Category

Estate Planning

Power of Attorney

How to Defend an Application to Review a Power of Attorney or Guardianship Appointment at NCAT (NSW)

By | Estate Planning

Australians live longer than ever before. Hopefully this means we can enjoy full and satisfying lives, but it also means many of us continue to live to a time after we’ve lost the mental capacity to make decisions for ourselves due to dementia or other illnesses of old age.

This fact has made the apppointment of Enduring Power of Attorney (EPOA) and enduring guardianship more significant legal decisions. An EPOA authorises one or more persons, a licensed trustee company, or the NSW Trustee and Guardian (the attorney), to act on behalf of the principal – the person with impaired decision-making capacity – by managing their personal financial and legal affairs.

An enduring guardian can make personal and lifestyle decisions on behalf of the principal, such as where they live and what sort of medical treatment they receive, when the appointer lacks capacity to make these decisions for themselves.

The trust and responsibility involved in these roles means those holding such positions can be closely scrutinised by other family members and beneficiaries of the person with impaired decision-making capacity. The EPOA, in particular, is not only responsible for acting in the best interests of the principal, but also those people who rely on the principal during his or her lifetime, as well as their beneficiaries once they die. Where a financial loss to the principal or his or her estate is sustained as a result of a decision by the EPOA, their appointment can be challenged.

In NSW the Guardianship Division of the NSW Civil and Administrative Tribunal (NCAT) is empowered to resolve disputes or concerns in respect of an incapacitated person’s guardianship or financial matters, including determining applications for the appointment of guardians and/or enduring powers of attorney, as well as reviewing these appointments.

This article will focus on what you should do if your appointment as an EPOA or enduring guardian is the subject of an NCAT review application.

The NCAT review process

The role of NCAT’s Guardianship Division is to protect and promote the rights and welfare of adults with impaired decision making capacity.

EPOA: When someone believes an EPOA is not acting in the best interests of a person who has lost capacity, they can make an application to NCAT to review the appointment under the Powers of Attorney Act 2003. NCAT accepts the request for a review if it believes it’s in the best interests of the person who made the EPOA.

As a result of a review, NCAT can vary or revoke the EPOA. It can remove an attorney from office or appoint a substitute attorney. Under its power of review, NCAT can require an attorney to provide accounts and information.

One reason an EPOA may be declared invalid, in whole or part, is because a person did not have the mental capacity to make a valid EPOA at or during a specified time. NCAT has the power to make this declaration about a person.

In some circumstances, NCAT may treat the application for review as an application for financial management and make a financial management order which suspends the operation of an EPOA for the duration of the Tribunal’s order.

To apply to the Court or NCAT for a review of the operation of a person’s EPOA, you must have legal standing. Those with standing include the principal (if they have mental capacity), a guardian or enduring guardian of the principal, and any other person who, in the opinion of the Court or NCAT, has “a proper interest in the proceedings or a genuine concern for the welfare of the principal”.

Guardianship: An enduring guardian is different to an EPOA in that they are appointed with specific powers to make important medical decisions for the principal (such as whether they should undergo an operation, or receive a certain drug), as well as decisions about living arrangements (assisted living, nursing home, etc.).

As with EPOAs, NCAT has the power to review the appointment of a guardian on its own motion, or at the request of anyone with a genuine concern for the welfare of the person. NCAT can revoke the appointment or confirm it. It may also change the functions in the appointment or make a guardianship/financial management order.

It should be noted that NCAT requires evidence that the person for whom the guardian is appointed has a decision-making disability and that disability results in the person being partially or wholly, incapable of managing themselves.

How to defend an NCAT review of your appointment as EPOA or enduring guardian

Both EPOAs and enduring guardians have important responsibilities and need to be aware of the time, stress and weight of those responsibilities before they agree to the appointment.

An EPOA has fiduciary duties and obligations to the principal which they can become liable for should they breach. The document creating the EPOA will set out these duties and obligations, as well as when the power becomes operative. If the EPOA begins when the principal loses mental capacity, the attorney should obtain a letter from the principal’s doctor or an appropriate specialist confirming that the principal has lost mental capacity and is unable to manage their own financial and legal affairs. This can be invaluable if there is a later request to review your appointment by NCAT.

An EPOA should always obtain appropriate advice about difficult or complex issues regarding the principal’s affairs. If an attorney decides to sell an asset of the principal, for example, he or she should first check with the principal’s legal representative to make sure the asset was not the subject of a direct gift in the principal’s will. This is a common cause of applications to review an EPOA to NCAT by beneficiaries of the will.

An attorney should be aware that under section 38 of the Powers of Attorney Act 2003 (NSW), they may apply to the Court or NCAT for advice or direction “on any matter relating to the scope of the attorney’s appointment or the exercise of any function by the attorney”. By doing so they may prevent those with standing having grounds to request a review by NCAT of their appointment.

An enduring guardian must act within the bounds of the Guardianship Act 1987 (NSW) in order to avoid grounds for review of their role by NCAT. This requires the guardian to keep the welfare and interest of the person they are acting for paramount; ensure the person’s freedom to decide and act for themselves is restricted as little as possible; take into account their views and encourage them to be self-reliant and live a normal life.

NCAT does not supervise enduring guardians and only acts where a concerned person makes an application, or information is received which leads to a review of the appointment.

Other than the requirements mentioned above, to avoid grounds for review an enduring guardian should ensure their appointment is made in writing and signed by both the appointer and the intended guardian in front of a designated legal authority. In carrying out their duties, the guardian also needs to pay due regard to any specific guidance or Advance Care Directives (ACDs) made by the appointer.

How our legal advice can help

If you act as an EPOA or enduring guardian for someone and your appointment is the subject of a review by an NCAT, you should contact Felicio Law Firm today. We have wide experience advocating for people before government bodies such as NCAT.

Similarly, if you need more information on the right way to appoint an EPOA or an enduring guardian, give our friendly team a call.

We’ll provide guidance and keep you fully informed throughout the process of defending your performance in the role and protecting your rights. At Felicio we take a considerate and collaborative approach to our relationship with our clients. Contact us today on (02) 4365 4249.

Discretionary Trust

What are the Benefits of a Discretionary Trust?

By | Estate Planning

Whether as a business structure or as part of estate planning, there are a number of advantages to setting up a discretionary trust, sometimes also called a ‘family trust’.

This article will provide some detail on the benefits – as well as some of the things to be cautious of – in creating a discretionary trust. Trusts can be a complex area of the law so it’s a wise course of action to seek the advice of an experienced legal expert if you wish to establish a discretionary trust.

The key advantages for estate planning

The main reason a person will set up a discretionary trust as part of their estate planning is the control it provides them in determining who and how much the beneficiaries of the trust will receive from the trust’s property and assets.

A discretionary trust will often hold shares and other investments. Money earnt on these investments is held in the trust and you, as the trustee, has the discretion about how the money is distributed to beneficiaries such as your immediate family members.

It’s important to note that the beneficiaries are a defined class of people who do not have a right to the assets of the trust but merely a right to be considered when the trustee decides to exercise their discretionary power to distribute income from the trust.

The second key advantage of a discretionary or family trust is that it can provide tax advantages. If as trustee you are earning an income that places you in a high income tax bracket, but your beneficiaries in the trust are in lower tax brackets, or even under the tax-free threshold, you can minimise the tax burden on income from investments by distributing trust income to those beneficiaries, who will be taxed at the lower rate.

A further strength of a discretionary trust is asset protection. In estate planning this can prove important where, for example, a beneficiary of the trust becomes bankrupt. In normal circumstances where a person passes on assets in a will to their adult child and that child is bankrupt, the assets will become available in the bankruptcy proceedings. But in the case of a discretionary trust, assets within the trust will be protected from the proceedings and any other creditors. The trustee can distribute to the bankrupt beneficiary once the bankruptcy period has expired.

Capital gains tax

A further benefit of a discretionary trust is that if an asset of the trust is disposed after a year within the trust, a 50% discount applies to any capital gains tax owing. This discount also flows through to beneficiaries on distribution of the proceeds.

Discretionary trusts as a business structure

A discretionary or family trust is a particularly popular means to structure a small business in Australia. The key advantages outlined above, including control, asset protection and tax advantages, equally apply.

Additionally, so long as the trust deed is correctly structured, small business capital gains tax concessions are also available in this structure. The benefits of limited liability are also available if the trustee is a corporate entity. The trust structure also makes it easier to admit new beneficiaries without the trustee losing control.

It’s important to also note some common disadvantages of this structure. Investors can be harder to attract when a trust structure is used and a bank, for example, is uncertain of the terms of the trust deed. Losses from the business are trapped in the trust, as only profits can be distributed, and property held in a discretionary trust is not able to take advantage of the tax-free threshold for land tax. There can also be a restriction on who can be distributed to if you need to make a family trust election, required where the trust wishes to claim losses from prior years, or imputation credits on franked dividends received.

Speak with Felicio Law Firm

At Felicio Law Firm we have many years of experience advising clients on the benefits of setting up a discretionary trust. We can take you step-by-step through more detail on the general points raised in this article and put your mind at ease about whether this is the right structure for your circumstances.

Contact us today on (02) 4365 4249 for an initial consultation.

Binding and Non-binding Nominations in Life Insurance and Superannuation Funds

Binding and Non-binding Nominations in Life Insurance and Superannuation Funds

By | Estate Planning

Estate planning has two primary goals. One is to protect yourself and your family in the event of unexpected illness or injury. The other is to ensure your loved ones are provided for after you die. Traditionally, having a valid will and naming beneficiaries through super fund providers have been key to achieving those objectives. However, experts now say that may not guarantee certain assets are allocated as per your wishes.

Keep reading to learn when binding and non-binding nominations in life insurance and superannuation funds may also be necessary.

What are binding nominations?

These are written instructions letting your superannuation fund trustee know who should receive your benefit when you die.

They play an important part in estate planning for two reasons. The first is that superannuation benefits are not legally classified as part of your overall estate. Therefore, your will, which ordinarily determines how the assets from your estate are allocated, does not apply to these benefits.

The second is that should there be a dispute among your family members after your death, the person or people you named as a beneficiary of your superannuation fund may be prevented from receiving the benefit, or it could be allocated to unintended recipients. By making a binding death benefit nomination, you eliminate the possibility of costly, unpleasant delays associated with any such dispute. This is because a trustee is legally obligated to follow your instructions.

You should also be aware that a valid binding death benefit nomination does not take effect until a super fund trustee receives and accepts it. It remains in effect for three years from the day it is initially signed, last changed or verified.

You can change or withdraw this type of nomination whenever you like. To change it, you must complete a new nomination form and submit it to the trustee. You must also notify the trustee in writing if you want to withdraw it. On a similar note, you must provide written notice to the trustee if you want to extend the nomination. This must be done before the expiry date.

It should also be noted that some funds that also accept non-lapsing binding nominations and so the nomination doesn’t need to be updated every three years. Often a characteristic of government super funds, the non-lapsing binding death nomination may only be made if permitted by the trust deed and with the active consent of the trustee.

A binding nomination is only valid if:

  • It favours one or more of your dependants and/or your legal personal representative.
  • Any dependant nominated must still be your dependant at the date of your death.
  • The distribution of your benefits must be clearly specified.
  • All of your benefits must be allocated. The entire nomination will be invalid otherwise.
  • It is signed and dated by you before two (2) witnesses, both of whom are over the age of 18 years and not named as beneficiaries.
  • It includes a declaration signed and dated by each witness indicating that you signed and dated the nomination in their  presence.

What are non-binding nominations?

This type of nomination simply verifies how you would prefer to have your death benefit paid out.

While it must be taken into consideration, super fund trustees are not legally obligated to follow your instructions. Instead, they maintain full discretion as to distribution of applicable benefits, in accordance with the trust deed and superannuation law.

Unlike a binding nomination, a non-binding nomination remains in place indefinitely  and only requires updating when your situation changes.

Who can you nominate?

If you are making a binding nomination, you may only name the following as beneficiaries:

  • The executor of your will (for the purposes of  distributing it according to your wishes);
  • the administrator of your estate (for the same purpose);
  • your husband or wife;
  • your child (or your spouse’s child) of any age, including an adopted child, foster child, ward or child as classified in Family Law legislation;
  • anyone living with you who met the criteria for an interdependent relationship at the date of your death; and
  • any other person as determined to be financially dependent on you at the date  of your death.

On the other hand, non-binding nominations can be made to:

  • The executor of your will or administrator of your estate (for the purposes detailed above);
  • anyone classified as your dependant in accordance with superannuation law.

In summary

No one wants to think about the inevitable. But the reality is, we will all die some day. By putting a comprehensive strategy in place now, we can ensure that our families are fully provided for when that day comes.

At Felicio Law Firm, our Central Coast estate planning lawyers are always available to help you craft a plan best suited to your situation. To learn if making binding or non-binding nominations for your superannuation or life insurance funds are viable options for you, contact us today on (02) 4365 4249.

estate planning queensland

When a Loved One Dies in Queensland, What are the Next Steps?

By | Estate Planning

There can be a surprisingly long checklist of things to do when a loved one dies, particularly if they were elderly and lived a full life.

From sorting out their outstanding financial matters, be it bank accounts or government pensions, to cancelling utilities and closing social media accounts, it can be a time-consuming process to ensure your loved one’s affairs are finalised to reflect their passing.

One of the most important considerations, of course, is making sure their wishes are carried out in regard to their estate through the terms of their will, provided they made one. This is where the services of a legal professional with a background in wills and estates can prove invaluable in saving you time and stress.

What to do in the event of a loved one’s death

Many government agencies provide a checklist for people to follow as a guide in organising the affairs of a loved one once they pass. The Queensland government provides one here.

In the first 24 hours after death, this includes the basics of contacting a doctor (if they died at home), contacting family and friends, the preferred funeral director, and the executor/s of the will.

It’s important then to locate your loved one’s personal documents in order to ensure that any instructions they left are accurately carried out. This may include, for example, a pre-paid funeral plan, but also encompass documents such as birth and marriage certificates, property deeds, life insurance or superannuation policies, bank account details and their will.

Thereafter it remains to contact all of those agencies your loved one had regular interaction with, such as Centrelink, Medicare, their local council, their utility providers, phone and internet providers, clubs and professional associations, and anyone else you think needs to know that they are deceased.

If you’ve engaged a funeral director, they will officially register the death with the Queensland government and apply for a death certificate, which must be done within 14 days of your relative’s passing. You can also undertake these tasks yourself if you choose to make the funeral arrangements for your loved one, though it’s recommended you contact the government to ensure you follow the correct procedure.

Wills and probate

If you’re named as executor of your loved one’s will, you are responsible for carrying out its terms.

In some circumstances, such as when certain people or organisations holding assets that are part of your loved one’s estate will not release them, you may have to apply to the Supreme Court for probate. A grant of probate is the Court’s recognition that the will is legally valid and that you are the person authorised to deal with the estate.

It may be the case that you require other types of grants, too. Where your loved one’s will was valid and you are applying to administer its terms but are not the executor, you will have to apply for a grant of letters of administration of the will. In cases where your loved one failed to make a will, you may need to apply for a grant of letters of administration on intestacy.

The importance of legal guidance

Wills, estates, probate and intestacy can be a complicated area of law. Experienced, specialist legal advice will help smooth your path if the responsibility of any of these areas falls on you once a loved one dies.

Felicio Law Firm has many years of experience helping people sort through the numerous issues you can face when a loved one dies. We can make the process easier by acting both with compassion and efficiency to help you through a difficult time. Call us today on (02) 4365 4249.

waiting girl in room

What Happens if You Die Without a Will in New South Wales?

By | Estate Planning

It’s estimated up to 50% of people in NSW either don’t have a will or don’t have a valid will, meaning that should they die unexpectedly, they will be considered intestate and their estates distributed to surviving family members under the rules of the Succession Act 2006 (NSW).

This is not ideal. Most people would like to know that whatever they leave behind after their death – property, shares, heirlooms and other assets – will be distributed to loved ones in accordance with their wishes rather than the provisions of a government act, but this is not possible if they didn’t get around to making a will.

This article provides a basic outline of how an estate is divided in the event of a loved one dying without a valid will.

Who can inherit a deceased’s estate without a will in place?

There is a hierarchy of next-of-kin who stand to inherit a deceased’s estate in the event of intestacy. It begins with a spouse and then, where there is no spouse, the deceased’s children and grandchildren, parents, siblings, grandparents, aunts and uncles, cousins and finally, the state (where a person dies with no living relatives).

Where a person dies with a spouse but no children, the spouse may be entitled to the whole estate of the deceased. If the deceased leaves both a spouse and children behind, and the children are the children of the spouse, it is the spouse who may be entitled to the whole estate. If the children are not the children of the spouse, the spouse may be entitled to: the personal effects of the deceased; a statutory amount, adjusted for CPI plus interest; and one half of any remainder.

In the event that the deceased had multiple spouses, various other considerations will come into play as to how the estate will be distributed and expert legal advice should be sought.

Under the NSW law, a spouse is defined as the person the deceased was married to immediately before their death, or was in a ‘domestic partnership’ with. This latter relationship can include de facto relationships or an interstate relationship that is registered. For de facto relationships, the relationship must have been for a continuous period of two years or resulted in the birth of a child.

It should be noted that if the deceased owned property with someone else as a joint tenant, then that person will inherit the entire property.

What is the process when there is no will?

For an intestate person’s assets to be distributed when they die without a will, someone needs to be appointed as an ‘estate administrator’, who will take on the responsibility of distributing the estate in line with the intestacy rules.

Often the administrator will be a lawyer, a financial planner or someone else trusted by the deceased (where possible), who needs to apply for a grant of administration from the court. This grant will allow them to reconcile matters related to the deceased’s estate – such as any unpaid debts, taxes, funeral expenses, etc – by withdrawing the deceased’s funds, before distributing what remains of the estate.

In simpler cases where the deceased left few assets and has a single spouse to inherit his or her estate, a grant of administration will not always be needed. The same applies if those likely to inherit from the estate can come to agreement on how best to distribute the assets.

Applying for a grant of administration can be time-consuming, involving a lot of paperwork and background research in order for the deceased’s estate to be properly distributed.

For this reason it is recommended to seek the guidance of legal professionals with a background in wills, estates and intestacy, such as the experts at Felicio Law Firm. Call us today on (02) 4365 4249.

Marriage Divorce Separation Existing Will

What is the Effect of Marriage, Separation or Divorce on an Existing Will?

By | Estate Planning

Once you’re of age and working, making a will – or what lawyers refer to as ‘estate planning‘ – is a highly recommended course of action to ensure your wishes are carried out in the event of your death.

But the terms of a will are necessarily complicated once you marry or, later on, separate or divorce. Various pieces of government legislation have further complicated the picture, meaning expert legal advice is strongly advised when it comes to making, amending or updating a will.

How does marriage impact the terms of a will?

If you have a will and then decide to get married, that will is revoked once you exchange vows. The exception to this is if you make a will in the “contemplation of marriage”. That is, you decided to make a will to cover the circumstance of gaining a beneficiary (or beneficiaries) in the form of your new spouse.

A law change made on March 1, 2008, will also provide an exception to the ‘revocation-on-marriage’ will provision. If you got married on or after that date, any terms in your will which provide a benefit to your spouse, or any appointment of them as an executor or trustee of the will, or as a guardian (of children, for example) remains in place, though the will is otherwise revoked.

If you die and didn’t manage to update a will that was made before March 1, 2008, then you may be partially intestate depending on the terms of the will at the time you married. In this case, your spouse will likely be able to claim most if not all of your estate and a state’s intestacy laws will determine who is entitled to anything not left to your spouse in the will.

How does separation affect a will?

On its own, separating from your spouse has no effect on your will but as noted above, your now ex-spouse will have the largest claim on your estate should you die before you divorce. For this reason, legal experts in estate planning recommend you always update or amend your will if your separation from your spouse looks like it is permanent.

What happens if we then divorce?

Various changes to relevant legislation over the years affect the impact of divorce on your will. If you were divorced in NSW before November 1, 1989, the will you had in place at the time of that divorce is unaffected and your ex-spouse is entitled to any gift in your will, unless you specifically revoked or updated the document.

If you were divorced after the above date, any terms in the will in favour of your ex-spouse, or any appointment of them as an executor or trustee in your will, are revoked. The further law changes in 2008, however, mean that if you were divorced on or after March 1, 2008, and your ex-spouse appears in your will as a trustee for beneficiaries such as any children from the relationship, then your ex may still act as trustee despite the divorce.

Same-sex couples

The passing of legislation enacting marriage equality in Australia in December 2017 has complicated the legal picture around same-sex couples and their wills.

Many couples married overseas prior to the Australian law changing, subsequently making their unions legal in Australia. Expert legal advice should be sought to determine the validity of wills made by couples who were legally married overseas prior to the recognition of marriage equality in Australia and made a will after this time, particularly if it includes beneficiaries other than their spouse.

As this article demonstrates, the legal landscape when it comes to the impact of marriage, separation and divorce on estate planning can be complicated. It involves different pieces of legislation with different dates before or after which certain aspects of a will are valid or not. In this case, contacting a law firm with proven experience in estate planning matters such as Felicia Law Firm is a wise course of action. Contact us today on (02) 4365 4249.

Litigation Guardians

Litigation Guardians – When Is It Appropriate?

By | Estate Planning, Litigation

One of the most common misconceptions about hiring a lawyer is that he or she will be solely responsible for making all of the decisions about your case both before and during any litigation.

It is true that your lawyer is legally and ethically obligated to provide the best possible legal advice and act in your best interest but provided you are making sound decisions based on the information he or she provides, your lawyer must also follow your instructions.

But what happens if you aren’t capable of telling your lawyer what to do? If you’re incapable of doing so because you’re under 18 years of age or disabled, the court will appoint someone called a litigation guardian to act on your behalf. In other words, this is someone who will effectively ‘step into your shoes’ to assess your best interests and instruct your lawyer accordingly.

To be selected as a litigation guardian, someone must:

  • be an adult;
  • demonstrate that he or she does not have any interest in the case that is opposed or potentially harmful to the interest of the person in need of his or her services;
  • be able to act fairly and competently;
  • consent to being a litigation guardian under applicable laws.

In some cases, relatives or other concerned parties will ask a lawyer to act as a litigation guardian. This is because a knowledgeable, experienced lawyer can act with a certain degree of objectivity and professionalism.

More often than not, the litigation guardian is a relative, friend or caregiver.  Barring that,  the court may select someone who does not personally know the person requiring a litigation guardian. In either case, the person chosen to fill this role must become familiar with the person’s situation and issue instructions that reflect their charge’s best interests.

Litigation guardians are generally appointed in the following types of cases:

  • Personal injury;
  • a criminal compensation application;
  • various matters related to Wills;
  • family provision applications.

A litigation guardian must be selected to represent someone in any Federal Circuit Court matter in which that party is incapable of understanding the proceeding or its potential consequences; or is incapable of fulfilling his or her legal obligations. Applicable court rules dictate that a minor must have a litigation guardian unless the court orders otherwise.

In accordance with Family Law Rules, a litigation guardian in the Family Court is known as a ‘case guardian’. In any Family Court matter a person who is legally classified as a child or is otherwise incapable of instructing his or her attorney, and/or fulfilling his or her legal obligations, must have a case guardian in order to initiate, continue, respond to, or intervene in proceedings. The only exception to this rule is if the court finds that the child not only comprehends the nature and possible consequences of the case, but can also make certain decisions and meet his or her legal obligations.

There are several methods for appointment. Someone can simply apply to be appointed a litigation guardian or case  guardian. In certain circumstances, the court may ask the Attorney-General to nominate a litigation guardian or case guardian. The court may also make its own motion for appointment of a litigation guardian. It may also remove or replace a litigation guardian.

Once the appointment is finalised, the litigation or case guardian must advise all other relevant parties about it in writing.

A newly-selected litigation guardian or case guardian must also abide by applicable court rules. Furthermore, he or she must do everything ordinarily required of a party to the litigation. Finally, he or she may also do anything that the party to the litigation would ordinarily do for his or her own benefit.

As we have already noted, a litigation guardian must obtain proper legal advice. In this context, he or she must duly consider any proposals for resolution of the case, such as participation in alternative dispute resolution.

In accordance with a relevant court order, any costs incurred by the litigation guardian are paid by a party to the litigation or from the income or property of the person that he or she represents.

To learn more about how to be appointed as a litigation guardian or any related issues, contact our Central Coast lawyers today.