Although the Internet has existed in one form or another for about 50 years, it is only in the last 15–20 years that we have seen the widespread emergence of the World Wide Web and its integration into nearly every aspect of modern life. We are now starting to see the disruptive consequences. I suspect this is just the leading edge of what is coming, for just as locomotives needed tracks, and cars needed roads before their disruptive effects were maximised, the web needs bandwidth. Once you appreciate that fact you are in a position to understand why a particular person or institution is for or against the NBN. Almost without exception, those that stand to lose as a result of the NBN, are against it.

The Internet is, even in its current narrow bandwidth iteration (‘broadband’ as it is known today, will in the very near future be looked upon as a naively boastful term) already massively disruptive. The ability to market and sell a product to anyone in the world connected to the web creates vastly larger markets for suppliers. They can sell direct to consumers, without having to utilise any of the pre-existing supply chains. The winners are the lowest-cost manufacturers, the consumers and delivery services; the losers are the middlemen (the wholesalers and the retailers) and the least-efficient manufacturers.

The ability to share information immediately with almost anyone connected to the Internet is undermining conventional information distribution networks. Newspapers the world over are in dire straits. Subscriptions and advertising revenues are falling; classified advertising revenue has all but evaporated. Distribution of video content via the Net is already starting to undermine free-to-air television—and that is with narrow bandwidth. When there is high speed upload available to all premises (households and businesses), everyone can be a live content supplier. Foxtel, and to a lesser extent, the free-to-air channels, will be reduced to irrelevance as consumers purchase feeds directly from producers.

But I predict that the NBN’s biggest legacy will be what it does to our cities: much less use of transport, and far less need to be in a city office. True telecommuting will be the norm. The commercial property sector will face upheaval (just as the retail property sector is starting to come under pressure now). There will be less (not more) road use, fewer cars, and less fuel consumption. There will be less demand to live in or near to a city (subject here to education needs). There will be lower carbon emissions (construction and transport are enormous greenhouse gas emitters). It might be a less than modest use of hyperbole to suggest that the NBN might be the most efficient carbon abatement available. Now that would be disruptive.

If your marriage has ended, you probably want to know how much a family lawyer will charge for conducting a property settlement (that is, negotiating how to divide the property of the marriage and attending to all the necessary formalities). We’ve prepared an estimate based on a typical property dispute below, excluding GST and court fees.

You would need to allow one or two days to prepare for a typical property settlement. The actual fees that you will incur will generally only be known on completion of your matter, and will be based on the amount of time that’s spent on it. In some circumstances, a fixed price service may be available.

Stage 1: $2,500

• To take your instructions through one or more meetings with you
• To undertake initial investigations into the assets and financial resources of the parties
• To provide you with a preliminary assessment of the likely range of outcomes

Stage 2: $2,500

• To draft financial statement
• To draft affidavit
• Attend first directions hearing

Stage 3A: $1,750

This stage applies only if the matter settles at or by the first directions hearing without the need to go to trial.

• Draft Binding Financial Agreement or Consent Orders

Stage 3B: $2,000

This stage and the subsequent stages apply only if the matter doesn’t settle at or by the first directions hearing.

• Prepare for Chapter 12 Conference
• Prepare all documents required for Chapter 12 Conference
• Attend Chapter 12 Conference

Stage 4: Prepare for trial: $4,500, plus $3,000 for barrister

• Attend in trial notice list
• Attend pre-trial conference
• Prepare for trial

Stage 5: Attend at trial (2 days): $4,000

• $1,500 per day for a solicitor (if required)

If you have any questions, or would like to find out more about family law property settlements, please don’t hesitate to contact our Mount Barker and Adelaide lawyers.

As a builder or tradesman you likely have experience with difficult clients who refuse to pay. They may be disputing the quality of your work or the reasonableness of your account. They may claim that they are unable to pay or that they are only able to pay in dribs and drabs. They may claim that payment is forthcoming and then never make good on their promises. They may be completely ignoring you. As a famous newspaper editor once said, some people use half their ingenuity getting into debt and the other half avoiding payment.

Non-payment of accounts can have serious consequences for the health of your business and even for your personal financial position. Recovering debts often requires immediate and decisive action, particularly if the debt is significant and you have your own liabilities to meet. You cannot simply wait and hope that the debtor will eventually do the right thing and make payment. Swift action is often the only language that chronic debtors seem to understand.

One powerful tool that is available to you is a lien under the Worker’s Liens Act 1893 (SA).

What is a Lien?

If you have performed work on a property (or have provided materials for use in such work) and have not been paid, you can lodge a lien over that property with the Lands Titles Office. The placing of a lien on a property prevents the registration of dealings with that property. For example, the owner of the property will not be able to register a sale, mortgage or lease of the property unless such transactions are subject to your rights.

The value of a lien is that it prevents the owner of the property from dealing freely with their property as they see fit. The owner may have a great deal of money tied up in the property. The inability to deal freely with it may put them in a very difficult position. In short, lodging a lien may bring considerable pressure to bear on the property owner and make it more likely that your account will be paid quickly.

Who Can Place a Lien?

A lien can be placed by a person or company who contracts to perform work or to provide materials with regard to a property or a fixture on the property. The work must be done with the assent of the owner or occupier of the land.

A lien can be placed by either a head-contractor or sub-contractor. In cases where a head-contractor has been paid but a dispute arises between the head-contractor and the sub-contractor, and the sub-contractor places a lien on the property, the owner of the property will generally put pressure on the head-contractor to pay the sub-contractor so that the lien can be removed.

A lien can also be placed by an employee of the property owner or an employee of a head-contractor or sub-contractor, although such liens are somewhat less useful. If you are an employee who has been underpaid or not paid at all, we suggest you seek legal advice about the options available to you.

How is a Lien Placed? What Happens Next?

A lien is placed by filing a form with the Lands Titles Office and paying a lodgement fee (currently $121). It is important to act quickly because there are time limits for lodging liens, particularly if the time for payment has passed and you have already demanded payment. You should seek urgent legal advice as soon as possible after default by the debtor.

After placing a lien, the Lands Titles Office will send a notice to the owner of the property informing them of the lien.

After the lien is placed, you will need to take legal action to enforce it within 14 days. Otherwise the lien will lapse. You will need to prove the debt. Hopefully, however, the legal proceedings will not be long and drawn out and a compromise or settlement will be reached. In some cases legal proceedings will be completely unnecessary and merely placing the lien will be enough to prompt a quick resolution.

In the event that a hearing is necessary and you are successful, the debtor must pay the debt. Alternatively, the Court may issue a warrant of sale with regard to the property. The proceeds of sale can then be used to discharge the debt (although your rights will be subject to previously registered interests in the land – such as a bank mortgage).

The placing of a lien is a powerful tool that can be used to assist you to recover amounts owing to you. However, the placing of a lien is complex and may not be suitable in your situation. It is important to note that a lien is just one of the options available to you. There are a variety of other options that may be more appropriate in your circumstances. We suggest you seek legal advice regarding whether a lien is appropriate in your case.

We are, of course, happy to assist you with such advice, with the process of placing a lien if appropriate, and with recovery of debts generally.

There is a general understanding on the part of most people that they need to have a will. Many consider that a ‘will kit’ is adequate for the job. Sometimes it is, but, compared to a properly drawn will, it may lead to the loss of the substantial monetary and familial benefits.

Asset Protection

If you gift part of your estate to a person who becomes bankrupt (even after you die), then that person’s trustee in bankruptcy is likely to take the gift up to the level required to discharge the bankruptcy. Similarly, a gift to a person who separates from his or her spouse may have to be shared with that spouse. A well-drawn will maximises the chances of avoiding these and other unintended consequences.

Tax Savings

A well-drawn will can produce substantial taxation savings for your estate and beneficiaries. The savings from even a relatively modest estate can be reduced by many thousands of dollars each year.

Family Disputes

Family members who believe they have not been adequately catered for in a will are able to challenge the will in the Supreme Court. This can tie up the estate and lead to family disputes that never heal—not quite the legacy most of us wish to bequeath to our families.

Legal Fees

A poorly drawn or incorrectly executed will may result in the will being rejected for probate, causing substantial additional expense to be incurred by your estate and beneficiaries. Also, the legal costs of all of the parties involved in a challenge to a will, discussed above, are usually paid out of the estate, substantially reducing the amount of money available for beneficiaries by tens or even hundreds of thousands of dollars. So paradoxically, legal fees can be much, much lower, if you use a lawyer in the first place.

Make Your Will Do What You Want It to Do

Drafting a will is generally not a straightforward task. There are many contingencies to be considered and technicalities to comply with. These can pose problems for lawyers in general practice, let alone the layperson. If you have a family trust, a superannuation fund, relatives or children to whom you have loaned money, if you have remarried, or if you have been beset by any number of other incidents of day-to-day living, you ought to have professionally drawn will. The cost of doing so is an investment in your family’s future.

Whilst it remains to be seen whether things are AFU, it is certainly not SN. The failure of either of the two large parties (ignoring the inconvenient truth that the Coalition is itself two parties) to gain an absolute majority of seats in the Federal Parliament is, at least in modern times, a novel situation. Many commentators have suggested that this will create uncertainty, and that uncertainty is bad. Are they right?

First, Constitution 101. The Federal Government exists by virtue of, and is limited by, the Constitution, an instrument of 128 sections. It provides for three arms of government, the Parliament, the Executive Government and the Judicature. Sixty sections of the Constitution are devoted to the Parliament. The Executive Government and the Judicature get nine sections each.

Voters are given the power to vote for a candidate in their local seat, a senator in their state, and for or against referenda. They do not get to vote for either a political party (apart from an amendment in 1977 responding to the replacing of retiring or deceased mid-term Senators, the Constitution makes no reference to political parties) or any candidate for Prime Minister (the Constitution does not refer to the office of Prime Minister at all).

For most of the life of the Commonwealth of Australia, and particularly the last 30 years, the party system has bastardised the structures anticipated by the Constitution so that, first, a party, and more recently, a single person (the Prime Minister) has controlled both the Executive Government and the Parliament. The two most extreme examples of this are John Howard, and until his dethroning, Kevin Rudd.

The independents, those non-aligned Members of Parliament, have decided to think for themselves, rather than slavishly follow party discipline effectively enforced by the appropriately named party whips. And, with a finely balanced parliament, the way the independents think, and the way they vote will matter. (The irony is that they have no more power than any other Member of Parliament—the others have handed their power to their parties which increases their power when in the majority, but reduces it in a hung Parliament.)

With her weak grasp on power as Prime Minister, Julia Gillard is not in a position to dictate to the Executive Government. She will need to listen, to consult and sometimes to have her ideas voted down in Cabinet (another institution not recognised by the Constitution).

Nor will the Prime Minister, or the Executive Government, be in a position to dictate to the Parliament. Rather, the Parliament can now (at least partially) unshackle itself from the chains of party discipline, put aside the rubber stamp of approval, and behave like an institution important enough to have devoted to it sixty sections of the Constitution as against the Executive’s mere nine.

If ‘certainty’ is code for keeping things just the way they have been, ‘uncertainty’ means change. And that’s no bad thing.

‘Blood diamonds’ is a phrase that has slipped into the lexicon over the past decade or so. The associations that travel with the phrase suggest that blood diamonds are, if not evil solidified, something very close to it. Recently a curvaceous super model (unfortunately not a tautology), the ex-dictator of Liberia (unfortunately an oxymoron), and a dinner party at the home of Nelson Mandela (unfortunately true), the International Criminal Court (unfortunately nothing to parenthesise) and blood diamonds all came together as a tabloid sensation demanding attention.

Blood diamonds are ‘diamonds that originate from areas controlled by forces or factions opposed to legitimate and internationally recognised governments, and are used to fund military action in opposition to those governments, or in contravention of the decisions of the Security Council’.

Diamonds, as we know, are forever. And, if de Beers has its way, they are forever expensive. For most of the past hundred years or so de Beers controlled the supply and distribution of the majority of gem quality diamonds throughout the world. It limits supply. At the same time, it creates demand by associating diamonds with glamour, wealth, quality, and permanence. The branding of diamonds has even co-opted marriage into its marketing. Short supply and high demand equals high price.

When a new supply of high quality diamonds becomes available, the natural response of the monopolist is to either control the new supply or, if that can’t be done, to eliminate it. And elimination is what has happened, albeit with the assistance of the United Nations.

The predominant methods of supply eradication were negative-branding and UN brokered treaties, both being addressed to the demand side of the equation. The negative-branding concept was brilliantly conceived, and brilliantly executed. A blood-diamond is the diametric of a ‘real’ diamond. The more negative connotations that one hangs onto blood diamonds, the better real diamonds become. And even more brilliantly, a diamond with a red hue is subconsciously, and erroneously, associated with blood diamonds.

The negative branding having commenced, lobbying was brought to bear on various NGOs, including the UN, arguing that the proceeds of diamonds mined in conflict zones were often used to fund wars. The argument was that the diamond itself was morally equivalent to the use to which those proceeds were put, and that same moral equivalence rubbed off on any subsequent owner of the diamond. The argument was accepted, and various UN Resolutions followed.

It is so nice when morality and money get engaged. That calls for a diamond.

A will-maker is presumed to be sane, and to have sufficient mental capacity to make a will, unless the contrary is proved. A lack of mental capacity may derive from a congenital intellectual difficulty, trauma affecting the brain, or cognitive processes and disease, including those more commonly occurring with old age. The Dickensian language of Lord Chief Justice Alexander Cockburn, delivering a judgment in 1870, provides a quaint and accurate summary—

It is essential to the exercise of such power that the testator [will-maker] shall understand the nature of the act and its effects; shall understand the extent of the property of which he is disposing; shall be able to comprehend and appreciate the claims to which he ought to give effect; and, with a view to the latter object, that no disorder of the mind shall poison his affections, pervert his sense of right, or prevent the exercise of his natural faculties—that no insane delusion shall influence his will in disposing of his property and bring about a disposal of it which, if the mind had been sound, would not have been made.

According to another case decided in the 1870s, the highest degree of mental capacity is required to make a will. Compare that with a 1953 case, which held that a lower degree is sufficient to contract a valid marriage. The distinction seems to be based on the premise that, if the same test were applied to marriages as is applied to wills, then the fact of getting married might of itself be sufficient to make the marriage invalid. Think about that if you’re still reading.

And while a will-maker ‘is bound to look all around, to consider his family, if he has one, his wife, his brothers and sisters, uncles and aunts, poor relations, possibly charities he has helped in his life …’ the capacity to make a will ‘is not reserved for people who are wise, or fair, or reasonable, or whose values confirm to generally accepted community standards. A person may disinherit a child for reasons that would shock the conscience of most ordinary members of the community, but that does not make the will invalid’.

Some examples of things which have proved lack of capacity include: belief in things impossible; belief in things possible but so improbable that no sane person could believe them; a belief, influencing the drafting of the will, invoked by trickery or misunderstanding; disease; injury; congenital disability; and the effects of certain medications. Neither a belief in God nor a belief in a happy marriage is considered to be a belief in a thing impossible; and suicide, not being evidence of a lack of sanity, is apparently rational.

Self-Managed Superannuation Funds (SMSFs) are popular vehicles for investing. There are many reasons why people choose to establish and invest in SMSFs. There are also many downsides to using them: your money is tied up until later in life; you don’t really own any of the assets in a SMSF; you are subject to sovereign risk to a greater extent than is the case with other asset classes. And, until September 2007, you did not have the ability to leverage an investment in a SMSF by borrowing.

Borrowing is now allowed if the following conditions are met—

• the borrowing is used to acquire an asset that is held on trust so that the fund trustee receives a beneficial interest and a right (but not an obligation) to acquire the legal ownership of the asset (or any replacement) through the payment of instalments;
• the lender’s recourse against the fund trustee in the event of default on the borrowing and related fees, or the exercise of rights (typically a put option) by the fund trustee, is limited to rights relating to the asset at the time of the action (such as taking possession of, or disposing of, the asset); and
• the asset (or any replacement) must be one which the fund trustee is permitted to acquire and hold directly (the asset may be any asset that a fund is permitted to invest in directly subject to any other investment restrictions that may be applicable such as those on in-house assets and acquisitions from a related party, which will continue to apply).

The overall structure is commonly referred to as an instalment warrant. As a matter of practice, the borrowing can be provided by a member or by an independent third party, such as a bank. Some banks require that the trustee of the SMSF be a company. In all situations the entity holding the asset is a company which holds on trust for the SMSF. Notwithstanding that there are certain conceptual difficulties (which are largely brushed over by most advisers) the instalment warrant structure is becoming commonplace. Nonetheless, you should always ensure that you obtain good advice in order to be sure whether or not the structure is suitable for your long-term investment goals.

The Special Disability Trust is an underutilised but useful vehicle for providing for family members who may have a physical or intellectual disability. It permits one to hold up to an amount of $551,740 which is excluded from the asset test, and the income from which is excluded from the income test.

What Is It?

A Special Disability Trust is a trust which satisfies the following criteria (with different rules for beneficiaries under 16 years old). It has only one Principal Beneficiary who if over 16 years of age who qualifies for a disability support pension and—

• must be living in accommodation provided for people with a disability with Commonwealth and/or State Government funding (or other approved accommodation) or who, if they had a sole carer, their carer would qualify for a carer payment or allowance; and
• is not working and there is no likelihood that they will ever work again for more than the relevant minimum wages (other rules apply for people under 16 years of age);
• is not already the beneficiary of another SDT;

The sole purpose of the SDT must be to provide for the care and accommodation of the Principal Beneficiary and the trustee must be either a professional trustee or at least two Australian resident individuals. There are various additional requirements.

What Are the Benefits?

Disability pensions are means tested as to both (a) the assets of the pensioner, including any interest the pensioner may have in a trust; and (b) the income of the pensioner. The value of assets beyond which a full pension is reduced is, for a home owning single pensioner, $178,000 (excluding the family home), and for a single pensioner who does not own his or her own home, $307,000. The level of income beyond which the full pension is reduced is, for a single person, $142 per fortnight. After that, it reduces at the rate of 50 cents in the dollar.
The value of assets in a Special Disability Trust, up to $551,750, will be disregarded when applying the assets to test to the beneficiary; and so too will be the income generated from those assets. Note also that it is important to try and retain at least a partial pension in order to be eligible for a Health Care Card, as people with disabilities often have requirements for medication which can become quite expensive. A Special Disability Trust helps in this regard too.

And as a bonus it can be the case that the person establishing the trust can also benefit, as the transfer of property to the trust may assist them in qualifying for a pension or Health Care Card too.

The effects of family breakdown extend beyond the personal to the economic, including intergenerational wealth transfers such as those created by wills.

The Family Court has extensive powers to make orders in relation to the ‘property’ and ‘financial resources’ of couples whose relationship has failed and one or both of whom have asked for its’ assistance. What is often not appreciated is the breadth of the terms ‘property’ and ‘financial resources’, and how this can have an impact on even the most carefully prepared estate plans and wills.

What is more, the power of the Family Court has extended beyond marriages, and now includes de facto relationships in most states, including, very shortly, South Australia.

It is not unusual for the parents of a couple to assist them financially, either during the life of the parent, or by will. The general rule is that the financial assistance will be treated as the property of the person whose parent provided it, and then, as a contribution by that person to the joint assets of the marriage. From there, the Family Court will apply its usual criteria for deciding what to do with it (a four step process that we will address in a later article). Suffice to say, it is almost never the case that the person contributing the money will get to keep it, and the earlier in the marriage the contribution is received, the more likely it is to be treated as owned jointly.

A more contentious question is whether the Family Court ought to take into account an expectation or likelihood that a person may receive an inheritance after separation. This is a difficult area, and in general, the more likely it is that one of the parties will receive an inheritance, and the more likely it is to be received soon, then the more likely it is to be taken into account.

Testamentary trusts may be used for a variety of reasons, including an attempt to preserve and protect the assets of the trust from the reach of the Family Court. The effectiveness of these devices is variable, and in general would require one to ensure that a party to the marriage in question does not control the trust. This is where the difficulty can arise. Who, if not the intended beneficiary, ought to control the trust, and how can you be sure that the intended beneficiary will in fact benefit? Similar comments can be made about trusts made during the life of the trust’s creator.

As is often the case, the bigger the inheritance, the more likely it is to be fought over. And the Family Court can be a very expensive place to have a stoush. Early and effective legal advice can save you and your loved ones a great deal of money.

First, a truism: the purchase of a house involves a major commitment, and a major investment. It can be exciting and stressful at the same time. You will, on so many levels, have a relationship with your house. Get off to a good start.

Many people are likely to have an involvement with your purchase: you, your family and friends, the seller, the seller’s real estate agent, your mortgage broker and bank, and your conveyancer. Apart from all the behind the scenes work (checking the contract of sale, council searches, the Certificate of Title, liaising with your financier, liaising with the conveyancer for the other party, anticipating and dealing with problems), your conveyancer is the person who ultimately completes the transaction by handing over the money (your money) and collecting the title.

It is no simple matter to handle the conveyancing for the sale or purchase of a property and you should not even think about doing it yourself. It is a job for a professional. And that is the first thing to look for—a professional conveyancer, one who carries professional indemnity insurance, and who is regulated by a professional body.

Knowledge of the local area is generally a good thing. A local conveyancer builds up a body of knowledge about the practices of certain real estate agents and the contracts they use and knowledge about the local area problems that may arise.

A local conveyancer can also be easier to contact, and ease of contact is one of the most important things to look for in retaining a provisional adviser of any sort. Local also means that they have a reputation which rises or falls with the quality of their service. The longer the local conveyancer has been established, the more time there has been for his or her reputation to become established. You should choose a reputable conveyancer.

And you also need to be confident that if anything goes wrong, your conveyancer can either deal with it personally, or turn quickly to someone who can. And whilst there are very real benefits to retaining a conveyancer who practices with property lawyers, most professional conveyancers do maintain relationships with lawyers in order to get prompt advice when problems arise.

Last, a truism: the purchase of a $400,000 house involves a number of substantial expenses including Stamp Duty ($16,330) and Transfer Registration ($2,484). You don’t want to add any unnecessary expenses, and you should look for a range of quotes. As in life in general, you tend to get what you pay for, and you are paying for peace of mind and confidence that the job will be done well.

The first step in deciding how and to whom you wish to leave your assets is to identify what your ‘assets’ are. Broadly speaking, they can be divided into ‘estate assets’ and ‘non-estate assets’. Only the former can be left by your will. This is a short list of some estate assets: personal effects; a car owned by you; bank accounts held solely in your name; real estate held solely in your name or as tenant in common with another person. And this is a short list of ‘non-estate assets’: an interest in a superannuation fund; the assets of a family trust; the assets of a company; property you own as trustee; property you own as joint tenant with another person.

The difference between the two categories is fundamental and of growing importance, as an increasing proportion of personal wealth is being held in superannuation funds, family trusts, and in real estate where the owners are joint tenants. Again, none of the assets held this way can pass by your will. If you wish to have some control over how those assets are dealt with after your death—who will own them, who will benefit from them—then you will need to adopt techniques other than a will. And while a will can sometimes be simple, these other techniques are almost never simple. They each require a degree of understanding and consideration which is difficult to achieve without competent advice from a lawyer or an accountant, or preferably both.

These techniques interact with a number of relatively complex areas of the law, including taxation, inheritance claims, property law, family law, trust law, superannuation law, and bankruptcy law. You cannot expect to bring to fruition your intentions as to how your assets (estate and non-estate) will be dealt with after your death unless you understand the relevant legal principles, and have your intentions property and correctly drafted.

Finally, complexity is not the fault of lawyers. It is the result of an inherent property of life: the tendency to increasing complexity. It is you, and it is all around you—complex ecospheres (having evolved from single-celled organisms), complex electronics, complex social relationships, so on. The law of inheritance is no different.

We have written on previous occasions about how a person can challenge a will under the Inheritance (Family Provision) Act 1972 (SA). When drafting a will it must be borne in mind that the members of the will-maker’s family will not always agree with the intentions of the will-maker as expressed in the will and that an Inheritance (Family Provision) Act (IFPA) claim may sometimes result. This article will consider some of the steps can be taken to minimise the likelihood of such a claim being made.

The simplest technique is to bear in mind the test which is applied by the courts when considering IFPA claims: would a wise and just will maker have considered it to be his moral duty to provide for that person? If so, and the will-maker does provide for that person, then the likelihood of that person bringing such a claim will diminish. But often the will-maker will consider, for whatever reason, that the person ought not to be provided for by the will, or that they ought not to be provided for to a greater extent than stated in the will, irrespective of the ‘wise and just’ test. (And after all, your view of ‘wise and just’ might just be different to the view of a judge.)

The other way of solving the problem is to reduce the size of the estate against which a claim can be made, and there are many devices for achieving that end. For instance, the will-maker might transfer some of his or her assets to a discretionary trust, which they would control until their death. The assets in the trust would not for part of the estate, and would not be available to satisfy a claim under an IFPA claim. This process can have disadvantages, particularly in the nature of capital gains tax (for the transfer of existing assets) or the loss of the principle place of residence exemption (for the family home).

Other devices include transferring property to joint ownership so that it devolves to the survivor and does not form part of the estate of the will-maker and binding death benefit (BDB) nominations and binding financial agreements (BFAs). The principle is this: if something does not form part of the estate of a will-maker, then it cannot be used to satisfy an IFPA claim. In NSW, steps have been taken to reduce a will-maker’s autonomy by inventing a fictitious ‘notional estate’, and that will be the topic of an upcoming discussion in this paper.

Sometimes a gift in a Will fails to provide the intended benefit. The possibility of this happening needs to be considered when the will is being drafted. Those beneficiaries most likely to lose or not benefit from an inheritance are known as ‘at-risk beneficiaries’. Some examples include—

• beneficiaries who may have personal liabilities (for example, professionals, business owners, or guarantors);
• beneficiaries who are vulnerable to others or to themselves (for example, due to age, illness, disability, drug addiction, or influence of others); and
• beneficiaries who are or who are likely to suffer a relationship breakdown.

There are a number of techniques that ought to be considered in relation to estate planning when there are at-risk beneficiaries to consider, some of which utilise self-managed superannuation funds (SMSFs). The use of SMSFs in estate planning is particularly useful in preventing or minimising the risk of litigation under the Inheritance (Family Provision) Act 1972 (SA), because SMSF assets do not necessarily become part of a deceased estate.

A binding death benefit (BDB) nomination is an instruction to the trustee of the SMSF telling him or her what to do in the event of your death. In general, the trustee must follow such an instruction. A binding death benefit nomination in respect of a SMSF can be expressed to be non-lapsing. So, unlike a death benefit nomination in an externally administered fund, it does not lapse after three years. What is most useful, however, is that, provided the trust deed permits it, the type of benefit or payment can also be specified in the nomination, and those benefits and payments can be structured or tailored to suit the needs of your beneficiaries.

One option would be to direct the trustee to pay your death benefits to a ‘superannuation death benefit trust’, a trust that you would have established as part of your estate plan, or indeed, as part of the superannuation fund. The deed governing that trust can itself be tailored to best suit your estate plan, and could include many of the provisions that are sometimes found in non-simple wills and which we have discussed in other posts.

You might also consider a ‘restricted account-based pension’, a tool which could be used, for instance, to pay an income stream to one beneficiary (for life, or for a shorter period of time), but to protect the capital of the trust for other beneficiaries. This would be useful in providing an income stream for a spouse (first or second), and protecting the capital of the trust for payment to your children when they are older.

The ecology of estate planning is diverse, and opportunities abound to maximise the chances that your beneficiaries will receive that which you intend.

It may be good and well to cope with a disappointment, but it is better to take advantage of it. Death and taxes, so the saying goes, are two of life’s certainties. And for an indeterminate 40% of the married population, so too is divorce. Although death has become less expensive with the abolition of death duties, taxes and divorce remain as expensive as ever (if not more so). Any time is a good time to partake of a little estate planning. Death and divorce are great times to do so—they each present the opportunity to structure assets and income streams. In this month’s post, we’ll discuss one of opportunities in the context of divorce.

Perhaps the most obvious (and often overlooked) area for tax planning the event of divorce concerns child maintenance trusts. These are trusts which differ from the common family discretionary trusts in a number of ways, but most importantly, in the way in which distributions of income to children are taxed.

The general rule is that trust distributions of income to children of more than $416 are taxed at a penalty rate of tax. After allowing for low income tax offsets currently available, the penalty rates commence at an income of about $2,600 per annum. But the Income Tax Assessment Act provides that distributions to children from child maintenance trusts are taxed at ordinary adult beneficiary rates of tax. The savings can be substantial.

For example, assume a parent advances $130,000 to a maintenance trust and it generates an income of 10% per annum on that sum, being $13,000 per annum.

Also assume there are two children who are entitled to a tax-free threshold limit of $6,000.

Since each child would be entitled to the low income tax offset, they would pay no tax.

Assume that the parent was earning income and paying tax at the highest marginal tax rate (ie, at 46.5%). Tax at that rate on the $13,000 equals $6,045.

However, the parent would not pay any tax if the income is distributed by a trustee of a child maintenance trust to the children. For practical purposes the trustee would pay the tax on behalf of the beneficiaries so entitled. There is in effect a tax saving of $6,045 every year. If the amount of capital put into the trust for, say, four children, was $260,000, then the annual tax savings would be $12,090.

The Family Court possesses extensive powers to deal with the property and financial resources of parties to a marriage. The recent case of Kennon v Spry, decided by the High Court earlier this year, shows just how extensive. The case dealt, in the main, with the meaning of ‘property’ for purposes of the Family Law Act and, in particular, what property there may be in certain aspects of a discretionary trust. Five judges handed down four separately reasoned decisions, with only one of those judges adopting what, until then, would have been the standard analysis of trusts and property.

The husband, Dr Spry, was and is a learned senior barrister and lecturer with a specialty in the law of trusts. His Equitable Remedies has, for many years, been the standard text, rivalled only by Meagher, Gummow & Lehane’s Equity: Doctrines and Remedies. The eponymous Gummow is, for the time being, the dominant personality on the High Court. Dr Spry had established a trust early in life and, for all intents and purposes, neither he nor his wife could be said to have any interest in the trust which could be said to amount to property. Three of the five judges, including Justice Gummow, found otherwise. And, whilst the Gummow–Spry rivalry did not move from academia to the Court, the fallout has indicated that Dr Spry was less than impressed with the majority judgments. (It is, depending on your perspective, a great story, a tragedy, or both.)

Whilst there are many grounds upon which the majority’s reasoning can be (and has been) criticised, the thing is that the High Court is, as the final court of appeal, by definition always right. The decision needs to be absorbed. The lessons which everyone but Dr Spry can draw from the decision are these—

• Nothing is certain in the law.
• Prepare your estate plan early in life. This should be done as soon as possible, and certainly well before you are married.
• Be clear about the goals of your estate plan. In particular, is the family trust in your estate plan for your benefit, or the benefit of future generations? If it is for future generations, then neither you nor your spouse should be a potential beneficiary.
• Consider having a binding financial agreement either prior to marriage or during marriage as part of your estate plan.
• Don’t get divorced.

In order to obtain compensation for personal injuries arising from a motor vehicle accident, you must show that the accident was partly the fault of someone else, and that your injuries have persisted for at least seven days (or you have incurred medical expenses that satisfy a specified threshold). The injuries do not need to be severe. Even minor injuries may be sufficient to found a claim.

It is advisable to see a lawyer as soon as possible following an accident (say, immediately after getting medical attention). Most personal injury lawyers are able to offer you a free appraisal as to whether you have an action worth proceeding with. A lawyer will also be able to claim many items for you which you might not know about, such as—

• future medical expenses;
• your lost income as a result of your injuries and your recovery (after the first seven days);
• the purchase of special equipment to assist with your day to day living (this may be as little as a shoe horn or a special bed);
• the cost of having someone maintain your home and garden if you cannot do it as a result of your injuries;
• the services that certain people may offer you free of charge and without expectation of reward, for instance your spouse having to do the washing and ironing because you can’t (these services are claimed at their commercial value despite the fact they were provided to you free of charge); and
• your spouse or domestic partner’s suffering as a result of the disruption to your relationship and their suffering as a result of yours (known as consortium).

All claims for personal injuries from motor vehicle accidents must be brought within three years of the motor vehicle accident so if you are unlucky enough to be one of the many inevitably injured on our roads by motor vehicles make sure you contact a lawyer to find out your rights and entitlements as soon as possible.

Your estate plan is a series of documents in the nature of, or relating to, wills, trusts, powers of appointment, property ownership, gift, insurance, superannuation, and powers of attorney designed to increase the value of your estate, protect it from creditors, marital breakdown, illness, and profligacy, to benefit from tax planning opportunities, and to benefit future generations of your family in terms of wealth and the avoidance of wasteful disputes over your assets once you die. Estate planning is the process of designing, creating, monitoring and updating an estate plan.

An essential part of any estate plan is a properly drawn will that takes into account your particular circumstances. Even small differences in individual circumstances make it inappropriate to try to deal with an off-the-shelf product without tailoring it to your unique fit. This means that the person drafting the estate plan—a lawyer—needs to take the time to gather and absorb a great deal of information. In so doing, she or he will need to learn about your family circumstances, your financial circumstances, and those your children. This information will come primarily from you, but the lawyer will also need to speak to your accountant, your financial planner, and your risk insurer (if any), and will typically include details of any assets in which you have an interest, their value, any debt attaching to them, any trusts in which you have an interest or prospective interest, the health of your family members, their marital status, and the strength of the various family relationships.

Your estate plan should be reviewed regularly, say every two years. A review should also be triggered by any of a number of events, including you deciding to marry or enter into a de facto relationship, or to divorce or leave a de facto relationship, the birth of any children, any of your children deciding to marry or enter a de facto relationship, or to divorce or leave a de facto relationship, you acquiring or disposing of a substantial asset, you establishing a new holding vehicle such as a company or trust, you establishing a business succession plan, when there is a substantial change in the value of your assets, or when there is a substantial change in the law, or a member of your family dies or becomes incapacitated. A failure to review and amend your estate plan can leave it outmoded and put at risk the benefits which you had the foresight to plan for in the first place.

Utopia: where a simple budget-priced will produces its desired results. To sleep, perchance to dream? I suppose that once you are dead, what does it matter how your hard earned is split up? It’s only money, after all. Rightly or wrongly, it matters to most people. And it probably matters to you. The litmus test is this: would you vote for a political party that advocated taxing inheritances at the rate of 100%? No? Not many people would, notwithstanding that it could mean less or no income tax and a more equitable distribution of wealth.

So, it can be taken as given that you don’t want your hard-earned going to the government upon your death. Would you be happy about it going to the trustee in bankruptcy of one of your children? How about to his or her ex-spouse? Would you be happy for a there to be a squabble amongst your family members in the Supreme Court over who should get what? All of these things happen, and not infrequently.

Perhaps you don’t want to think about it. After all, none of your children will ever divorce. None of your children will ever go bankrupt or be liable for large business debts. And heaven forbid that any of your children should ever argue over your will, or over who you gave the most to or who you loved the most.

And as for second marriages, well, your former spouse will be careful, and none of ‘the kids’ inheritance’ will go to the new partner, let alone to his or her children. No, everything will be all right. Really. All these things happen to other people. They won’t happen to you.

And the trustee of your superannuation fund is bound to make the same decision about the payment of the death benefits as you would have made, so why not leave the decision to him or her?

Not so sure? Well, what can you do anyway? Quite a lot actually. An estate plan, a properly and carefully drawn will, perhaps incorporating a testamentary trust, and sometimes, a deed of family arrangement. The reward for both you and your beneficiaries is peace of mind flowing from increased confidence that your will be done.

First, a definition: a will is a document by which the will-maker directs the manner in which his or her property shall be dealt with upon and after his or her death. There are a number of formalities that are required in order for a document to be a valid will—

• it must be in writing;
• it must be signed by the will-maker; and
• the will-maker’s signature must be witnessed or acknowledged by two people present together.

A will can only direct the manner of disposal of property that the will-maker owns at his or her death. A will cannot direct the manner of disposal of an interest in land held as a joint tenant; that interest passes to the other joint tenant no matter what the will states. Nor can it effect the disposal of an interest in a joint bank account, or superannuation entitlements, or life insurance nominations. It cannot effect the disposal of any property held in a trust (including what is commonly known as a family trust).

Again, a will can effect a disposal only of property which the will-maker actually owns.

A will-maker is, in general, free to dispose of property by will in whatever manner he or she may wish, however frivolous and capricious. One notable Canadian will-maker left all of his estate to whichever Toronto woman had the most children in the 10 years following his death. (It was shared by four women who each had nine children in that period.)

There are limits, however, and a will-maker is expected to make adequate provision for the support and maintenance of certain relatives. That expectation is protected by legislation, the Inheritance (Family Provision) Act 1972 (SA), which provides that certain persons can apply to the Supreme Court (after the death of the will-maker) to have the terms of a will varied so as to make greater provision for themselves.

If a will is invalid, or has been revoked, then the property of the purported will-maker will be dealt with according the rules of intestacy. They are quite complex and beyond the scope of this article. The consequence is that the property may be distributed in a manner quite contrary to what the deceased actually intended. Invalidity may arise through a lack of formality of the document, uncertainty and poor drafting, unforeseen events and many other factors.

Revocation will generally arise from marriage (remarriage) or from an attempt to draft another will (even if it is itself invalid), and many other factors.

Last month I took the seasonal opportunity to write about the gift of life, and in particular, the gift of life arising from death where on the death of a person, his or her organs are, in the absence of a direction from that person to the contrary, donated to save or improve the lives of others.

This leads me now to the vexed issue of organ donations by healthy people. Kerry Packer’s helicopter pilot famously donated a kidney to his boss. The practice is not unusual in familial relationships, with siblings or parents often (or even usually) being willing to donate an organ to help save the life of a loved one. And anecdotal evidence suggests that there is a substantial black market in organs which have been sold by the ‘donor’, or have been stolen from them. As things presently stand in Australia it is quite legal to give an organ to another person (even a stranger), but illegal to sell one. Why? The policy behind this law is not clear. Perhaps fear of a corrupt and exploitative organ market developing, where individuals under financial duress are making decisions that they would not otherwise make. ‘Pay off your credit card debt now! Finance your house deposit! With just one kidney!’ Demand would drive prices up and altruistic ‘stranger’ donation would disappear. As a result the only transplant waiting list left would become one based on wealth, not health, with organs going to the highest bidder, rather than the most needy.

As the situation now stands, the donation of an organ by a healthy person is posited as a strong example of altruistic behaviour and the vast majority (95%) of such donors are satisfied with their decision, and would do it again. A small minority (5%) suffer regret connected with the tyranny of the gift. A recent episode of the television programme House illustrated the point nicely. A woman wished to donate an organ to her partner, who was in need of that organ in order to survive. The operation was risky—there was a chance of the donor dying. The doctor was aware that the partner was in fact planning on leaving the donor, and that the partner had not told her of those plans. The doctor told the donor. The donor said something along the lines of, ‘I know. I’ve known that for a while. That’s why I’m willing to donate. She will never be able to leave me now’. Unfortunately for Dr&nbps;Richard Batista aged 49 of Long Island, his donation of a kidney to his wife in 2001 did not stop her leaving him. On 7 January this year, Dr Batista’s lawyer demanded the return of the kidney or the payment of its estimated monetary value of USD 1.5 million.

The number of actual organ donors per million population in Australia is scandalously low—only ten donors. Last year there were only 198 organ donors in the entire country, the lowest level since 2003, and substantially less than the 1989 figure of 231.There are currently more than 2,000 people, many of them children, on transplant waiting lists in Australia. In the coming year, more than 100 will die waiting for a transplant. Many more of them will continue to suffer terrible impairment to their quality of life.

But it need not be so. The death of one person can give life to several others—liver, heart, kidneys and so on—or alleviate their suffering—cornea, pancreas and so on.

Whether to donate the organs of a brain-dead person is an emotional and difficult issue. Were it a question of pure reason, the answer would be simple: donate every time. Why is it that despite 94% approval for organ donation as a concept, the actual rate is so tragically low?

I don’t think it is anything to do with religion. The number of adherents to faiths which proscribe organ donations is not very high. Nor are there many faiths that hold such anti-life views. Our collective failure to facilitate suitable organ donation rates is more likely connected to, firstly, the rather confronting contemplation of the process and the implementation of administrative steps to effect it, and, secondly, a perception that notwithstanding the rather obvious benefits to others, that it would be somehow disrespectful to the deceased. Somewhat ironically, some relatives will oppose an organ donation even when the deceased has clearly and specifically stated that he or she wishes to be a donor.

In South Australia, organ donation is controlled by the Transplantation and Anatomy Act 1983 (SA). When a person dies in hospital or is taken to hospital after death, a hospital officer may authorise the removal of organs in certain circumstances. The Australian Organ Donor Register is one way of ascertaining the wishes of the deceased. In practice, the family of the deceased is generally consulted and donations do not proceed if the family is strongly opposed.

Statistics from NSW, the ACT, Victoria, and Tasmania indicate that, when called upon to make the decision, family members consent, on average, only 57% of the time. Frequently, the reason given for declining to give consent is unfamiliarity with what the deceased would have wanted.

Given that 96% of the population support the principle of organ donation, and the obviously public good that it entails, it ought to be presumed that a brain-dead potential donor consents to organ donation, and that the only way that presumption can be rebutted is by reference to a contrary instruction in the Australian Organ Donor Registry. This will require legislative change.

Give life, and have a very merry Christmas day.