As our “digital identities” become more predominant, planning around your “digital assets” is becoming increasingly important to consider as part of the estate planning process. One of many reasons to undertake careful estate planning, is to clarify your wishes and reduce the burden on the executors. It is important to specify who is legally entitled to administer your digital assets both within your Will and any other account by way of legacy nomination.

Social Media & accounts

Social media sites such as Facebook and Apple now allow their users to add legacy contacts to enable them limited control over the user’s account after their passing, once a death certificate is provided via their support page. If an executor or another individual was appointed to administer the user’s digital assets, taking advantage of such a function will simplify the process of administering the deceased social media account.

The ability to appoint a legacy contact is a new function, one that is not offered by a majority of websites. On websites such as LinkedIn or Twitter, a support page may simply assist you in deactivating the deceased account after providing a copy of a death certificate.

Passwords

In the more likely circumstance where websites have no method to appoint a legacy contact or even be deactivated externally, the only option would be to provide the administrator with the digital keys through passwords. Any person who is leaving a series of accounts, with different usernames and passwords, would be recommended to have a digital register, in a form of a spreadsheet or a table to be kept alongside their wills.

Given the frequency in which new online accounts are often created and passwords being changed, such digital registers should also be updated frequently. Alternatively, leaving behind the access to a  password manager, such as Lastpass can serve as an easier way for your administrator to access your full list of up-to-date passwords. 

Photos, videos and Cryptocurrency

A database of media files can be stored on online cloud servers or for larger databases, offline on hard drives or computers. The same is the case for cryptocurrency, which can be stored online for active trading, or offline in physical drives for added security.

In either case, a digital register should leave detailed information on how to access these accounts, via passwords in online accounts or instructions on where to locate and how to access a physical database of digital assets. The ways to leave your legacy on digital platforms are evolving, but it remains the best way to prepare by closely tracking and updating each of your digital assets individually.

For any questions regarding estate planning and your digital assets, please contact Jake Cho at jake.cho@perspectivelaw.com or call him today on 07 3317 4312.

There are many ways a Willmaker can equalise the benefits for their children under their Will.

This situation often arises where one or more of the adult children have received payments of money or property from their parents during their lifetime, to the exclusion of their other children. The parents want to ensure that on their death, all children receive an equal share of their estate.

1. Hotchpot

One option is to insert a ‘hotchpot’ clause under the parents’ Will. The effect of this is that advancements received from parents are taken as part satisfaction of a respective child’s share in the estate. This ensures that all of the children receive an equal share in the estate.  Below is a simple example:

Simon and Lisa are married and have three children: Matthew, Stuart, Monique and Catherine. Simon and Lisa pay Monique $250,000 to assist with purchasing her first home. They want this money to be taken into ‘hotchpot’ when the survivor of them passes, so that each child receives an equal share of the residue of their estate.

Monique’s share is reduced by $250,000.

This approach is not perfect. If there is no record of the payment to Monique, it may give rise to a dispute during the estate administration, which can result in litigation.  One approach to mitigate the risk of this happening is to have Simon, Lisa and Monique sign a Deed of Loan to record the advance of $250,000.

It needs to be clear within the terms of the Will, whether the unpaid amount of the advancement is to be repaid on the death of the parent, or is otherwise forgiven and forms part of the estate for the purposes of equalising the benefits between the children.

The equalisation provision best applies to distributions of cash, rather than distributions of assets, such as real estate or shares. If a beneficiary receives a transfer of real estate, and later disposes of the asset, then CGT may be applicable. Depending on their respective assessable income, the amount of tax payable will vary between the beneficiaries. This, in theory, reduces the value of the gift.

• Specific Gifts

Another option is for the parents to make specific gifts to the other children, equivalent to the value of the advancement.   The gifts are in addition to the child’s share of the residue of the estate.  The effect is that those children who did not benefit during the lifetime of their parents, will receive more from the estate.

Using the example above, ultimately, Matthew, Stuart and Catherine would each $250,000 in addition to their share of the residue of the estate.

The Willmaker will need to consider whether inflation is to be considered with respect to the value of the specific gifts.

At Perspective Law, we would be pleased to assist you with all your estate planning needs. Please contact our office on 07 3839 7555 for all your queries, or alternatively you can email Elizabeth Ulrick at elizabeth.ulrick@perspectivelaw.com, or any other member of our estate planning team today.

Queensland has been subject to several catastrophic weather events in the past, the most recent of which being the 2022 floods. As we start to rebuild from the havoc wreaked by this event, with the memories of 2011 still fresh in our minds, it is prudent to consider the impact of such devastating events on our contractual relationships. Picture this: you are about to settle on your beautiful new home. Settlement under the contract was due to be completed on 11 March 2022. During the floods that devastated much of the Southeast Queensland, your prospective new house was inundated with water. You are devastated. The Seller is devastated. But the looming question remains – who is responsible, and what can you do?

The Contract

Under common law, and expressly stipulated in the REIQ contracts, the property is at the risk of the Buyer from the date the contract is formed (or the next business day). This means that, providing the contract is valid, the Buyer may be compelled to complete the contract (and potentially rely on any insurance) in the event of loss or damage to the property after the contract date. It is for this reason, and the problems that arise as a result, that we recommend our clients obtain insurance from the date the contract is signed. Whilst the seller is obliged to treat the property with reasonable care until settlement, this type of weather event would be outside that consideration, and there is nothing that compels the Seller to maintain the insurance after the contract is formed.

Statutory Rights from the Property Law Act

All is not lost however, should the hypothetical above be your reality. In Queensland (and Queensland alone, although Victoria does have something vaguely similar) there is statutory provision at section 64 of the Property Law Act that allows a Buyer to rescind the contract in certain circumstances where damage has caused your residential property to become uninhabitable. However, there are several elements that need to be established before rescission can occur pursuant to this provision.

In order to rely on section 64 for relief, the contract for sale must be for a “dwelling house” which includes units in a Community Titles Scheme (your lot must be damaged, not the common property) but currently excludes commercial transactions. The dwelling must be ‘destroyed or damaged’ which means there must be physical evidence rather than a transient impediment to occupation. An event such as a fire, or the Brisbane river running through your living room may not need a thorough investigation. However, water ingress or rising damp from flooding can result in far less obvious physical manifestations (but may still be just as harmful to the property).

Another element that needs to be proved, is the damage must render the dwelling house unfit for occupation, when reasonably considered. This may result from only part of the property being damaged (such as the bathroom). But the damage must render the property unusable in the present condition. Temporary damage such as loss of lights or temporary power outage is unlikely to be sufficient to warrant notice by the Buyer under section 64. Critically, in this writers opinion, the fact that the damage may be rectified by the Seller prior to Settlement does not preclude the Buyer from being able to rescind the contract if, otherwise the Buyer is able to rely on this section. This is huge, and where the Queensland position varies from that of a similar statutory relief in Victoria. Essentially what this means is, if at the time the notice is issued (which must be done prior to the actual settlement date or possession date) the unit is proved to be unfit for habitation, irrespective of whether the seller is willing and/or able to rectify the damage (potentially, even if that can damage can be fixed prior to Settlement) the Buyer may issue a notice in writing to the Seller and effectively rescind the contract. Remember how we said the Seller is not obliged to maintain insurance on the property after the contract date? Should the Buyer effectively rescind the contract at this point (this point being, when Brisbane river is flowing freely through the living room) the Seller then becomes responsible for the property (and the damage). In Victoria, the only other State that has a statutory right akin to our section 64, if the Seller can (and does) rectify the issue prior to the settlement date, the provision can not be relied upon. A seemingly more equitable arrangement in our opinion.

The takeaway: always have a solicitor review your contract prior to signing. Whilst you may not always be able to change the position (section 64, can not be contracted out of), it is crucial that both Sellers and Buyers are aware of the risks they are signing up for.

At Perspective Law, we would love the opportunity to assist you with all your review needs. So, get in touch with Tony Crilly at tony.crilly@perspectivelaw.com or Katherine Blood at Katherine.blood@perspectivelaw.com or Stuart Wardrobe at stuart.wardrobe@perspectivelaw.com before you sign your next contract.

As of 1 January 2022, all homes or units that are being sold, or leased will require interconnected smoke alarms that are connected to the dwelling’s electrical supply.

All parties involved in a residential transaction should be aware of the following practical changes going forward.

Property Sale – REIQ Contract for Houses

The REIQ Contract for Residential Properties, updated on 20 January 2022, includes new provisions in line with the smoke alarm rules. Clause 7.8 of the Standard Terms of Contract requires any residential houses to comply with the new smoke alarm rules by the Settlement Date.

The Seller

As the Seller, the party must declare whether compliant smoke alarms are installed in the property as part of the Contract. False or misleading declaration under the Contract (or the Queensland Titles Form 24) may lead to penalties under the Fire and Emergency Services Act 1990.

However, under the Standard Terms of the REIQ Contract, the Seller has no further obligation under the Contract to provide evidence or records that compliant smoke alarms have been installed.

The Buyer

It is the responsibility of the Buyer to verify whether the smoke alarms are compliant with the updated rules.  If the property was found to not have complied with the new smoke alarm rules, the Buyer can request an adjustment of 0.15% of the Purchase Price. This is the only remedy that the Buyer can seek, and they cannot use the findings to request further discounts or to terminate the Contract.

While the remedies available to the Buyer are minor, ensuring that compliant smoke alarms are installed would be an important part of a property inspection and due diligence. This is especially important if the intent of the Buyer is to rent out the property after purchase.

Residential Tenancies

Unlikely the sale of a property, an owner seeking to rent out their residential property is not required to provide specific notices to tenants regarding smoke alarms. The latest General Tenancy Agreement (as of June 2021) contains no provisions related to smoke alarms. Nevertheless, a lessor must comply with Smoke Alarm rules, including the additional requirement to clean and test the smoke alarms within 30 days before the start of a new (or renewed) tenancy.

The tenant in the residential tenancy will be required to clean and test the smoke alarms every 12 months and must inform the landlord if the smoke alarm needs replacement.

If you have any questions about how the latest smoke alarm rules may affect your transaction, please feel free to contact Jake Cho at Jake.Cho@Perspectivelaw.com or Perspective Law on 07 3839 7555.

We have many clients that ask for recommendations about the control clauses in their family trust and how they can shape that as part of their overall succession plan.

The exact terms of the Deed must be read carefully to determine what will happen if the trustee needs to be replaced, or if the controlling individual loses capacity,  dies or becomes bankrupt (and therefore poses a risk to the trust assets).

There are a few basic points that should be kept in mind when a review is made of the trust terms for an estate or succession plan.

What is an “appointor”?

Most discretionary trust deeds will include clauses that provide a mechanism to give a person the power to change the trustee by “appointing” them. In most trust deeds they are referred to as the ”appointor” or guardian”. This is usually the person for whom the trust was established and the Primary Beneficiary of the trust. If the “controller” of the trust considers that a change of trustee is required,  notice can be given and a deed appointing a new trustee signed. This might be because there is a change in the relationship status of the appointor, a dispute with a creditor has arisen, or changes to the family succession plan have been requested.

It is important to note that cases have recognised the appointor can, depending on the terms of the deed, have fiduciary duties to act in the best interests of the beneficiaries of the trust.  The role should be taken very seriously as there may be consequences for breaching the fiduciary duty. Do I need an appointor for my trust?

There is  no necessity for having the role of appointor in a family trust. In practical terms, the trustee (and, in the case of a corporate trustee, the directors of that company) has the day-to-day operating control for the trust, which includes managing money, bank accounts, buying and selling shares or property and using the income of the trust for the benefit of the chosen beneficiaries. The appointor is the person who has the power to change the trustee. This means, if a trustee is not acting in a manner that is in accordance with the purpose of the trust, which appointor expects that they will do, then the appointor has the power to remove that person or company and appoint a replacement. This might be for example where the trustees fail to consider the needs of the appointor as a beneficiary and prefer some over others in distributing income or capital from the trust. It is much better to have a clear controller or appointor in the trust, so the clear succession of that power is made if they die or become incapable of acting.

Can I have a company act as appointor of my trust?

The role of an appointor is a role created under the written signed terms of a trust deed. If the trust deed includes terms that allow a company to act as appointor, a company can act as appointor of a family trust. This can be very important if there are more family members than just one Principal interested or involved in the powers of appointing a trustee to the trust.

Should I have a company act as the appointor of my trust?

There are certain circumstances where using a company to act as trustee of the family trust is vitally important to the overall succession plan for the family group. Very often family trusts are used for a collective family business or group of property assets and everyone has a vested interest in the success. In that case the individual family members might want to be secure in knowing they have a share in a company that can exercise the powers of appointment of the trustee, so they are not excluded from decision making. They may want to reach formal agreement about how the company as appointor can make decisions regarding the trustee and the individuals that can control the trust. They may do this by excluding spouses of family members perhaps to protect the assets from claims under Family Law or other creditors.

An appointor company does not hold any assets, so there is no risk to the shares but there may be significant administrative benefits, by carefully managing control of the appointor role. Where a company is resolved to be acting as the appointor of the trust, then there is a cost for the company to be established, registered annually with ASIC and records maintained on an ongoing basis.

A corporate appointor will be very useful where there are complex family arrangements and loans or securities supporting the business or assets of the trust. It is very appropriate where there are ongoing control arrangements, where it is being transferred to multiple family members or different generations.

If you or one of your clients have questions regarding the ongoing control of a discretionary trusts, please feel free to call on 3317 4312 or email Tony.Crilly@perspectivelaw.com.

1. What is a family provision claim?

a family provision claim is also known as a “claim” or court proceeding for further entitlement from an estate, as “contesting a Will” or as an application for “further and better provision.”  These claims or applications are made where an “eligible” person has been left out of a will completely or where they seek a greater share from an estate.

2. Who is able to make a claim?

We sometimes receive queries where a client is concerned that their sibling or friend might make a family provision claim, however, only certain applicants as defined within the Succession Act are “eligible”.

“Eligible applicants” include a:

• “Spouse”, defined as including a husband, wife, de facto partner, civil partner and a dependent former spouse.  It is possible for someone to have more than one spouse if, for example, they remain married but have entered into a new de facto relationship;

• “Child” which includes stepchildren and adopted children;

• “Dependent” – means a person who was being wholly or substantially maintained or supported by the deceased at the time of their death and who is:
  • A parent of the deceased;
  • A parent of a surviving child under the age of 18 of the deceased person; or
  • A person under the age of 18.

3. Are there any timeframes to be complied with?

an applicant must notify the executor in writing within 6 months from date of death of their intention to make bring a family provision claim.  They must then file the application in the Court within 9 months from date of death. 

The Court has discretion to allow an application to be held out of time after considering factors such as the reason for delay, whether the estate has been distributed and whether the beneficiaries of the estate would be prejudiced by allowing the application to proceed.

4. What are the steps that must be taken for a claim?

When an applicant files an Application for further provision, they must also file an Affidavit which sets out information in support of their case and a draft directions order which sets out a proposed timeline for the steps leading up to a trial of a matter.  The executor can either agree with the proposed dates or negotiate dates with the applicant. 

The directions order sets out dates for:

• The executor to serve material on any person who may be affected by the claim;

• The filing of a Notice of Address for Service by anyone who wishes to be separately represented;

• The filing of affidavit material by all parties;

• A compulsory without prejudice meeting to be held, usually between lawyers to narrow the issues and negotiate a settlement;

• The parties to attend mediation (this is a compulsory step);

• The matter to be set down for a trial if the matter does not settle at mediation.

5. What does the court consider?

Once eligibility has been confirmed, the court considers the claim on a two-step process:

• Whether there has been “adequate provision” for the applicant’s proper maintenance and support;

• If so, then what provision, if any, ought to be made out of the estate for the applicant.

Relevant factors included the value of the estate, the applicant’s financial circumstances and future needs and the competing needs of all beneficiaries.

6. Who pays for the claim?

The parties may negotiate costs, however, if they are unable to agree and the matter proceeds to a trial then costs are in the court’s discretion.  A successful party will usually have some proportion of their legal costs paid by the other party.

If the applicant is successful, then the estate will usually pay for the applicant’s standard costs.  If an applicant is unsuccessful then the Court may order that they pay their own costs, or even that they pay the executor’s costs.

The Court will consider the size of the estate, any reasonable offers that were made and if a party has failed to comply with the rules or a practice direction of the Court.

We recommend obtaining legal advice when considering filing an application.  We can assess the likely outcome of an application and advise of possible risks at an early stage.

7. What if I leave them a small gift?

We are sometimes asked whether a claim can be prevented if a testator leaves someone a small sum of money and we have seen Wills where a beneficiary is left a gift as small as $1 in an attempt to prevent a claim.  However, the relevant consideration is not whether an applicant has been left a distribution but whether that distribution is adequate for their needs.

At Perspective Law we are experienced in family provision claims, including acting for applicants or for executors defending the claim.  We can also provide advice when drafting your estate plan if you have concerns that a claim may be made on your estate.  If you wish to discuss your options, please contact Tony Crilly tony.crilly@perspectivelaw.com or Lauren Nolan lauren.nolan@perspectivelaw.com. Call us today at Perspective Law on 07 3839 7555 or go directly to our website and start the process on-line www.perspectivelaw.com.

The new edition of the Contract for Houses and Residential Land (17^th ed.) and Contract for Residential Lots in a Community Title Scheme (13^th ed.) were released late January of this year, and already the property world is buzzing. One of the biggest amendments to the contract terms, is under clause 6.2 the new ability of either party to obtain an extension for up to 5 working days if they are unable to settle due to delay or inaction of the Financier. More than one notice can be given but settlement must not be more than 5 business days from the original date.

In an obvious response to the media coverage of the incident in late 2021, where a retired couple claimed the deposit (a significant $65,000.00) on a young first home buyer couple who were unable to settle as a result of the Financiers delay, the Real Estate Institute of Queensland in collaboration with the Queensland Law Society have attempted to ameliorate what some would consider the harsh reality of our “time is of the essence” provisions.

This brings Queensland contracts (well, REIQ residential contracts at least) in line with the position in other states in Australia. Victoria for example, allow for a ‘default notice’ to be served on the Buyer if settlement does not occur as scheduled, giving them 14 days to remedy the default (on payment of penalty interest). The new clause in the REIQ residential contracts grants a unilateral right to an extension of up to 5 Business days, provided it is exercised prior to 4:00pm on the Scheduled Settlement Date. There is no limitation on the number of extensions that can be requested, provided the cumulative time does not exceed the 5 Business Days.

There are some questions being raised in the aftermath of the release of these amendments however, as to who should bear the additional legal costs of extending the settlement and whether these provisions can be contracted out of. What it does make clear is that if settlement timing is important for you (for example, in a situation where you are Buying a property and Selling a property simultaneously or need to book removalists and the like) a review of the contract prior to signing is critical to ensure your interests are protected and youunderstand the possible outcomes of the contract you are entering into.

The New REIQ contract also adds clauses about smoke alarms, pool compliance, payment of deposits by direct transfer, new sellers warranties on enforcement notices, services passing through the land which do not have an easement and new definition of the Contract date to address signing electronically.

Please contact our team at Perspective Law for assistance in all your Property matters at Tony.Crilly@perspectivelaw.com or Katherine.Blood@perspectivelaw.com   

Our last blog outlined some of the major points about testamentary discretionary trusts.

This blog will address some of the other key features of a testamentary discretionary trust (TDT).

As previously discussed, two of the main benefits of a TDT are asset protection and tax minimisation. You can read more about these benefits here (link Lauren’s blog).

Some of the other benefits of a TDT include the ability to:

• incorporate the terms of a Special Disability Trust (SDT);
• defer capital gains tax (CGT) liability;
• stream capital gains and franked distributions to beneficiaries; and
• “mere expectancy” asset protection.

1. Special Disability Trust

A TDT can be drafted to incorporate the terms of an SDT.

One of the major benefits of a SDT is that contributions by immediate family members to the trust do not impact on the mean test concessions for the beneficiary to the extend the contributions do not exceed the total amount which can be gifted to a trust (currently $500,000).  

There are also significant CGT exemptions for any asset donated to a SDT, including the main residence exemption.

If the amount to be distributed to a SDT exceeds the assets test assessment exemption (up to $694,000 indexed 1 July each year) then the balance of funds can be held by a separate TDT.

Incorporating a SDT under a TDT maximises the benefit for a disabled beneficiary. 

2. CGT Rollover

The assets transferred to a beneficiary pursuant to a Will, will not trigger a CGT event, until the assets are sold or transferred to a third-party. This is referred to as CGT rollover.

The same CGT rollover also applies to an asset transferred to a beneficiary from the Trustee of a TDT.

This position was confirmed by the ATO in Practice Statement LA 2003/12. It states:

“The cost base and reduced cost base of the asset in the hands of the beneficiary is calculated in the same way as it would have been if the asset had passed to them from the deceased’s legal personal representative.”

The principal place of residence exemption under s 118-195 of the Income Tax Assessment Act 1997 may also apply to beneficiary of a TDT exercising a right of residence granted by the terms of the Will. It is imperative the Will gives each beneficiary a qualified right of residence in relation to property.

3. Income and Streaming Powers

Provided it is not prevented in the Will, a TDT can stream capital gains and franked dividends.

This is the same as an inter vivos trust, subject to the terms of the TDT.

The benefits of a Trustee’s power to stream were set out by the ATO as follows:

“This allows beneficiaries to offset capital gains with their capital losses, apply applicable discounts and, subject to integrity rules, get the benefit of any franking credits attached to a franked distribution.”

4. Asset Protection

Also discussed in our previous blog was the protection that a TDT gives to a beneficiary in the event of a family law claim or bankruptcy.

However, to afford such protection, the testator must be willing to impose strict controls, exclusions and fetters on the terms of the TDT. 

In the Family Law context, the Court has not been inclined to consider the assets in a TDT as matrimonial property, or the financial resources of a party, in circumstances where a beneficiary has a “mere expectancy”.

Factors relevant to considering whether a party has a mere expectancy include:

• Whether the party is a beneficiary to a trust;

• The number of beneficiaries in the trust; and

• History, frequency and value of the distributions made to the party during the operation of the trust.

A key question is whether a beneficiary’s interest in the trust is really “discretionary”.  For this reason, a single testamentary trust controlled by all children arguably provides better asset protection than separate testamentary trusts for each child. This may be worth considering if the prospect of a family law claim against a beneficiary is likely.

To discuss TDTs further, we encourage you to call Elizabeth Ulrick on 07 3317 4311 or email her at elizabeth.ulrick@perspectivelaw.com.

After the Treasury Laws Amendment (Registries Modernisation and Other Measures) Act 2020 (Cth) (Act) was passed on 12 June 2020, all directors of Australian companies will need to be identified by a permanent unique number known as a director identification number (DIN). The main purpose of the Act is to:

• require that all directors have their identity verified as part of the DIN application process (includes alternate directors and company secretaries);
• require directors only have one DIN and prevent directors hiding behind aliases or variations of their name;
• prevent director identity fraud;
• apply a consistent regime across Australian body corporates, Aboriginal and Torres Strait Islander corporations, and registered foreign companies;
• further aid in the deterrence and penalise illegal phoenix activity; and
• impose criminal and civil penalties for non-compliance.
• impose criminal and civil penalties for applying for multiple DINs or misrepresenting a DIN being up to $22,200 (100 penalty units) and/or 12 months imprisonment.

When do you need to apply?

• Directors appointed on or before 31 October 2021 will be required to apply for a DIN before 30 November 2022;
• New directors appointed between 1 November 2021 and 4 April 2022 must apply within 28 days of their appointment.
• The resignation of a director will then only take effect from the date of notification and a director that fails to notify the ASIC of their resignation within 28 days may be held accountable.

How do you apply?

For Australian residents, the quickest way to apply will be online use the MyGovID app and then apply for the DIN at https://mygovid.gov.au/AuthSpa.UI/index.html#login noting that you will need the following information to complete the application.

• Tax file number
• Residential address as registered with the ATO
• Bank account details (as held by the ATO)
• Superannuation account details – including your member number and the funds ABN
• A dividend statement with the investment reference number
• A PAYG Summary issued in the last two years

If you do not have a MyGov ID, you can also apply by phone or by using a paper form however you will need to supply the following as proof of your identity:

• Certified Primary documents – one of the following:
  • Australian full birth certificate (extracts and commemorative certificates are not acceptable)
  • Australian passport (including passports that have expired in the past two years)
  • Australian citizenship certificate or extract from a Register of Citizenship by Descent
  • ImmiCard
  • Visa (if you are using a foreign passport but you are still in Australia).
• Certified Secondary Documents – two of the following:
  • Medicare card
  • Australian driver’s licence or learner’s permit. This must show your photo and signature, and the address on the card must match your details on the form.

For non-Australian residents, the application must be made either over the phone or by using a paper form and you will need to supply the following as proof of your identity:

• Certified Primary documents
  • Foreign birth certificate
  • Foreign passport
  • Australian full birth certificate (extracts and commemorative certificates are not acceptable)
  • Australian passport (including passports that have expired in the past two years)
• Certified Secondary documents
  • National photo identification card
  • Foreign government identification
  • Driver’s licence, as long as the licence address matches the address details on your application
  • Marriage certificate, but if you use this document to verify your change of name, you can’t use it as a secondary document
  • If you have changed your name, you must provide another document showing the change, such as a:
    • marriage certificate
    • deed poll
    • change of name certificate.

It is important to note that documents outside of Australia can only be certified by either:

• a notary public; or
• a staff member at an Australian embassy, high commission or consulate, including consulates headed by Austrade honorary consuls.

So make a note of the date and we recommend getting it done well ahead of time as there will be a rush to register late in the day. If you have any questions please call Tony Crilly or email us at info@perspectivelaw.com.

A thorough estate plan is even more important when you are dealing with vulnerable beneficiaries, such as someone who has a disability or is suffering from drug addiction or financial susceptibility.  Considerations can include retaining pension eligibility, ensuing the beneficiary has sufficient funds for their needs and keeping the funds protected from wastage.

Two main options include a special disability trust (subject to eligibility) and a protective trust.

Special disability trust (“SDT”)

An SDT provides for the care and accommodation of a person with a severe disability as defined in the Social Security Act.  They can be established during a person’s lifetime or pursuant to a Will provided the terms of the trust reflect the model trust deed endorsed by Centrelink.

SDTs can allow for income and assets means tested pension concessions.  All trust income is excluded from the income test assessment for the beneficiary.  An asset test assessment exemption applies, currently $700,250, and is indexed on 1 July each year.  The principal place of residence is also an exempt asset.  There are no limits on the amount of assets that can be held in the SDT, except that assets above the concessional limit will be included in the beneficiary’s assessable assets for determining eligibility for the disability pension. 

Anyone can gift assets to the SDT except for the beneficiary and their partner, who may only gift a bequest or superannuation death benefit within three years of receipt.  There is a gifting concession of up to $500,000 which applies to eligible family members of the beneficiary if that family member is also receiving or might be eligible for a government pension.  Additional contributions made by immediate family members are assessed under the usual gifting rules.

The primary purpose of an SDT is for the reasonable care and accommodation costs of the beneficiary.  However, the SDT may undertake discretionary spending not limited to the care and accommodation needs, provided it is for the benefit of the beneficiary.  There is a limit on the amount of discretionary spending which is currently $12,500.

To ensure the interests of the beneficiary are protected, there are strict reporting requirements and the SDT must be reviewed annually.  The trustee must provide annual financial statements to the Department of Human Services/Department of Veterans’ Affairs.  An audit may be requested by certain people, including the beneficiary and immediate family members.  The trustee can be either a professional trustee or two or more individuals. 

Protective trust

An alternative option is a protective trust.  This trust can be established where a beneficiary does not fit the eligibility requirements of a SDT and can be used for broader purposes as the trust is free of the restrictions imposed on SDTs.  Protective trusts can also be prepared during a person’s lifetime but most are established in a Will.  The asset and income exemptions that apply for an SDT do not apply to the capital or income of a protective trust.

It is not uncommon for the primary beneficiary of a testamentary trust to also be the trustee.  However, with a protective trust, a separate trustee holds the trust assets for the beneficiary.  They have the discretion to distribute income and capital to the beneficiary, subject to any terms specified in the trust deed or the Will.  The terms can be specific in relation to how much can be distributed or what the distributions should be used towards.  Alternatively, the terms can provide the trustee with wide discretion to create flexibility for changes in circumstances.  In some circumstances control of the trust can be transferred to the beneficiary upon a certain age or other condition. 

The choice of trustee is critical and two or more trustees may be preferable, such as a family member and an independent person such as an accountant.  A professional trustee can be appointed if there is no one suitable. 

Conclusion

To ensure that assets are protected for vulnerable beneficiaries, it is important that structures are put in place either during a person’s lifetime or on their death as part of their Will.  These structures can protect a beneficiary losing their disability pension or funds being wasted.  The type of trust to be established and the terms of the trust depend upon the needs and circumstances of the beneficiary. 

If you consider that an SDT or protective trust may be suitable for your circumstances, please contact Perspective Law on 07 3839 7555.