the accounts have been filed. The court is entitled to use its discretion and much will depend on the size of the estate, the efforts of the executor and any gift or benefit he or she may have received under the terms of the will.

The amount of commission allowed, if any, will depend to a large extent on the value of the assets in the estate of the deceased and the amount of work the executor has had to do in dealing with the realisation and distribution of those assets. The court has determined a guide to rates of commission but can use its discretion to award lump sums without reference to the guide or it can make no award at all.

It is not uncommon for solicitors to advise their clients to provide a legacy to their executor in his or her capacity as an executor when preparing or changing a will. This effectively compensates the executor for any possible ‘pains and trouble’ that may occur while discharging executorial duties and thus avoids the need for the executor to apply for commission.

You should consult with a solicitor if you are interested in applying for commission and when preparing your own will.

My mother is 85 years old. Two years ago she met a younger gentleman who sold his house and moved in with her a short time later. My mother has an interest in 2 properties. She and her gentleman friend live in one which is in the name of a family trust and she receives a rental income from the second property which is solely in her name.

My mother and her friend appear to be happy but my brothers and I are concerned that he may make a claim on her estate in the event that she dies first. I am executor of her Will. I would like to know what rights this man has and where my brothers and I stand if my mother passes away. How can we guarantee that he does not make a claim?

There are times when an elderly person’s new found happiness creates some estate planning issues for not only the couple concerned but also for immediate family members.

When your mother passes away, her estate would consist of her investment property and any monetary assets she owns at the time of her death. The home that is owned by the Family Trust is not hers to give away. Much depends on the nature of the Trust Deed itself and who has been listed as beneficiaries of the Trust and as Trustee.

Your mother has a Will currently in place. However, she has every right to change that Will as often as she likes for as long as she has testamentary capacity. If she chooses in the future to make some provision for her friend, she is legally entitled to do so.

However, in the event that she makes no changes to her existing Will and leaves her whole estate to her children, her friend then has the right to make a claim against your mother’s estate under The Family Provision Act, 1982.

The Family Provision Act 1982 gives certain categories of people the opportunity to make a claim against the estate of a deceased person. The categories of people who can claim include the deceased person’s spouse (including de facto spouse), the deceased’s children; any one who was financially dependant upon the deceased during the deceased’s lifetime and finally a former spouse.

Those people who wish to pursue such a claim have eighteen months from the death of the deceased to commence proceedings. They must establish to the Court that they have need and must satisfy the Court that provision of some sort should be made for them.

In the event that your mother’s friend made a claim, he might argue that he was her de facto partner and was dependant on your mother as she provided a place of residence for him and he was responsible only for his share of outgoings. The Court would expect him to furnish evidence of his financial circumstances and his financial need.

There is no guarantee that your mother’s friend will not make a claim against your mother’s estate in the event that she predeceases him. However, it would be advisable that he and your mother enter into a ‘binding financial agreement’. This type of agreement, often made between couples with individual assets, clearly outlines the assets of each party and the rights each party to the contract has with regard to those assets. It also outlines any joint assets. This type of agreement is becoming an important part of any long term relationship between couples who, prior to meeting each other, have developed property, share and other financial portfolios.

A Solicitor can assist you and your mother with advice about binding financial agreements and Family Provision Act claims.

I recently saw an article in the newspaper that indicated that new legislation was coming into effect in 2004 with regard to Power of Attorney. I was planning to appoint my son as my attorney later this year.

How does the new legislation affect me?

The Powers of Attorney Act 2003 is scheduled to take effect from February 16, 2004 and the act, with some exceptions, will only apply to Powers of Attorney created after that date.

The new Act makes a number of changes to Powers of Attorney and specifically to “Enduring Powers of Attorney”.

An Enduring Power of Attorney is a power of attorney that remains effective even if the person making the appointment loses their mental capacity after they have appointed an attorney. If the Power of Attorney is not ‘enduring’, it will cease to operate if that person becomes of unsound mind.

In the past, the person granting the power was the only person required to sign the document. The new legislation however, requires both the person granting the power and the person nominated as enduring attorney to sign and accept the conditions outlined in the document. This move brings NSW in line with other states and is similar to the procedures required when appointing an enduring guardian. It is important to note that the Enduring Power of Attorney instrument does not become operational until the nominated attorney has accepted the appointment and signed the appropriate documents before a prescribed witness.

This new requirement applies to enduring powers of attorney and does not apply to ordinary powers of attorney, documents frequently used in a business context.

The new legislation also demands that every page of a power of attorney document must be certified as a true copy in order for the instrument to be a valid copy. Certification must be strictly complied with in order for the document to be acceptable to banks and other organisations.

The legislation also allows for some long awaited uniformity across Australia. The Act finally recognises powers of attorney made in other states and Territories. At present, a power of attorney instrument drafted and signed in another state is not valid in NSW.

Further, in order to more specifically control an attorney’s actions, the new act states that an attorney cannot authorise a gift of all or any of the principal’s property unless such authority is clearly outlined in Schedule 3 of the document. There are also provisions to protect beneficiaries against the possible disposal of testamentary gifts or assets by an attorney prior to the death of the person granting the power.

The Act also gives the Guardianship Tribunal and the Administrative Appeals Tribunal a broader range of authority when dealing with matters of capacity to make a power of attorney and with breaches of the Trustee Act.

The changes to existing legislation as incorporated into the Powers of Attorney Act 2003 are generally seen as necessary and beneficial to the wider community. If you have been considering appointing an attorney, consult your solicitor and he or she can explain the new legislation to you in greater detail.

Administration of an Estate – Grant of Probate or Letters of Administration
Assets and Liabilities of an Estate/a>
Contracts Involving Wills
Executors’ Obligations
General & Enduring Guardianship
General & Enduring Power of Attorney
Intestacy Rule
Legal Capacity and Wills
Living Wills and Mutual Wills
Not-For-Profit Organisations: Wills & Bequests
Retirement Village & Aged Care Advice
Retirement Village Accommodation
Revoking a Will
Special Disability Trusts – What Are they and How Can they Assist uou
Succession Planning
Testamentary Trusts
vBlog – Estate Law
Ways to change your Will
Advanced Care Directives
Dementia and the Law
Does A Person Have Capacity To Make A Will?
Enduring Guardianship

How to begin dealing with a Deceased Estates
FAQ about Probate & Executor Duties
Family Provision Act Claims and Estates Disputes
FAQ about Planning For Your Future
Farm Succession Planning
FAQ about Wills & Estate Planning
Guardianship Tribunal Appeals
General & Enduring Guardianship
General & Enduring Power of Attorney
Granny Flats
How To Write A Will
Notary Public
Power of Attorney
Reviewing Your Trust Deed
Retirement Village & Aged Care Advice
Self Managed Super Funds and Estate Law
Superannuation Complaints Tribunal
Special Disability Trusts
Special Disability Trusts – extension to CGT relief
Substitute decision-making
The Succession Act
Transition to Aged Care
Wills & Estate Planning

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