Dangers of acquiring property as Tenants in Common without a formal written agreement between owners

For many, purchasing a property is becoming increasingly difficult due to inflated property prices and higher interest rates. Some prospective buyers may consider turning to Tenancy in Common as a means of entering the property market as a part-owner. Tenancy in Common is a legal arrangement in which each independent buyer owns and controls a portion of a property. Such an arrangement is not to be confused with Joint Tenancy, where parties own the whole of a property together. Under joint tenancy, when one joint tenant dies, the property will pass to any surviving joint tenant/s. Under a Tenancy in Common, the portion of the property owned by the deceased will form part of their estate and will not automatically pass to the remaining Tenants in Common. Joint Tenancy is usually preferred by couples, whereas Tenancy in Common may be utilised by friends, investors, or family members as a means of purchasing a property together while keeping their individual interests in it separate.

A common issue with Tenancy in Common arrangements is that often at some point, one of the co-owners wishes to sell his or her interest in the property, while the remaining co-owners wish to retain their interest. Having a valid, written formal agreement between the co-owners is crucial in these circumstances. Ideally, the remaining Tenants in Common will be able to buy the exiting co-owner out, acquiring his or her interest in the property. However, often the existing co-owners are unwilling or unable to do so, sometimes because they are unable to secure the funds necessary to purchase the interest in the time provided by the co-owner looking to sell. This usually results in a dispute regarding how or if the property is to be sold.

If the co-owners cannot agree on how to deal with the property, Section 38 of the Property Law Act 1974 (Qld) allows a co-owner to apply to the court seeking appointment of a Statutory Trustee to sell the property. A Statutory Trustee is a court-appointed corporation or individuals tasked with completing the sale of the property on behalf of the co-owners. Absent a formal written agreement between the co-owners, the court is unlikely to reject an application under section 38 to sell the property. However, a properly drafted and executed written agreement between the parties may enable co-owners looking to retain or increase their interest or prevent or delay the sale of the property to do so.

The court may reject an Application to sell the property via Statutory Trustee if a formal written agreement is in place between the co-owners that sets out how the property is to be sold. It is common for such agreements to have clauses requiring the co-owners to retain their interest for a certain period before being able to dispose of them, or even providing the co-owners with a right of refusal of sale by one of the other co-owners. The clauses inserted into such an agreement should be carefully considered and agreed upon by the parties prior to acquiring the property.

The uncertainty caused by a failure to execute a formal written agreement often leads to lengthy, expensive disputes between the co-owners if one or more look to dispose of their interest in the property. Not to say a written agreement is guaranteed to prevent a successful application for sale by Statutory Trustee, nor that it will prevent disputes between co-owners regarding sale, but it will go some way to reducing the likelihood of such events occurring.

If you would like advice on how to document an agreement, please call us now on 07 3839 7555 or email tony.crilly@perspectivelaw.com

Business Succession and Company Structure

We are often asked to review, the corporate structure of a client, with a view to preparing for a sale. This can be as part of a wider succession strategy when a client wants to wind down and retire.

The key is lots of forward planning, especially consideration of the tax and practical consequences, well before listing for sale.

Frequently, clients need to separate the risks in the business and prepare a structure so that is more easily acquired by a third party.

An example of this is introducing an interposed Holding Company.

The main purpose of a holding company, is to secure the key assets, such as intellectual property (trademarks, patents, domains), key equipment and cash. These are the key assets that you may want to protect from unexpected liabilities and legal claims.

An operating company typically conducts all of the sales, has the business liabilities and contracts with customers, suppliers, employees and lenders.

A third party looking to buy the key assets, may not be interested in assuming the current or historical liability for business trading activity over a number of years conducted by the subsidiary operating company.

If you are looking at selling down the business, we recommend getting strategic legal and accounting advice well prior to offering the assets for sale. Call us now and ask us how. Tony.Crilly@Perspectivelaw.com 07 3839 7555

Terms Sheets

Business Sales – why a Terms Sheet counts

When it comes to selling a business, the precise details of negotiations between a buyer and a seller presents numerous challenges. Before starting to draft any formal legal documents, it is best to prepare a term sheet that reflects all the most important parts of the deal. Terms Sheets must state as precisely and simply as possible the fundamental terms (such as price) and conditions (such as due diligence) of a sale and will act as a touchstone throughout all further negotiations. By clearly stating the basic terms, the parties can get on and negotiate the finer legal points of a formal contract with confidence there is mutual agreement to buy and sell. Inevitably, there is a process of push and pull regarding the finer points of a contract, but by having a signed Terms Sheet defining the fundamentals, parties are more likely to avoid disputes.

What is a Term Sheet?

A term sheet is a non-binding document that outlines the terms and conditions of a potential business transaction. It is usually signed early in the phases of sale negotiations and serves as a starting point for more detailed legal agreements to be prepared and signed later.

A term sheet is a document that outlines the terms and conditions of a proposed business sale, whether it is in the form of an asset sale or a share sale. Very different considerations apply for each and it is critical that key conditions are identified at the outset. This might be how to deal with work in progress, earn out of future contract profit, or payment of dividends prior to the date for completion. A Terms Sheet is not legally binding for an absolute sale, but it is binding in terms of confidentiality and exclusivity in dealing with the other party.

It serves as a starting point for negotiations and can be used as a backup reference point during the due diligence process, when a buyer is checking the details of the business or company.

Term sheets typically include details on the purchase price, financing, governance, and other important terms of the transaction, such as profit multiples. Terms Sheets can be used in many different types of business transactions, including mergers of companies, acquisitions of smaller companies, and investments in shares in a trading company.

Why are Term Sheets Necessary for the Sale of a Business?

There are many reasons why term sheets are necessary for the sale of a business:

1. TO PROVIDE A CLEAR UNDERSTANDING OF THE TRANSACTION:

By specifying all the fundamental details of the transaction, including the purchase price, payment terms, completion date, and any conditions that need to be met before a final agreement is reached. This helps both parties have a clear understanding of what is expected of them and helps avoid misunderstandings or legal disputes later.

• TO SAVE TIME AND MONEY:

Negotiating the terms of a business sale can be a time-consuming and expensive process as it is very resource-intensive and requires legal, accounting, lending time and expertise. A term sheet allows both parties to discuss quickly and efficiently the key terms of the transaction and reach a point where the balance of the terms between buyer and seller are agreed to be mutually beneficial as recorded in the agreement. It helps to clearly define the terms of the deal upfront, which can help to avoid lengthy and costly legal negotiations later.

3. HELP TO PROTECT BOTH PARTIES:
   Serves as a legal document that can be used to protect the interests of both the seller and the buyer in the event of a dispute. A term sheet can include provisions that protect both the buyer and seller, such as confidentiality clauses and exclusivity provisions. It clearly outlines the terms and conditions of the sale, including any warranties or indemnities that may be included.

Finance and Tax Considerations

One of the most important considerations in any business deal is the financial requirement to fund the purchase price as well as any adjustments or expenses required in the transfer of ownership. Term sheets will often include details on the purchase price, financing arrangements, and any conditions that may affect the final price.

It’s important to carefully review and understand the financial terms of a term sheet, as they can have significant implications for the buyer or seller. For example, the purchase price may be structured as a combination of cash, debt, and equity plus post-sale consulting expenses, or it may include contingencies such as earn-out provisions that could affect the final price.

Tax considerations are also an important part of any business deal, and term sheets should include details on how taxes will be handled or adjusted between the parties as part of the transaction. This may include information on the tax implications for the buyer and seller, as well as any GST considerations as a going concern, tax credits, or incentives that may be available.

Inclusions and Conduct

Term sheets may also include provisions related to physical assets such as vehicles, stock, plants, fixtures, and fittings. These are important considerations, as they can have a significant impact on the value of the business. For example, if a business includes valuable manufacturing equipment or unique technology created by the seller, this could be a major selling point for the buyer and should be included on the term sheet.

In addition to physical assets, term sheets may also include provisions related to the conduct of the business and parties involved during the negotiation and due diligence processes. This may include restrictions on the seller’s ability to take on new debt or make significant changes to the business during this time.

Due Diligence and Legal Considerations

Due diligence is the process of thoroughly researching and evaluating a business before entering a contract. It’s an important step in the term sheet process, as it helps ensure that both parties have a clear understanding of the risks and opportunities associated with the transaction.

During the due diligence process, buyers typically review a variety of documents and perform various analyses to assess the financial health, legal status, and overall viability of the business. This may include reviewing financial statements, contracts, trademarks, business names, logos, patents, and other legal registrations.

In addition to financial and legal due diligence, term sheets may also include provisions related to liquor licences, intellectual property, and restraint of trade to be imposed after completion on the individual Directors. For example, the term sheet may specify which intellectual property assets will be transferred as part of the deal or outline any restrictions on the use of the business’s trade names or brands.

Checklist for the Sale or Purchase of Shares

If you are considering the sale or purchase of shares in a business, there are a few key points you should consider before signing any document:

1. Price: The price for the shares or assets being sold or purchased should be clearly stated in the term sheet. This can include the total purchase price, as well as any payment terms or contingencies.
2. Ownership and control: The term sheet should outline the percentage of ownership and control the buyer will have over the shares of the company after the transaction is completed.
3. Management and employment: It’s important to clarify any changes to management and the employment of key staff or Directors that will result from the sale or purchase of shares.
4. Liabilities and warranties: The term sheet should outline any liabilities or warranties that are assumed by the buyer or seller because of the transaction.
5. Closing conditions: The term sheet should specify any conditions prior to completion that must be met before the transaction can be finalised and the balance purchase price paid. These can include regulatory approvals, financing arrangements, and other contingencies.

Think carefully before you sign and always get legal advice before you do. There may be binding obligations, such as confidentiality, non-compete, or exclusive dealing clauses, that will be enforceable against you.

Call us now and ask us how to best draft a Terms Sheet that suits your circumstances.

Contact Tony.Crilly@Perspectivelaw.com or call 07 3839 7555.

Discretionary trusts are a useful vehicle for operating businesses, minimising tax, and providing asset protection.  They are also flexible in nature – the trustee has discretionary powers with regards to distributing the net income and capital of the trust. However, the exercise of the discretionary power has been scrutinised in recent years, including in the case of Owies v JJE Nominees Pty Ltd (in its capacity as the trustee for the Owies Family Trust) [2022] VSCA 142 (“Owies”).  

My blog will identify the conduct of the Trustee in Owies that lead the Court of Appeal to find the trustees had not exercised their duty to give real and genuine consideration of the positions of the beneficiaries of the trust.

What is a discretionary trust?

Discretionary trusts are established by Deed between the Settlor and the Trustee.

The trustee holds the trust funds on trust for the beneficiaries. Beneficiaries are the object of the trust and have an interest in the trust property. They usually consist of immediate and extended family members, and hence these types of trusts are called “discretionary family trusts”.

Most discretionary trusts also have an appointor. The appointor has the power to appoint and remove a trustee.

Discretion to distribute trust income and capital

The trustee has the power to distribute the net income and capital of the trust to any one or more of the beneficiaries and in such proportions as it sees fit. The discretion is absolute and unfettered. 

At the end of each financial year, the trustee will resolve to distribute the net income of the trust fund. Ordinarily, if the trustee has not distributed the income prior to then, a certain class of beneficiaries will take the income by default.

The distribution of income is strategic. Subject to the terms of the Deed, net income of the trust can be split between beneficiaries Further, capital gains and franked dividends can be streamed to beneficiaries, reducing the overall tax position for the trust.

Trustee decision making

The trustees exercise of discretion to distribute net income has been scrutinised in recent years. The court has considered numerous applications by aggrieved beneficiaries, questioning the distribution of trust income because the trustee did not give real and genuine consideration to them as beneficiaries of the trust.  

This blog will consider the recent case Owies v JJE Nominees Pty Ltd (in its capacity as the trustee for the Owies Family Trust) [2022] VSCA 142 and in doing so, provide some practical tips for trustees when it comes to the requirement to give real and genuine consideration to the beneficiaries of the trust, prior to making its decision regarding the distribution of trust income.

Owies – The facts

In Owies, the beneficiaries of the trust were from the same family –parents, John, and Eva, and their three children Michael, Deborah, and Paul. The assets of the trust were in the order of $23 million and an annual income in the hundreds of thousands of dollars.

For each financial year from 2011 to 2018, the trustee determined to distribute income to John, Michael, and Eva in the ratio 40:40:20.  In none of the years was a distribution of income made to Deborah and Paul.  

John and Evan were directors of the corporate trustee, from its registration in 1970 to their deaths in 2020 and 2018 respectively. Michael was director in 2019.

Deborah and Paul had need. Deborah suffered from various medical conditions. Her medical expenses for 13 years exceeded $20,000 per annum. Her taxable income between 2013 and 2017 was between $39,000 and $44,000.  It was noted that Paul also had demonstrable need for income, but to a lesser extent than Deborah.

Owies – The outcome

The court held the trustee did not give real and genuine consideration of the positions of Deborah and Paul.

A key consideration for the Court of Appeal’s was that the nature and purpose of the power to distribute income, was to benefit Michael, Deborah, and Paul in equal shares.  The trust deed provided that upon the default appointment of income, the three children held the income pursuant to an express trust in equal shares. There was also provision for the children to take the trust fund in equal shares on the vesting date, in absence of a prior determination. 

The factors that lead the Court to determine the trustee did not give real and genuine consideration to Paul and Deborah were:

1. The trustee made no enquiries of Paul and Deborah.
2. There was no obvious reason why the trustee would favour Michael, John, and Eva, when Deborah and Paul had a demonstrable need for income.  
3. The trustee did not exercise an independent mind – there was an elision between the interests of John and Evan and the best interest of the beneficiaries under the trust.
4. There was a history of antipathy between Eva and Paul, and Eva and Deborah – for example, Paul had asked for a copy of the trust deed but was met with resistance.
5. There was a pattern of distributions from 2011 to 2018, which was inconsistent with a continuing obligation to consider the distribution of income for each accounting year

Practical notes for Trustees

The first point to note is that trustees should not fret about whether their second-cousin’s spouse will bring an application, questioning why the trustee did not make a distribution to them in 2018.

Owies illustrates that in discharging the duty to give real and genuine consideration, it is critical to identify the nature and purpose of the power to distribute. Trustees need to consider who are the beneficiaries on the default distribution of income and on the vesting date.

Once those beneficiaries are identified, the trustee must make enquiries of the position of those beneficiaries, and factor in that information as part of its decision-making process.  Further, the Trustee should obtain legal advice about the most appropriate way to document this process.

Importantly, the trustees must be acting in good faith, responsibly and reasonably at all times. 

The team at Perspective Law Pty Ltd can assist to mitigate the risk of disputes regarding trust administration. If you would like to get in touch, please contact us on 07 3839 7555 or email us at info@perspectivelaw.com.

Land tax laws have recently been announced and then withdrawn. The proposed changes were so that the value of any interstate land owned by an entity would be considered when determining Queensland land tax liability.

Queensland Parliament recently passed then withdrew the Revenue Legislation Amendment Bill 2022 which included changes to how land tax will be calculated in Queensland from 30 June 2023.

From that date, it proposed interstate land be included to determine:

• Whether the land tax-free threshold has been exceeded; and
• The total taxable value of your landholding, which is used to calculate the rate of land tax that will be applied to the Queensland proportion of your landholdings.

Once the rate of land tax has been calculated, you would only pay land tax on the land that you owned in Queensland.

If you do not own land in other states or territories, this change would not affect you.

If you do own land in another state or territory, you would need have had to declare your interstate landholding by setting up an online account with the Queensland Revenue Office and completing a declaration (within 30 days of receiving your assessment or by 31 October) which includes:

• Details of the land;
• The land value based on the statutory value in that state or territory; and
• Your percentage of ownership of the land.

Most (but not all) of the land tax exemptions applicable to Queensland land also apply to interstate land (for example, principal place of residence, primary production land).

The most obvious effect of this change is that many people who owned both Queensland and interstate property, but were previously below the land tax threshold, may have been above the threshold and liable to pay land tax on the Queensland property they hold.

What a difference a day makes especially in politics!

Note that in NSW and Victoria there are deemed Foreign Trust land tax surcharge laws. I suspect that it will not be long before Queensland follows suit to align with these states.

If you have issues about stamp duty and Land Tax, please give Tony or Stuart a call 07 3839 7555.

Trustees hold a general duty to preserve the trust fund. Those who fail to satisfy this duty may find themselves personally liable for losses caused by their breach. But what does this duty actually entail, and how can trustees avoid liability?

A Trustees must understand their underlying responsibility to preserve the trust fund. Section 5 of the Trusts (Investments) Amendment Act 1999 (Qld) (‘The Act’) authorises a trustee to invest funds from the trust in any investment they deem appropriate. However, trustee powers of investment are not limitless. To guard against personal liability, the trustee must ensure:

• The investment is not expressly prohibited by the trust deed, regardless of the benefit it may bestow to the trust.
• Reasonable care, prudence and diligence is taken when making and managing investments to ensure they are in the best interests of the trust and its beneficiaries.

The Act also sets out numerous considerations a trustee ought to undertake prior to, and throughout management of investments made with trust funds. The applicability of these considerations will vary depending on the trust, its purpose, its beneficiaries, and the proposed investment. Before investing trust funds, at a minimum, consideration needs to be given to:

• The purpose of the trust.
• The needs of the beneficiaries.
• The risk associated with the investment, including the proportionality of the investment to the value of the entire trust fund.
• Forecasted appreciation or depreciation of the investment.
• Potential returns and the expected time frame of such returns.
• Any management or maintenance costs associated with the investment.

Trustees must also be cognisant of the fact that their fiduciary obligation is an ongoing one – there can be no “set and forget” when it comes to trustee investments. The Act requires, at a minimum, annual consultation with a qualified financial advisor on investments made with trust funds, ensuring they continue to be in the best interest of the beneficiaries. The trustee must also ensure it utilises other sources of professional advice, including legal and accountancy, where the trust investments necessitate it.

Trustees may be held personally liable for losses incurred by the trust where they have failed to invest the trust funds, even where the trust did not expressly set out vehicles for investment or even the requirement to do so.[1] The takeaway here is that prudent and carefully considered investment of trust funds falls within the duty of the trustee and a failure to do so could be a costly. Failure to invest could be deemed a breach of trustee duties leading to removal as trustee and deemed a breach of trustee duties. Trustees must not interpret ‘cautious investment’ to mean no investment.

To conclude, investment of trust funds is a critical and essential means of preserving and strengthening the value of a trust and best serving the interests its beneficiaries. However, when acting as trustee, it is best to err on the side of cautious investment. Investment suitability can only be assessed on a trust-by-trust basis, which is why trustees must keep the above duties and considerations at the forefront of their mind both preceding and following initial investment to support the trust without exposing themselves to liability. If you are appointing someone as trustee or want to review your trust deed to determine your rights and obligations, please contact Perspective Law on 07 3839 7555.

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[1] Adamson v Reid (1880) 6 VLR (E) 164.

There are several factors a person needs to consider when deciding whom to appoint as the executor of their will. The decision should not be made hastily. An ill-fitting appointment can have devastating consequences to the administration of an estate.

An executor is the person appointed by the testator (the person making the Will) to manage, administer, direct, and dispose of property under a will (Encyclopaedic Australian Legal Dictionary, LexisNexis Australia).

Set out below is a non-exhaustive list of criteria to follow when deciding whom to appoint as an executor.

1. Trust

The testator must trust that the executor will carry out their duties competently.

Their duties include attending to the funeral, burial, or cremation arrangements, obtaining a Grant of Probate (if necessary), administering the estate according to law, paying estate debts, preparing an estate account and distributing the balance of the estate to the beneficiaries.

Trust is critical not only for the peace of mind of the testator, but because it is also the foundation of the fiduciary duty of an executor. The law recognises the executor is in a special position of power of the property of the estate, and the beneficiaries are considered vulnerable in transactions between the executor and beneficiary concerning estate assets. The executor must act for and on behalf of the beneficiaries. 

As a fiduciary, the executor must not put themselves in a position of conflict between their personal interests and their duties to the beneficiaries.

As a tool to assist with the decision-making process, the testator should consider appointing a person who they trust to carry out their wishes.

2. Financially Literate

The Executor has a duty to maximise the value of the estate.

In this context, it is important that the executor understands the nature and value of the testator’s assets, preferably prior to him or her passing away.  For example, where a testator owns commercial property which is tenanted, then the executor has a duty to maintain those tendencies and continue to collect rent.

Financial literacy can be an important skill for the Executor to have at the outset of the administration of the estate. It will assist when the Executor is dealing with financial matters such as tax and mortgages.  It is also recommended that the Executor be able to work with the testator’s accountants and other professional advisors.

3. Health

In most cases, we will advise the testator to consider appointing an executor who is younger than them. it is important that when the executor is required to act, they are able to do so, both mentally and physically.

If the person is experiencing health issues, then it is advisable to appoint someone else to act as an executor in the first instance.

If an executor has to retire or renounce during the administration, for health or other reasons, then this can delay the administration.

4. Location

It is recommended that the executor is within close proximity to the estate assets.

This is for several reasons:

• although the need to physically sign documents in this electronic age is becoming less likely, there are still documents which require physical signatures;  and

• there are a number of issues that can arise during the estate administration and may require the executor to physically attend the property.

Particularly recently, with the increased incidences of flooding and other natural disasters, the executor may be required to inspect the estate property and arrange for repairs. This is part of their duty to maintain and maximise the value of the estate.

As a tax consideration, it is important to appoint an executor that lives in Australia and is a resident for tax purposes. In the alternative, there is the potential for the estate to be deemed a foreign trust. This can result in a higher tax liability, meaning less estate assets to distribute to the beneficiaries.

In any case, the testator should appoint a substitute executor to act in the event that the first named Executor is incapable or unable to act. This will allow the estate to continue to be administered in circumstances where the first mentioned executor renounces.

From an accountability perspective, it is also worth considering appointing two executors to act in the first instance. Executors must act jointly.

As you can see, there are a multitude of factors to consider when appointing an executor under your Will. If you’d like to discuss any of these matters further, please do not hesitate to contact Elizabeth Ulrick (elizabeth.ulrick@perspectivelaw.com, 07 3317 4311) or Tony Crilly (tony.crilly@perspectivelaw.com, 07 3317 4313)

Options to renew are common in both retail and commercial leases, to provide the Landlord and the tenant  with the opportunity to extend the term  of the lease without the need to renegotiate a majority of the terms.

However, in preparing a formal Lease  with an option to renew or in exercising it, there are important factors that must be considered under legislation or commonly found in leases.

1. Exercise of Option – the Process

Leases with an option to renew should specify a specific time period within y which a party must exercise their option. This might  be the latest date by which the tenant must  exercise their option or lose the right to do so completely (e.g. no less than 6 months prior to the expiry of the initial term of Lease) or a range of earliest and later dates within which the tenant must  exercise their option (e.g. no earlier than 6 months prior but no later than 3 months prior to the Lease’s expiry).

As with all notices between parties of a Lease, a notice to exercise the option to renew a lease must  be made in writing, to the address for the Landlord as provided by the Lease. Failure by the tenant to exercise their option before expiry of  the option date will  have severe consequences, as the Landlord will have no obligation to accept a renewal request made outside of the exercise date.

Under the Retail Shop Leases Act 1994 (Qld), a Landlord is required to remind its tenant, in writing, at least 2 months prior, but no later  than 6 months before the option date, as stated in the lease.

2. Exercise of Option – the Pre-Requisites

Once the option is exercised, the terms of the Lease for the extended term will mostly  remain the same. However, there may be several key obligations under the Lease to be completed or rental to be assessed including:

• Redecoration: tenants are often required to periodically redecorate or renovate their Premises, usually triggered near the end of each term.

• No defaults: while the Landlord will not be able to decline a validly exercised option to renew, the tenant must ensure that they do not default on the lease, prior to or after their option exercise. This includes payment of all rent and outgoings up to date as well as evidence of insurance renewal certificates;

• Rent Review: leases generally require an annual review of rent under a fixed percentage increase or CPI review. In a new term, a market rent review is favoured, where the landlord will reassess the rent against the market value. Market review clauses will often contain mechanisms to resolve disputes regarding the assessed rent, for the market rent to be assessed by an independent valuer if the tenant does not agree with the initial rent review. Such mechanisms for disputes are required for Retail Shop Leases under the Act, regardless of the Lease’s provisions. It is much better for th etenat to have received notice of the market rental from the landlord as required under a lease, prior to the date for having to decide whether to renew the lease or not.

The timing of the market rent review should also be noted, to ensure that disputes regarding market rent do not delay the renewed term of the Lease.

Every person has different circumstances whether it be their family members, the assets they own or control and the wishes they have for the future should they pass away.

Like each person, a Will that creates a testamentary trust is as different as they are. Some examples of types of trusts are:

1. Special disability trusts- These are special trusts that provide for beneficiaries that are disabled, vulnerable due to inherent medical conditions and are unlikely to be able to effectively manage the assets they are gifted through the Will. If the person suffers from a significant disability either physical or mental, they may meet the Centrelink guidelines to create a special trust that allows tax fee income for their support and a capital amount paid for their accommodation or main residence purchase. Compliance with the Social Security Act and regulations must be observed I the drafting of the terms of the trust.
2. Restricted access to capital- Often a parent is very concerned about a child receiving a substantial amount by inheritance at a young age and losing it due to a business startup, an investment failure, or a relationship breakdown, early in their lives. To give a balanced approach, many clients create a gift of a percentage of the capital at an age say 25 years and then continue the control of the executors until a later date, say they reach 35 years. This assists a beneficiary by giving access to the income but preserving some of the capital from these risks and if they lose it all the first time, they have a second chance.
3. Change of control of assets- A Family Discretionary Trust can be used to create long term asset protection and tax minimization for a family group. By creating a mechanism for a change of control over a family trust, the Will maker can effectively make a distribution to the intended person. Careful consideration of the controller or appointor stated in the deed is required as well as the change of Director and shareholder of a trustee company. This can be done in the Will and a resolution of the company, as well as by a variation to the trust deed. Sometimes a Will maker insists on a trust being wound up and the assets transferred through to the estate trust created in the Will.
4. Restricted powers- Often the Will maker wants to ensure the benefits of the testamentary trust are utilized and to that extent they restrict the ability of the executor to dispense with or not establish the trust. They might also restrict who can be appointed to control the trust by excluding certain individuals such as a spouse of the child beneficiary.

Every case is different, and the Will should be drafted in a way that meets the wishes of the person making the Will. You only get one chance to get it right sometimes, so it is best to make it count. Our recommendation is always allow flexibility to meet changes in circumstances and leave as much potential benefit to the intended beneficiary as possible. Ask us how by contacting Tony Crilly at Tony.Crilly@Perspectivelaw.com.

The numerous films about estates have people believe that when someone dies, the family will be summoned to a meeting with a lawyer for the ‘reading of the Will’.  There is no requirement for this to occur and it rarely takes place.  Instead, we often have clients who come to us because they believe they are a beneficiary of an estate (or are considering making a claim on the estate) but have not received a copy of the Will.  In some cases, the Executor has refused to provide a copy.

Who is entitled to obtain a copy?

In Queensland, the Succession Act 1981 states that a person in possession of the original Will must allow certain people to inspect the Will or receive a copy.  The persons entitled include:

1. A person named in the Will, whether as a beneficiary, executor or other person, including in an earlier Will;

2. The testator’s spouse, parent or child;

3. A person who would have been entitled to a share of the estate if the testator had died intestate (meaning without leaving a Will);

4. The parent or guardian of a minor child mentioned in the Will or a child entitled under intestacy;

5. A creditor and anyone with a legitimate claim against the estate;

6. Anyone eligible to make a family provision application.

The obligation is not limited to the last Will – it also includes prior Wills, Codicils and other documents purporting to be a Will.

How can I obtain a copy?

If you know who holds the Will, and satisfy one of the above categories, you can contact the person confirming that you are entitled under s 33Z of the Succession Act and that you would like to inspect the Will or obtain a copy.  If you request a certified copy of the Will then you may need to pay their reasonable expenses.

If you are entitled to receive a copy but the person in possession of the Will is still refusing, it is important to seek legal advice.  There are deadlines for Court applications (9 months from date of death for further provision) including challenging the validity of a Will or making a claim for further provision from the estate and you do not want to miss the opportunity to file an application.

What if I don’t know where the Will is?

It can be trickier if you don’t know where to begin looking for the Will.  You may ask the next of kin or other family members.  Otherwise, the deceased’s solicitor, accountant or even the funeral home may know where the Will is held.  If a Grant of Probate is being obtained, then it is also possible to access documents from the Supreme Court of Queensland.  A search in the Queensland Law Reporter will show the name and address of the person or the law firm making the Application for a Grant of Probate.

Can I seek a copy of a Will while the person is still alive?

There are no obligations to provide a copy of your Will to anyone during your lifetime.  In certain circumstances your power of attorney may seek to obtain a copy of the Will to check whether they are selling assets which were specifically gifted in your Will.  It is otherwise entirely up to you whether you choose to disclose the contents of your Will prior to your death.

If you think that you are affected by an estate and a Will has not been disclosed to you please contact Lauren Nolan for advice at Lauren.Nolan@Perspectivelaw.com or call us today on 07 3839 7555.