Estate Planning and the New Zealand Family Law

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1 Newsletter Winter 2005 did you know The Supreme Court now has power to create a permanent easement over a neighbour s land, against their will, if it is reasonably necessary for use or development of your land, subject to compensation. The Local Court has power to make an order permitting you to have temporary access to neighbour s land in order to carry our work on your land. For example, you may need to place a crane on your neighbour s land. Again this is subject to compensation. It is sometimes possible to transfer assets from one company to another without paying capital gains tax or Recent amendments to the Family Law Act allow for orders to be made against persons outside the relationship, such as creditors Further changes may enable a party to a marriage to make a claim on a bankrupt spouse s estate in preference to creditors. stamp duty, by availing of CGT roll-over or corporate reconstruction exemption from stamp duty. You may be able to obtain a substantial tax deduction by donating a (valuable) art work to a public gallery. Capital Gains Tax may apply even on a compulsory resumption of your property by a government agency. From July onwards, the landlord of retail premises will have to pay its own legal costs for preparation of the lease, instead of passing these on to the tenant. Capital Gains Tax may also apply if you gift an asset, based on the value of the asset. If a tenant vacates premises without performing repairs required under the lease, a landlord may not be able to recover their full costs. In NSW, damages are limited to the diminution in value of the premises this may be much less than the cost of doing the work. If the lease permits, while a tenant occupies premises, the landlord may enter and do the work during the lease and then claim the cost from the tenant. What s new in Family Law? Relationship centres 75 relationship centres will be set up around the country intended as a first port of call to assist separating spouses to reach agreement without Court proceedings. If properly resourced, they will be a helpful adjunct to the family law process by providing counselling and mediation at an early stage. Children s cases program This is a less adversarial process for dealing with children s matters in the Family Court, allowing the judge to control the case from the beginning. It will be expanded. The Government has yet to respond to calls from some quarters for increased pressure on separating parents to agree to joint parenting arrangements. Such orders for sharing care of children on an approximately equal basis are becoming more common, but do not suit all cases. Child support Major changes are expected. Sexually transmitted debt Recent amendments to the Family Law Act allow for orders to be made against persons outside the relationship, such as creditors, and assist to rectify situations of sexually transmitted debt. Further changes may enable a party to a marriage to make a claim on a bankrupt spouse s estate in preference to creditors. Superannuation splitting Increasingly, the Family Court is making an order splitting off a portion of one party s super and rolling it over to a new super account in the other spouse s name. Pre-nuptial and binding financial agreements More couples are entering into binding financial agreements. These allow people either prior to marriage, during the marriage, or after separation, to make an agreement that will normally prevent any interference by the Family Court, provided each party obtains a certificate of advice from an independent solicitor. Online resources A large amount of family law information is now available on line, from websites, including the Family Court site Federal Magistrates Court and Child Support Agency Staunton & Thompson can direct you to other information and sources which help to explain and understand the law and procedures that will be relevant to your situation. Rapid resolution Most matters are capable of resolution at an early stage, if you understand your rights and entitlements and how to access various methods of dispute resolution. We can assist you with this process. For more information about family law and for legal support when you need it, contact Andrew Corish, Partner Accredited Specialist Family Law arc@stlegal.com.au

2 Powers of Attorney can [now] be tailored more specifically to suit the circumstances of each person. You should ensure you know the extent of CGT liability before committing to the sale of a property or other CGT asset. What you need to know about Powers of Attorney Update Recent significant changes affect enduring powers, which remain valid if the person giving it later loses mental capacity. Most people should make an enduring power of attorney, otherwise serious difficulties can arise if you become incapable of handling your own affairs through accident, illness or infirmity. You don t want to be in a rudderless ship situation with management of your affairs passing to the Protective Commissioner instead of those you would have selected to perform this important role. This can prove expensive as well as calamitous for your family and/or business associates. Wills and Powers of Attorney Your Will can only operate upon your death. The persons named as your executors have no power to act during any period of incapacity prior to your death. Tailored for you Now Powers of Attorney can be tailored more specifically to suit the circumstances of each person. The new form prompts you to specify when the Power of Attorney is to take effect and allows you to moderate the normal prohibition on the attorney using your money or property to benefit the attorney or some third party (that strict prohibition had created difficulties in some cases). With proper advice and due consideration of the variety of options, both you and your attorneys will be able to better plan for and manage your affairs if and when the need arises. Operates when you need it Clients have expressed concerns about their Power of Attorney being used before the time is appropriate. If this worries you, we can suggest ways of removing this concern. While previous Powers of Attorney remain valid, don t delay in making an enduring Power of Attorney or in reviewing current arrangements. For more information about Powers of Attorney and help with Wills and Estate Planning, contact rrm@stlegal.com.au Capital Gains Tax: the noose tightens The Tax Office believes there has been failure to pay CGT on a massive scale. The ATO is accessing State revenue authorities stamp duty and other records of property sales. It has also started to monitor media reports of property sales. The Gold Coast was selected for an ATO pilot project to write to vendors to say their recent sale had been noted and it was expected the transaction would feature in the next tax return. You should ensure you know the extent of CGT liability before committing to the sale of a property or other CGT asset. CGT is becoming an ever larger issue in estate planning and Will making. For more information about CGT and protecting your position, contact rrm@stlegal.com.au Page 2

3 Strata title law reform Recently there have been important amendments to the Strata Schemes Management Act. These include: 10 year sinking fund plans are required for new strata schemes and may be ordered for established ones there are now special provisions for large strata schemes with at least 100 lots owners approval in a general meeting is required before seeking legal advice or legal action by an owners corporation expanded powers for Consumer Trader & Tenancy Tribunal to appoint a strata managing agent when disputes arise there is now power for an owners corporation to alter, add to, or erect a new structure on common property there is now power for an owners corporation to grant a licence to an owner to use common property in a particular manner without a by-law fire safety inspections provision of certain documents by the developer to the owners corporation. For more information about Strata titles law, and all your property matters, contact Dennis Staunton, Partner mail@stlegal.com.au Interested in retirement villages? Recent amendments tighten up provisions in relation to residents liability for recurrent charges and clarify rights to assign residence contracts. A former resident (or their estate) may let or sublet retirement village premises without first having to hand back possession to the village operator. Liability to pay for personal services will cease when a resident dies or moves out. For more information about retirement villages and all aspects of elder law, including will disputes, contact Paul Tocchini, Senior Associate pt@stlegal.com.au Unfair employment arrangements The harsh or unfair contract provisions of the NSW Industrial Relations Act enable the Industrial Commission to rewrite a contract under which a person performs work in an industry where the annual remuneration does not exceed $ This applies if the contract is unfair at the outset, or later is found to operate unfairly for any reason. It can apply not only to employees, but people such as consultants and franchisees. Supreme Court judges have expressed concern about intrusion of these provisions into the realm of commerce. Whether you are an employer or employee, if you have a claim or are vulnerable to a claim of this nature in a termination situation, seek our advice. For more information and legal support for employers and employees dealing with dismissals, contact Philippa Grant, Associate Accredited Specialist Advocacy pg@stlegal.com.au

4 Have you lent money to family or friends? There are lots of potential traps in what are classified as loans payable on demand. Loans payable on demand are those where no time for repayment is specified. Because an immediate debt is created, the clock starts ticking on the statutory limitation period. There is a common misconception that the limitation periods start when demand for payment is made. That is not so. The limitation period runs from the time the borrower receives the money. What problems does this present? This situation may cause injustice in case of loans between friends or family members where the expectation is the money will not be repaid until the lender demands it. The situation can arise with a deceased estate where the executor tries to recover loans from the deceased to family members, which may be statute-barred if the deceased lent the money more than six years ago. What to do The NSW Law Reform Commission has recommended changes to the law to address this problem, but in the meantime you should seek advice regarding any loan you have made or intend to make that may encounter this problem. For more information and legal help in this area, contact Paul Tocchini, Senior Associate pt@stlegal.com.au Home loans Staunton & Thompson can help Talk to us before choosing your new home loan. As a member of LawFund, we can offer you mortgage broking services available through the legal profession. LawFund offers loans from some 30 lenders, including the major trading banks. A LawFund mobile consultant will provide objective and unbiased guidance to help you find the right home loan. Or it could be you already have a mortgage and want to check if there is a better loan that would be worth switching to. In particular, if your loan is more than 5 years old, it was arranged in less competitive times. Substantial savings may be available. Who better to handle the loan application than the people handling the conveyancing transaction your law firm? After all, we have to be in communication with the lender during the approval process, the letter of offer, the mortgage documentation and the settlement process. The whole project will be easier and you ll save money. LawFund does not advertise in the media. The money they save enables part of the commission received from the lender to go to the law firm who referred the borrower. Staunton & Thompson share our portion of the upfront commission equally with you this can mean a substantial saving for you. Of course, all consultations with our LawFund consultant are on a no-obligation basis. For more information on home loans and LawFund, contact Melissa Mamone, Paul Tocchini, Senior Associate Licensed Conveyancer rrm@stlegal.com.au pt@stlegal.com.au mm@stlegal.com.au There is a common misconception that the limitation periods start when demand for payment is made. That is not so. The Staunton & Thompson website is constantly updated with relevant, useful information. This includes articles, interesting cases, information sheets, and links to other helpful websites which can assist you in determining the right course of action to take. You can us with requests for preliminary advice or information on a no-obligation basis. Page 4

5 Property vendor exit duty You are probably aware of the introduction of this extremely unpopular measure by the NSW government. It is particularly harsh because it is assessed in most cases at the rate of 2.25% on the whole selling price, not just the capital gain component. No allowance is made for money spent on improvements or repairs. Exemption in respect of principal place of residence is extremely technical. You should obtain advice on exemption availability or amount of duty before committing to a sale of your property. For more information about vendor exit duty and all aspects of property law, contact Dennis Staunton, Partner Maureen Keary, Licensed Conveyancer mail@stlegal.com.au mk@stlegal.com.au Get companies to pay what they owe you in 21 days The 21 day demand is a swift and powerful measure against a company that won t pay money it owes. If the debt is more than $2,000 we can prepare and serve a notice on your behalf giving the company 21 days to pay up or make acceptable arrangements. If this does not happen and there is no genuine dispute about the debt, the company is deemed to be insolvent and the next step is winding up, so if the company can pay, it normally will. There are no Court fees with the demand. What if you receive a 21 day demand? If you are on the receiving end of one of these demands you may dispute whole or part of the claim or you may have a counterclaim. If so, within 21 days from when the demand is served it is essential that either the other party is persuaded to withdraw the demand or you institute Court action to have the demand set aside. The trap that many have fallen into is in not getting this Court document filed and served on the creditor within the 21 day period. Your company is then in a very difficult position and usually has to pay up regardless. A demand may have been served at the company s registered office this may be at the office of your accountant. Or you may be on holidays. Valuable time may be lost before it comes to your notice. It is essential to ensure that your accountant and your staff are aware of the urgency with which a demand under the Corporations Act has to be dealt with. You must either make full payment or seek legal advice without delay. If you want to apply to have a statutory demand set aside, there has to be an affidavit that provides proper grounds as to any dispute or counterclaim. Preparation of this document is sometimes a difficult task and there is no time to be lost. Be careful Finally, it is an abuse of the statutory demand process to use it when you know there is a bona fide dispute regarding the claim or that there is a counterclaim. Again legal advice should be sought in these circumstances. For more information on how to enforce your rights - or to protect your position, contact Philippa Grant, Associate Accredited Specialist Advocacy rrm@stlegal.com.au pg@stlegal.com.au it is an abuse of the statutory demand process to use it when you know there is a bona fide dispute regarding the claim or that there is a counterclaim. Page 5

6 Avoid stamp duty traps! Do you operate a Trust? Trusts have become increasingly popular for both active trading businesses and passive investment vehicles. These can be fixed or unit trusts, discretionary trusts or hybrid trusts. However, a number of common trust transactions have stamp duty complexities. Without careful planning, you may end up incurring stamp duty that might have been avoided. Categories of trust transactions which commonly present stamp duty problems are: introduction of a trust into a transaction either before or after the contract has been entered into purchases of land on behalf of another person or entity amendment of trust deeds to add or remove beneficiaries. If you are involved in a trust and are considering any transactions of this nature, you should seek advice about stamp duty liability. For more information and expert advise about all aspects of trusts, contact rrm@stlegal.com.au This newsletter has been prepared for general information only. It is not intended to be a definitive analysis of legislative changes or other matters. Professional advice should be taken before any course of action is pursued. Liability limited by a scheme approved under professionals standards legislation. Copyright Staunton & Thompson 2005 The team The Staunton & Thompson team has a number of specialists to help you in various areas of the law. Profiled in this edition of our newsletter are: Andrew Corish is based at North Sydney and joined the Staunton & Thompson team in Andrew is an Accredited Specialist Family Law. For advice, information, or help with Family Law matters, call Andrew on Conducting the majority of Staunton & Thompson s Local Court work and general litigation is Philippa Grant. Philippa is an Accredited Specialist Advocacy. If you are facing police charges or any other prosecutions, contact Philippa for expert legal advice and representation. Bob Medcalf is a solicitor and chartered accountant, registered tax agent, and a registered migration agent. Bob can assist you in the areas of business and commercial law, tax advice, tax disputes, business migration, estate planning, and business structuring. Introducing the rest of the Staunton & Thompson team: Dennis Staunton, Partner, Accredited Specialist Business Law Ray Griffiths, Consultant Paul Tocchini, Senior Associate Maureen Keary, Licensed Conveyancer Melissa Mamone, Licensed Conveyancer Adrienne Anderson, Wills & Probate Paralegal Naureen Shuja, Family Law Paralegal Rachael Wright, Bookkeeper Sonya Maruca, Litigation Paralegal Fiona Matthews, Secretary Marian Smith, Receptionist Tel mail@stlegal.com.au DX 9229 Manly Manly Level 5, 22 Central Avenue Manly NSW 2095 Fax North Sydney Level 13, 122 Arthur Street North Sydney NSW 2060 Fax