The OHL Wire ISSUE 14: New Parents Must Not Put Off Estate Planning

September 2015

ISSUE

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14

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NEW PARENTS MUST NOT PUT OFF ESTATE PLANNING

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PREVENTION IS BETTER THAN CURE: 10 TIPS TO HELP YOUR BUSINESS AVOID LITIGATION

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CONTESTING A WILL AND INHERITANCE DISPUTES IN NSW

LEGAL - WEALTH PROTECTION - INVESTMENT - BUSINESS - LIFESTYLE - SYDNEY

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PRE-PURCHASE: LEGAL BASICS

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FUN FACTS ABOUT DEATH AND TAXES

New Parents Must Not Put Off Estate Planning

With a new baby in the house, new parents have a lot to think about other than estate planning. And to be frank, estate planning has something of a musty, dreary reputation that seems completely inappropriate to the moment.

So think of it as life planning for that little ball of energy who now seems to occupy most of your conscious waking thoughts. But do not put it off. Whether estate or life planning, it need not be as difficult as you may think.

Let’s find out why.

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Why New Parents Need Estate Planning

Trusts

Life can change in an instant, utterly without warning.

The purpose of a trust is to hold and manage assets for your children. The trustee chosen by the parents can manage the assets and handle payouts to the children, paying taxes and transferring the property to the child when he or she reaches a certain age. A trustee should, above all, have sound financial judgment and the ability to work well with the children’s guardian.

According to the Australian Bureau of Statistics, in 2012, more than 4,000 people who died in Australia were between the ages of 30 and 44, at precisely the age to leave minor children behind.

As new parents, you now are responsible for a small person’s welfare. It is true that when parents die without an estate plan, the courts eventually will distribute assets and otherwise make provisions for children, but it is a slow process and the decisions made, including the all-important choice of a guardian, may not be the choice you would have made.

Many people have informal conversations with loved ones about the care of their children, but unless these intentions are formalized legally, they have no binding effect.

The Key Components of Estate Planning for New Parents Estate plans can become a very elaborate affair and that may be why many young families put off the basic work of providing for their children’s future. At its simplest, an estate plan probably really only needs four things: a will for each parent, a guardianship arrangement for the children in the event of the death or disability of both parents, a trust to provide for the holding and distribution of assets for the children’s benefit and life insurance for both parents.

Wills A will is a simply written document that details how your assets should be distributed after your death. Many parents choose each other as primary beneficiary and their child as secondary beneficiary in the event that both die at the same time in a tragedy like a road accident or natural disaster.

A will also should designate an executor who will have the authority and responsibility to carry out the will’s terms.

Parents of young children also should designate a guardian for them and someone to manage the assets and property you leave to them. The guardian and asset manager need not be the same person.

Guardianship In general, the legal guardianship of a child goes to the surviving parent if the other dies. But if both parents die at the same time, or if one dies and the other becomes incapacitated, a guardian would need to step in.

The chosen guardian is often a friend or family member, and it is essential to discuss this with that person in advance. A good guardian should have the time, resources, interest and good judgment to raise your children. You and your spouse should agree on the same guardian to avoid legal battles.

Most couples choose the same guardian for each child to keep the family together.

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Many trusts make assets available when the recipient turns 18 or 21, but parents may choose any age and a wide variety of payout arrangements. Without a trust, assets are subject to taxes and probate.

Life Insurance Life insurance can help replace the income your family would lose in the event of your death and cover funeral and burial expenses. Parents who are young and healthy usually can buy affordable term life insurance.

Life insurance policies must name beneficiaries, which can create something of a conundrum with minor children. One approach is creating a living trust as beneficiary of the life insurance policy. That way, if both parents die at the same time, the child will have access to the money through a trustee.

What is Family Future At Owen Hodge Lawyers, we try to make it easy for new parents to provide for their children’s future. Family Future is our approach to bundling the basic estate planning services all young families should have, and at an affordable price.

It is also an excellent way to ensure all the pieces of an estate plan – the will, trust, guardianship agreement and insurance work together as a coherent whole.

But it is not a one-size-fits-all approach. The skilled assessment process is an opportunity for every family to evaluate particular risks so the plan works for real needs.

Real Life Stories Consider the situation of a mother of two who passed away suddenly and unexpectedly. Her husband was left to care for two children under the age of 5, which made full-time work impracticable.

Fortunately, the couple had life insurance that paid a sufficient sum, allowing the father to devote three years exclusively to his children, enabling him to get them settled and into school, before returning to full-time work.

In another situation, a tragic road accident killed one parent and left the other severely injured. Instead of being parcelled out among distant relatives, the parents’ wills kept their three children together to be cared for by good friends of the couple.

among distant relatives, the parents’ wills kept their three

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Prevention Is Better Than Cure 10 Tips to Help Your Business Avoid Litigation An ounce of prevention, as they say, really is just sound business practice. , Litigation can be ruinously expensive, and even “win� can devour the time and energy you need to actually run your business. It also has a nasty way of damaging your most important intangible asset, your business reputation.

Find out more.

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lawyers of becoming needlessly embroiled in litigation.

1/ Structure your business to protect important assets.

Most businesspeople understand that the peril of doing business as a sole proprietor is that personal assets can be reached by business creditors. There are few, if any, situations in which that is a reasonable risk. It is important, however, to go a step farther, perhaps structuring your business into several entities in order to shield important assets.

6/ Be proactive in managing disputes before they escalate into litigation. situation with an unhappy customer or business partner. If the shoe is on the other foot and the dispute is about a nonpaying buyer or client, negotiating a payment schedule

7/ Choose who you do business with.

2/ Business relationships should be covered by written contracts, which should be reviewed by a lawyer.

That is the place to spend your legal budget, rather than on litigation. Without laboring the obvious, make sure that you read and understand all contracts to which you are a unsure or which may require further negotiation.

3/ Apropos of which, make sure that your insurance coverage is appropriate to your business risks.

It is not just a question of amount, but of the kind of coverage that your business carries.

4/ Keep good records.

Many disputes can be avoided by being able to quickly produce the relevant documents. These should include contractual agreements as well as correspondence and notes taken contemporaneously to record the substance of conversations and telephone calls. This may be a good time to review your records retention policy and to ensure that important documents exist in both electronic form and hard copy.

Do annual or more frequent reviews and be prepared to terminate the employment of any individual whose conduct could subject the business to a law suit. Make sure that you have systems and procedures in place to help you identify dishonest conduct.

Especially for new businesses, the temptation can be to take any client or embrace any potential partner who walks through the door. Taking the time to know a little more about those you depend on, whether it is a big client, an important vendor or a co-venturer is usually worthwhile.

Disentangling an unwise business relationship can be very troublesome.

8/ Analyze past business disputes.

A periodic retrospective review of disputes – who they involved on both sides and what kind of transactions gave rise to them – may help your business identify areas for improvement. For example, you may be able to identify problems with the terms of standard contracts, poor internal communication or a failure to properly handle complaints.

9/ Nothing personal; it’s just business. from the start to separate the personal from the commercial. objective.

10/ Don’t be a jerk.

This is really a corollary of the previous two rules. Be honest in evaluating your own actions because no one has the luxury of being right all the time. Try to understand the dispute from the other side and made adjustments or amends as necessary.

If you are dealing with a genuinely impossible individual, business with and in some cases, the better choice may be to politely decline from additional orders or jobs.

If you have questions about ways to avoid litigation or how to resolve business disputes, please contact us at Owen Hodge Lawyers to schedule a consultation by calling 1800 770 780.

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Contesting a Will and Inheritance Disputes

in NSW

Will contests and inheritance disputes are among the most distressing of situations.

On top of feeling the loss of a loved one, now you also may feel confused or shocked by the provisions of a will that seem unfair.

Can an inheritance dispute cause friction in a family?

It is very nearly guaranteed.

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contesting a will and challenging one. You may have a case to challenge a will in New South Wales if you believe it does not represent the true intent of the deceased because of the mental capacity.

Challenging the Validity of a Will Several circumstances may cause the will itself to be invalid – not representing the true intention and last purpose of the person who has passed away. These include: * Forgery * Fraud * Lack of testamentary capacity. person is in the care of an unscrupulous person or institution, often with no close family to monitor the situation.

The concept of “forgery” also may cover the “bad signature” intentions, but was signed by someone else, even at the deceased’s direction.

Fraud may occur under similar circumstances, where the person who has died signed a document under the false impression that it was not a will, but something else, such as a power of attorney.

Another person, likely someone with something to gain

* a spouse (including a de-facto partner), * a former spouse, or * a child or dependent grandchild of the deceased or a child of someone who was in a domestic relationship with the deceased. grandchild (not biologically related to the deceased) of a domestic partner with whom the deceased last lived with 15 years prior to death.

But even individuals within this expansive category must then demonstrate the deceased had a moral obligation to provide for their needs. If you are an adult son or daughter but have been estranged from your parent for years, for Finally, a court will evaluate what your needs are in light of

What can you do if you are not a family member?

All is not lost. Perhaps you nursed your dear neighbour Nellie for a decade. She promised to provide for you in her will in recognition of your care. However, Nellie had made her will long before you began to look after her, and she quickly became too sick to update it. In order to do justice, courts sometimes will approach such situations the money had been set aside in a trust for you to be paid on Nellie’s death.

will by misrepresenting relevant facts or, in more extreme cases, through threats or coercion.

stepparents remarry. Suppose your mother married your stepfather and, at the time, both of them made new wills that were, essentially, mirror images of one another. Your

demonstrate lack of testamentary capacity. Demonstrating lack of capacity generally requires some medical evidence of mental disability that existed at the time the will was made.

would go to your stepfather. If she were the second to die, everything would be divided evenly between her children and your stepfather’s children. Your stepfather agreed to the same thing. They traded mutual promises.

Contesting the Provisions of a Valid Will Perhaps your position is not that the will was invalid, but that its provisions are unfair. The law protects family members, and it casts a very wide net to determine who is “family.”

and changed his will to leave all of your mother’s children out. Courts can be imaginative in this situation, too, under a contract theory. Promises traded for promises have economic value.

To cast the question in legal terms, it is helpful to consider three questions:

Time Limits

* Are you an eligible person? * Did the deceased have a moral obligation to provide for your maintenance, education and advancement in life? * What are your needs?

The time for making a claim under the Succession Act is 12 months from the date of death. However, it is prudent to seek advice from a solicitor about the will as soon as possible as assets can be distributed quickly in the absence of notice of a contested dispute and may be lost forever.

as:

If you want to know more about contesting a will, please call us today to schedule a consultation at 1800 770 780.

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Pre-Purchase: Legal Basics The pre-purchase phase in a property settlement is one of the most important times, because this phase ultimately determines

1. “Buyer beware” applies in real estate sales deals. been signed for a real estate deal, you are committed, subject only to conditions negotiated in the pre-purchase phase. This means that protecting your investment requires understanding your rights from early on in the process.

2. Agents aren’t always working for you

Legal Basics to Know in the Pre-Purchase Phase Here are a few key things to consider during the pre-purchase phase before a contract for a real estate deal is signed:

3.Contracts could be your only source of protection.

“Buyer beware” applies in real estate sales deals.

While sellers have some disclosure obligations to buyers, it is up to those who are purchasing a property to do due diligence.

This means ensuring the property can be used for its intended purpose and doing necessary research to determine a good price. Buyers shouldn’t count on a seller to give them all the details they need to know to decide whether to buy.

Agents aren’t always working for you.

Agents representing sellers are aiming to get a sale completed and buyers always should remember they are working for the sellers. In general, no matter who an agent is representing, it also is essential to recognize that agents are not legally trained and are not allowed to draft special conditions to real estate contracts. When agents try adding conditions, they may be lead to delays.

Contracts could be your only source of protection.

The terms of the contract are going to govern your real estate transaction. If the contract does not provide you to get out of the agreement if necessary, you could end up in a situation where you either need to go through with a transaction under unfavorable terms or you are out of a lot of money. decide the terms of the agreement are not favorable, this period is limited in time and it may be too late to deal with issues that arise. It is best to get the legal counsel you need early in the process so you are informed while negotiating a contract and before you sign.

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Fun Facts About

1. In Australia, a death used to trigger death duties or death taxes. Now death duties have been abolished.

2. Taxes are not the only things you need to consider when planning ahead for a death.

Death and Tax “In this world, nothing can be said to be certain, except death and taxes.” This famous quote from Benjamin Franklin remains worldwide. However, what many people don’t realize is tax obligations actually can persist beyond death. While it may not seem like a very fun fact to think about, taxes are something you need to know about and understand when planning ahead for your future or when inheriting money or property.

Fun Facts About Death and Taxes 3. Inheritance taxes can be minimized, depending upon how assets are left to loved ones and depending upon what beneficiaries do when they inherit money and property.

In Australia, a death used to trigger death duties or death taxes.

Now death duties have been abolished. However, this doesn’t mean no tax payments ever are due when someone passes taxes, including capital gains taxes, when real estate owned by the deceased is transferred and then sold.

Inheritance taxes can be minimized, depending upon how

ciaries do when they inherit money and property. For example,

the death of the deceased won’t be liable for capital gains taxes. capital gains taxes also may be avoided or reduced, even if the house is later sold years after the initial move.

Taxes are not the only things you need to consider when planning ahead for a death. You also need to know other laws that apply to govern your estate. For example, marriage and remarriage both can revoke a will, which could impact a child’s inheritance and could result in assets being divided according to state intestacy laws. Surviving members of a Self-Managed Super Fund (SMSF) also could ignore even legally valid, binding ries.

To understand how to protect your estate, leave funds to your loved ones and limit your tax obligations if you inherit, you need to talk to an experienced legal professional. Call Owen Hodge Lawyers today to learn all about death and taxes.

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The Ninth Sydney Architectural Festival Arrives

October Long Weekend

The October Long Weekend is fast approaching and you may be looking for fun, inspirational, and educational activities to do. One of your best options for entertainment may involve visiting the Sydney Architectural Festival.

What is the Sydney Architectural Festival?

The Sydney Architectural Festival is in its ninth year, and again will run for a full four-day span over the October long weekend. The dates of this year’s festival are 2-5 October, with special events planned for each of the days.

The festival, which is based in Sydney, will include talks and tours as well as other exciting activities. Short films and musical performances are part of the festival, all with a focus on architecture and appreciating the beauty of buildings and structures that shape our lives.

The festival’s flagship public event is called TheGoods and it will take place on Saturday. TheGoods is going on at the newly-opened Goods Line in Ultimo, which is the newest social infrastructure in Sydney that has taken the place of a previously-congested rail corridor. The Saturday event will include yoga on the green at The Goods, an exploration of the new public promenade, outdoor workshops, music, food and educational talks.

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TheGoods is not the only big event taking place at this four-day celebration of architecture. The festival’s opening day on Friday, 2 October also will feature an announcement of the winner of a competition in which entrants were asked to re-imagine George Street in Sydney for the year 2020. Friday, 2 October is dubbed #DesignSecrets.

Sunday, 4 October and Monday, 5 October have their own focus, with Sunday labeled NewCity and Monday called GoGlobal. NewCity will allow a look into designs of the future, with clients and designers both sharing their visions. A kids’ workshop at Customs House also gives the architects of tomorrow a chance to flex their budding design muscles. GoGlobal is a glimpse into what has helped make Sydney a global leader in design.

An after-dark shirt film festival and a zine fair also are featured events taking place during the four day festival.

The Sydney Architectural Festival is organized and operated by a collective of young design professionals called Archival, who work together with JOC Consulting to make the event happen. You can take advantage of both free and ticketed events, so be sure to check out the festival if you want to make the most of your October Long Weekend.

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What’s On In Sydney Listen Out - Centennial Park

The Star Epsom Day - Randwick South

2nd October till 4th October Sydney Olympic Park NSW 2127 www.ebexpo.com.au

3rd October Centennial Park NSW 2021 www.listenout.com.au

3rd October Alison Road, Randwick South NSW 2031 info@australianturfclub.com.au

EB Expo is back in 2015 for its fourth year!

With an incredible show floor boasting over 15,000 square metres of gaming action, it is a chance for every gamer Australia wide to get together celebrate video games and pop culture!

Australia's national dance music event is back for its third year! Listen Out will be touring quality dance music acts around Australia, with stops in Sydney, Perth, Melbourne and Brisbane this September and October.

The Star Epsom Day, celebrated over the October long weekend, is one of biggest events on this season's social and sporting calendar. Racegoers can enjoy the Chandon Pop Up Bar and live DJs.

Light the Night Sydney

Sydney Craft Beer Week

5th October 30 Eton Street, Sutherland NSW 2232 suthentcent@ssc.nsw.gov.au

9th October North Shore, Milsons Point NSW 2061 www.lightthenight.org.au

17th October till 25th October 199 Cleveland Street, Redfern NSW 2016 www.sydneycraftbeerweek.com

With more than 50 ballet dancers, The Russian National Ballet Theatre will perform full classical performances of Swan Lake. The glamour of the palace ballroom is evocative of the Russian Imperial world.

Australia will unite at walks across the country to brighten the lives of families affected by leukaemia, lymphoma and myeloma. Gather with family and friends to light a special lantern; gold to think of a loved one, white for your own journey, or blue to show you care.

This October, the streets of Sydney will be flowing with Craft Beer as Sydney Beer Week (SCBW) returns bigger, better, and tastier. Over 60 of Sydney's leading venues will host the city's largest and most exciting celebration of Craft Beer, with more than 120 enticing events.

SydStart2015 - Sydney

Cruelty Free Festival - Eveleigh

EB Games Expo 2015

The Russian National Ballet Theatre

Stencil Art Prize Exhibition 17th October till 30th October Level 3, Chippendale NSW 2008 www.stencilartprize.com

29th October till 30th October Town Hall House, Sydney NSW 2000 psavant@freelancer.com

25th October Australian Technology Park, Eveleigh NSW Crueltyfreefestival.org.au

The largest stencil event in the world that exists to recognise and reward stencil artists.This year 92 stencil finalists from 21 countries will have artworks on display.

Key themes include cityscapes, momento mori, portraiture, to surreal etc.

SydStart is Australia's largest start up and growth conference. Two jam packed days full of actionable insights, from the best start up entrepreneurs, growth marketers in the world. Network with Founders and Entrepreneurs, Individual contributors, SMBs and Investors etc.

The Cruelty Free Festival is a free community event run by Animal Liberation NSW. It gathers the best cruelty-free brands, entertainers and workshops to highlight the simple changes which can make a massive impact on the lives of animals!

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INDIVIDUAL AND COMMERCIAL LAW SPECIALISTS Enhancing the lives of our clients by providing acquisition of wealth, protection and management of assets and the transfer of wealth throughout generations.

CALL 1800 770 780 VIEW www.owenhodge.com.au VISIT Level 3, 171 Clarence Street, Sydney NSW 2000 Level 2, 12-14 Ormonde Parade, Hurstville nsw 2220