If you are considering purchasing a property with another person, it is important that you understand how you will own that land. When more than one buyer is involved, you will have the option to elect to be either joint tenants or tenants in common.

Though these terms may sound similar, each of these agreements confer different rights and interests upon owners. Regardless of whether you are buying property with a partner, family member or friend, determining which type of ownership is right for you before purchasing property can prevent substantial legal and financial difficulty in the long run.

It is critical that you decide how to hold the property before you sign a contract, as any change can incur further stamp duty at the normal rates. It is possible to transfer from one name into joint names as spouse and it will be exempt from stamp duty. However, the same opportunity to does not apply to the reverse for a transfer from joint names into one name only. You might do this for asset protection purposes because that person is at risk of creditors in a trading company.

The Differences between Joint Tenancy and Tenants in Common

Joint tenancy is where two or more people jointly and equally own property together rather than a quantified share of it. At law, joint tenants are recognised as the single owner of the property. This type of arrangement is common between married or long-term couples.

As it is not possible to separate each tenant’s share, there are limited circumstances in which joint tenancy agreements can come to an end. Such circumstances include but are not limited to where the property is sold to a third party, or where one joint tenant transfers their interest in the property to another person. On the death of one joint tenant, the property “vests” automatically in the surviving person. All that is required is to record the death on title and the property will be in the sole name of the survivor. This is an important step as you cannot sell the property unless and until it is in the correct name.

In contrast, tenants in common own separate and distinct shares of a single property.  These shares may be equal or unequal. For example, one tenant in common may own a 10% share of the property, while the other owns the remaining 90%. These shares may be disposed of as each owner chooses. Though each owner will own a portion share of the property, the land is not physically divided between them. Rather, each tenant in common is entitled to full physical possession of the land.

However, the key difference between these arrangements concerns what happens to the property after one owner passes away. In this situation, if a property is owned by joint tenants, the deceased’s interest in the property is transferred to the surviving tenants. The property does not become an asset of the deceased’s estate. This is called the “right of survivorship”.

In a tenant in common arrangement however, no such right of survivorship exists. Instead, the property will become an asset of the deceased’s estate. As a result, the deceased owner’s share must be transferred only to the beneficiary of the estate or be otherwise dealt with by the estate’s legal representative.

Due to these essential differences in your rights as owner, it is important to ensure you enter into the ownership arrangement that is right for you.

At Perspective Law, we can assist you to evaluate your circumstances and make sure that you are entering an arrangement tailored to your needs. Should you be interested in our advice or more information, please contact us for an obligation free discussion (07) 3839 7555.

Managing a deceased estate is no easy feat for an Executor. If appointed to the task of collecting the deceased’s assets, like selling the main residence, shares, bank accounts, superannuation and other property, it can get complicated. There can be the additional challenge of dealing with the interest in private companies and family trusts.  We highlight below some of the issues in an estate administration that we see on a daily basis.

• Tax and superannuation

It is likely that an Executor will have to deal with the deceased’s superannuation benefits as part of the estate administration process. Very often a Binding Death benefit Nomination is made directing the member balance to either the spouse or the estate. Once the executor has redeemed the superannuation death benefits, they should consider the most tax effective way to distribute these to the beneficiaries.  The executor should obtain a calculation of the withholding tax on the superannuation benefits payable to any non-residents for tax purposes. There is an obligation to withhold tax from any super paid to non-dependant, and this should be taken into account when making distributions to reflect the entitlements under the Will.

• Find my super

During the course of a person’s life, they might become a member of multiple industry super funds. There can be substantial benefits attached to some member accounts in additional funds, including significant life insurance. Consider whether to perform a “find my super” search, with the Australian Taxation Office as early as possible in the estate administration process.

• Interest on Bank Accounts

One of the issues in dealing with interest on the deceased’s bank accounts, is whether a beneficiary is “presently entitled” to receive that income. This will determine whether the beneficiary or the estate is liable to pay tax on the net income. A beneficiary will not be presently entitled to income of the estate until it has been fully administered. Note this does not mean that the estate has to be wound up, just that the executor makes provision for the tax payable on interest as well as all debts and all specific assets or cash payments.

• Sale of main residence within 24 months date of death

The sale of the deceased’s main residence is generally exempt from capital gains tax as it falls within the main residence exemption. However, for this exemption to apply, the property must be sold within 24 months from the date of death. Beware of circumstances that might affect the main residence exemption, such as if the deceased’s ownership in the main residence passed to them as a beneficiary of a deceased estate, or they had rented out the property for some period of time. It is crucial to get evidence of the cost base such as original land purchase, building contract construction price and the exact dates the property was rented out and when use as a main residence resumed.

• Cancellation of credit cards and auto debits

Credit card and auto debit facilities should be cancelled immediately to prevent identity fraud. The executor should return the credit cards to the relevant facility for cancellation. However, be aware of any loan repayments by way of a direct debit, as alternative arrangements may need to be made.

• Estate Bank Account

It is important that the Executor opens an estate bank account for the collection of estate assets. Any income earnt on estate assets should also be paid into this account, including any dividend payments on shares and interest on bank accounts.

This serves two purposes. Not only does it assist to distribute the estate assets according to law, but it also assist the Executor to comply with their duty to account, which can be required by the Court and requires the Executor to produce a full inventory of the estate at any time during the administration.

• Tax returns for personal, trusts and companies

The Executor is responsible for fulfilling the tax obligations of the deceased person and is personally liable for the tax payable. They will have to conduct investigations to find out whether the deceased had interest in any trusts or companies, as these will need to be declared to the Australian Taxation Office. If the estate is earning interest on assets, an estate tax return will need to be prepared and lodged. It is important to contact the deceased’s accountant to find out this information and obtain advice. 

• Cancel passport driver license and electoral roll membership

As with credit cards, the driver’s licence of the deceased should be sent to the Department of Transport and Main roads for cancellation. The executor should request confirmation of the details of registration of any motor vehicles owned by the deceased and arrange for the interest in the motor vehicle to be transferred to the Executor.

The electoral roll should also be notified of the death. This is important, particularly if it is an election year, otherwise the estate will be at risk of incurring a fine.

If you require further information on the administration of an estate, please do not hesitate to call us and talk through any of these issues on (07) 3839 7555.

While this may seem like a morbid question for a Monday morning, dealing with your superannuation is an important part of estate planning. After all, your super funds may represent a sizeable portion of your asset pool when you pass away.

However, unlike your other assets, your super death benefit is not automatically considered to be part of your estate. Your super therefore cannot be dealt with by your Will unless you have directed your super fund to leave the benefit to your legal personal representative (‘LPR’), otherwise known as the executor of your estate.

This is because your Will deals with the assets already owned by your estate such as your savings, property, shares and other personal items. Conversely, your super is held on trust by the trustee of your super fund.

We recommend executing a Binding Death Benefit Nomination form through your super fund to specify who you wish to receive your death benefit. This is a legally binding document which must be submitted to your super fund and updated every three years.

You can choose to nominate either your dependants or your LPR.

Nominating your dependants

Section 10 of the Superannuation Industry (Supervision) Act 1993 (Cth) (‘SIS Act’) defines ‘dependant’ to include your spouse, children or a person with whom you have an ‘interdependent relationship’ with at the time of your death. An ‘interdependent relationship’ describes a close personal relationship between two people who live together and receive financial, domestic and personal support from each other. When you pass away, your super fund will distribute your death benefit to your dependants.

Nominating your LPR

Alternatively, you may nominate your LPR to distribute your super funds in accordance with the terms of your Will. This means that your super benefit forms part of your estate and may be distributed to your beneficiaries.

What happens if a Binding Death Benefit Nomination has not been completed?

If you do not give instructions to your super fund, or if your Binding Death Benefit Nomination is declared invalid, the trustee will have discretion to distribute your death benefit to either your dependents or your estate. Completing a Binding Death Benefit Nomination Form removes this discretion and ensures that your wishes are carried out.

At Perspective Law, we will submit a Binding Death Benefit Nomination to your super fund during the estate planning process. We have the experience to ensure that this form is completed properly to avoid any question of its validity.

Should you be interested in updating your estate planning, please do not hesitate to give us a call on (07) 3832 5555.

Life is full of surprises and not everything goes according to plan. The one thing we treasure is the freedom to make a choice about our life including our health care. As distinct from an Enduring power of Attorney, it is important to plan ahead for the possibility that you may no longer be able to make serious end of life decisions regarding your health care. What happens if you lose capacity to make health decisions on your own behalf?

A situation may arise where you suffer from an accident, dementia or a mental illness. It is absolutely vital to express your wishes for your future health care ahead of time, so that health professionals have clear directions about the types of treatment that you want to receive. Doing so can also relieve the burden experienced by your loved ones when making difficult decisions on your behalf. Every person we have spoken to that had to make that tough decision about continuing life support for their spouse felt terrible no what the decision made.

Certainty about your end if life health care can be achieved through an Advance Health Directive (‘AHD’), a binding legal document which spells out your future health care preferences. The  document under  ‘Your Directions’, is divided into three parts; life-sustaining treatment,  other health care and  blood transfusions. You can give binding directions in each category, so that a hospital or doctor knows exactly what you require.

An AHD allows you to give directions about life-sustaining treatments such as CPR, assisted ventilation and artificial nutrition (example naso-gastric feeding) which aim to prolong your life. To make a  decision, on whether you want this to be done, we recommend that you consider your age, state of health, your values and what quality of life means to you. You can choose to either choose yes or no to  particular treatment in different sets of circumstances to life-sustaining treatments, or even leave the decision with your attorneys.

The next part of the document allows you to give directions regarding both general and special health care. General health care relates to the majority of medical treatments, procedures and services for mental and physical conditions. Conversely, special health care includes procedures such as organ donation, experimental health care and participation in special medical research are options you can choose.

The final part of ‘Your Directions’ relates to blood transfusions. This includes the transfer of blood, red cells, platelets and/or plasma. You may stipulate the terms upon which you would consent to a blood transfusion or list the types of transfusions that you would accept. This section may also be useful if you have religious preferences that do not sanction the procedure.

Your doctor will need to explain the treatment options to you and witness your AHD to confirm that you have capacity to execute the document. During the appointment, your doctor will explain the medical implications of each health states and treatment in the context of your medical history. If you are terminal, palliative, unconscious or in a permanent negative state, you may consider treatments in a  different light and select different options.

It is also worth noting that an updated version of this document was recently released by the Queensland Government which allows you to appoint attorneys for health matters. This section does not need to be filled out if you have prepared an EPA.

If you wish to have an Advance Health Directive as part of your strategic estate plan to ensure that your wishes regarding your future health care are clearly recorded, please contact our office on (07) 3839 7555.

An Enduring Power of Attorney (‘EPA’) is a legal document that allows you to appoint one or more trusted individuals to make decisions about your financial and personal (including health) matters should you lose capacity to make these decisions on your own behalf.

An EPA is a forward-thinking document. It plans ahead for a situation where you lose capacity to manage your own affairs and outlines your wishes for your care ahead of time. For example, an EPA would come into effect should you experience a medical condition (such as a stroke) , mental illness or accident that impairs your decision making or ability to sign (such as paralysis) . You are also able to specify the circumstances under which your attorneys may begin exercising their decision-making powers. Ultimately, the document enables your loved ones to manage your affairs in accordance with your needs and best interests. Most of the time it is needed so that access to bank accounts, access to insurance, access to superannuation member benefits and a sale of  property is required to support you. Financial institutions are very tough on proving what powers the attorney has been granted, so very careful thought must go into the drafting of the special conditions and what actions an attorney can take.

At the end of 2020, the Queensland Government introduced a new EPA form which separates your attorneys’ decision-making powers into two sections: personal (including health) matters and financial matters.

Personal (including health) Matters

The first section of the form relates to personal and health matters. This covers decisions about your general welfare, including the support services that you may require and decisions regarding your place of residence.

The section also relates to decisions surrounding your health care, enabling your attorneys to make decisions regarding any medical treatments and services that you may require. If you have specific wishes about your future healthcare, an Advance Health Directive may be completed with the assistance of your General Practitioner to supplement your EPA. We will discuss this further in our blog post next week.

Financial Matters

You may also enable your attorneys to assume responsibility over your financial affairs should you lose capacity. This may relate to access to superannuation, making claims on insurance policies, managing your businesses, paying your expenses, selling your property or making investments on your behalf.

It is also worth noting that the new EPA form allows you to require that your attorneys notify you, or another trusted person, of the content of any decisions made on your behalf. This is an extra layer of accountability to ensure that your attorneys are acting in your best interests.

We recommend preparing an EPA as part of your strategic estate planning to support your loved ones in carrying out your wishes in the situation that you lose capacity. An EPA can also provide you with peace of mind, as you can be confident that your needs have been planned for ahead of time.

At Perspective Law, we can insert tailor made clauses to further maximise the protection that an EPA can offer. For more information, please give us a call on (07) 3317 4312.

A testamentary discretionary trust is used to manage family assets and businesses. It has significant tax advantages and asset protection benefits for beneficiaries, making it a popular option for testators who wish to provide financial security and peace of mind to their families.

Firstly, it is useful to outline the basic operational structure of a testamentary discretionary trust. These trusts are operated by the trustee, who controls the trust assets and makes discretionary distributions in favour of the beneficiaries. Conversely, the appointor of the trust has the important power to appoint and remove trustees. The trust deed will also stipulate the testator’s family members as the class of beneficiaries.

The trust itself is considered discretionary as the trustee can withdraw capital and distribute income as they see fit. This provides a high degree of flexibility to the trustee.

On the one hand, it is open to the trustee to retain the capital and produce income for the long-term benefit of the beneficiaries. This provides a protected environment for the environments from which the beneficiaries may benefit. This is especially important in circumstances where they are compromised or vulnerable or unable to support themselves or their dependants due to mental or physical disability, financial hardship from loss of employment, bankruptcy or matrimonial property disputes. The trustee can therefore securely invest the estate funds and generate income for the purpose of providing financial support to the beneficiaries.

The testator can express their preference for the trustee to retain the trust capital through a Statement of Wishes. With that being said, the trustee is not locked into this course of action. It is open to the trustee to remove the capital to suit the particular needs of the beneficiaries upon financial advice.

Finally, these trusts are also desirable for their tax advantages. We recommend that you seek accounting advice to further unpack the financial benefits of a testamentary discretionary trust to suit your particular circumstances.

If you would like further information about incorporating a testamentary discretionary trust into your strategic estate planning, please contact our office on (07) 3839 7555.

One of the most important steps of the estate administration process is obtaining a grant of Probate.

Probate is the seal of the Supreme Court of Queensland that officially recognises a Will as valid. It confirms that the formal requirements of the Will have been complied with and that the executor has been properly appointed. Furthermore, Probate demonstrates that due notice has been given that the document is the final Will of the deceased.

It is necessary to obtain a grant of Probate to allow the executor to administer the estate. This enables the executor to claim estate assets, pay the outstanding debts of the deceased, make investments on behalf of the beneficiaries, and distribute the estate assets. Financial institutions and banks will require a grant of Probate to ensure the validity of the Will and the executor’s ability to transfer estate assets.

There are a number of issues that can arise when applying for Probate. This blog article will step through nine of these issues.

• Firstly, the Will is damaged or has holes in it from removed staples. In this case, the executor will need to explain how this occurred using a Form 111 – Affidavit of Plight. This Form requires a deponent to state on oath whether there were any other testamentary documents attached to the Will that have since been separated.

• The testamentary capacity of the Willmaker is another common issue that arises in the context of Probate. This legal issue was raised In the Will of Esme Jane Ferris, heard by the Supreme Court of Queensland in 2020.[1] At the time of executing her second Will on 14 March 2016, Ms Ferris had been diagnosed with rapidly advancing Alzheimer’s disease. Moreover, her psychiatrist had recommended that she be admitted to a dementia unit for specialised care. This drew into question the testamentary capacity of Ms Ferris to radically alter her first Will which had been executed on 31 May 2005. Ultimately, the Court was satisfied that Ms Ferris did not have testamentary capacity at the time, and the second Will was therefore declared invalid. A grant in common form was instead ordered for the earlier Will.

In these cases, the onus of proving testamentary capacity falls on the plaintiff. Probate will not be granted where there is significant doubt as to the testator’s soundness of ‘mind, memory and understanding’ at the time of executing the Will.[2]

• Another common problem occurs where the executor only holds a copy of the Will as the document is missing or lost. In this case, the executor will be required to complete a Form 9 – Application with supporting affidavit material.

• Thirdly, if the Will has been incorrectly or inconsistently dated, one of the witnesses will need to file an affidavit using Form 107 – Affidavit of due execution of will/codicil stating that the Will was duly executed. This Form must be accompanied by a copy of the original last Will.

• A Form 107 must also be completed where the attestation clause does not make clear that the testator was blind or illiterate at the time of executing their Will. One of the witnesses will be required to complete this Form to confirm that the testator was completely aware of the contents of the Will and approved of its execution.

• Next, if an attestation clause was not included in the Will at all, a Form 107 will again need to be filled out by a witness or another person present while the Will was signed. They will be required to confirm the identities of those present during the execution of the document. Alternatively, an affidavit may be filed alongside a copy of the Will.

• Moreover, a notice for Probate must include all known aliases of the deceased. If this does not occur, the process must be started again. A new affidavit using Form 104 – Affidavit of publication must be submitted, the notice must be re-advertised and re-served to the Public Trustee, and the registry counter must be attended to amend the headings of the filed documents.

• A typographical error in the application for Probate regarding the date of the Will is much easier to fix as an amended application can be filed.

• Finally, an application that has been submitted too early can be refiled after two weeks has passed since filing the last application and the publication of a death notice in the newspaper.

Evidently, obtaining a grant of Probate is an essential step of estate administration. At Perspective Law, we have the experience that is required to step you through this process. For further information, please do not hesitate to call our office on (07) 3839 7555 to discuss your specific needs.

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[1] In the Will of Esme Jane Ferris (deceased) [2020] QSC 26.

[2] In The Will of Edward Victor Macfarlane Deceased [2012] QSC 20 at [9] – [10]