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Have you been left out of a Will?

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The loss of a family member is always a difficult time, but it can become more distressing to learn that you have not been included in the family member’s Will.

Generally, a person may leave their assets to whomever they wish. However, the law recognises that there are those who relied on the deceased for support and who can sometimes be unfairly left out of the deceased’s Will. Consequently, they are then unable to make a claim so that their needs are adequately provided for.

In these circumstances a person can consider challenging the deceased’s Will or contesting the Estate. There are two main ways that this can happen:

  1. The validity of the Will may be challenged on the basis that the Will maker did not have the legal capacity to make the Will, or didn’t understand what they were signing; or
  2. A claim can be made under the Succession Act on the basis that the Will maker failed to provide for a family member but where they had a moral obligation to do so.

Under the Succession Act, only persons who qualify as eligible persons under the Act may apply to the Court. There are seven categories of eligible persons, namely:

  1. The wife or husband of the deceased when they died;
  2. A person in a de facto relationship with the deceased when they died (including same sex partners);
  3. A child of the deceased;
  4. Former wives and husbands of the deceased or former de facto partners of the deceased, who were receiving or entitled to receive maintenance from the deceased when they died;
  5. A grandchild of the deceased, in certain circumstances;
  6. A step-child of the deceased in certain circumstances; and
  7. A parent of the deceased.

To demonstrate entitlement to receive some benefit from the estate, you must show that the deceased had an obligation to provide for you and that you have been left without adequate provision for your proper maintenance, education or advancement in life.

It is important to note that inheritance claims are subject to strict time limit, which is 12 months after the date of death.

You may not need to go to court as most parties encourage mediation to avoid unnecessary legal costs or any lengthy delays.

If you are concerned, please be sure to contact us as soon as possible or you may be prevented from making a claim. It is usually a good idea to try and get a copy of the last Will of the deceased, so that you can discuss the details with us more accurately.

If you or someone you know wants more information or needs help or advice, please contact us on 02 9955 6692 or email lee@hslegal.com.au

Employer or Contractor – do you know the difference?

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It’s important for all businesses to have systems in place to determine whether workers should be classified as employees or independent contractors, as tax, super and other government obligations are different depending on whether the working arrangement is employment or contracting.

Employees generally have PAYG withholding, super and fringe benefits tax paid by the employer. Contractors generally look after their own tax obligations.

If you get it wrong and fail to meet your obligations, you risk having to pay penalties and charges.

What factors do you need to consider?

 There are a number of factors which need to be taken into account which help determine whether a worker could be classed as an employee or an independent contractor.

It is important to realise that no single factor can determine if a person is an independent contractor or an employee. To correctly determine whether a worker is an employee or contractor, you need to look at the whole working arrangement.

A worker isn’t automatically a contractor just because they have an ABN or specialist skills or you only need them during busy periods.

Courts will look at the whole relationship between the parties when determining the status of a person’s employment.

The Fair Work Ombudsman has produced a table of common indicators that may contribute to determining whether a person is an employee or independent contractor:

Indicator Employee Independent Contractor
Degree of control over how work is performed Performs work, under the direction and control of their employer, on an ongoing basis. Has a high level of control in how the work is done.
Hours of work Generally works standard or set hours (note: a casual employee’s hours may vary from week to week). Under agreement, decides what hours to work to complete the specific task.
Expectation of work Usually has an ongoing expectation of work (note: some employees may be engaged for a specific task or specific period). Usually engaged for a specific task.
Risk Bears no financial risk (this is the responsibility of their employer). Bears the risk for making a profit or loss on each task. Usually bears responsibility and liability for poor work or injury sustained while performing the task. As such, contractors generally have their own insurance policy.
Superannuation Entitled to have superannuation contributions paid into a nominated superannuation fund by their employer. Pays their own superannuation (note: in some circumstances independent contractors may be entitled to be paid superannuation contributions).
Tools and equipment Tools and equipment are generally provided by the employer, or a tool allowance is provided. Uses their own tools and equipment (note: alternative arrangements may be made within a contract for services).
Tax Has income tax deducted by their employer. Pays their own tax and GST to the Australian Taxation Office.
Method of payment Paid regularly (for example, weekly/fortnightly/monthly). Has obtained an ABN and submits an invoice for work completed or is paid at the end of the contract or project.
Leave Entitled to receive paid leave (for example, annual leave, personal/carers’ leave, long service leave) or receive a loading in lieu of leave entitlements in the case of casual employees. Does not receive paid leave.

 

A simple way to help tell the difference

The Australian Taxation Office on its website uses the following simple descriptions:

  • Employees work in your business and are part of your business.
  • Contractors run their own business and provide services to your business.

Why is the distinction important?

Employment relationships are regulated by specific labour protection laws and various awards and workplace agreements. These laws generally provide a higher degree of protection to employees than the general commercial laws that regulate contractor relationships.

This protection includes minimum conditions and standards of employment for employees including minimum entitlements for leave, public holidays, notice of termination and redundancy pay.

Adopt good business processes

Business owners need to keep records to support any decision on whether a worker is an employee or contractor and the factors relied on to make that decision.

Most of the information needed to support the decision can be found in a service contract for independent contractors or an employment contract for employees, which should accurately reflect the actual conditions of the working arrangement.

All contracts should:

  • be in writing
  • specify whether it is a contract for services or an employment contract;
  • set out the period of engagement and the remuneration;
  • include dispute resolution provisions;
  • specify if/how the relationship can be terminated.

Penalties

It is illegal for an employer to misrepresent an employment relationship or a proposed employment arrangement as an independent contracting arrangement or, make a knowingly false statement to persuade or influence an employee to become an independent contractor.

Under the Fair Work Act inspectors can:

  • seek the imposition of penalties for contraventions of sham contracting arrangements; and
  • apply to the courts to grant an injunction or an interim injunction if an employer seeks (or threatens) to dismiss an employee for the purpose of engaging them as an independent contractor. The purpose of the injunction would be to prevent the dismissal from occurring, or otherwise remedy the effects. Courts can also make other orders to have the employee reinstated or compensated.

If you need more information or if you need assistance or advice on how to proceed please call us on 02 9955 6692 or email lee@hslegal.com.au

Starting a Business – An overview of Common Business Structures

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There are 4 main types of business structures for doing business in Australia, each with their own advantages and disadvantages. A person can carry on business as a sole trader, partnership, trust and company.

The choice of business structure is an important decision to make at the start of a business venture, as the structure can impact on tax implications and reporting requirements during the lifetime of the business. When setting up a business structure, consideration should be given to factors such as how many people will be involved in the business, what the business will do, how much income is likely to be earned from the business and the intended growth of the business.

Sole Trader

A person can carry on a business on his or her own behalf, as a sole trader. A sole trader can trade under his or her own name or a registered business name. The income earned as a sole trader is taxed at the same rate as individual tax payers.

This is the simplest form of business structure, with lower establishment costs and with minimal legal and compliance requirements. The main disadvantage to this type of business structure is that a sole trader is personally liable for all obligations incurred in the course of the business.

Partnership

Two or more individuals can carry on business in partnership, where the income from the business is received jointly. Partnerships are relatively inexpensive to form and operate. Most partnerships are established by a partnership agreement which sets out the rights and obligations of the partners. A partnership itself is not taxable, rather each partner pays tax on their share of the net income of the partnership.

The downside to this type of business structure is that partners are severally and jointly liable for the obligations of the partnership. There is also potential for dispute and loss of trust between the partners.

Trust

Under a trust, a trustee owns the property or assets of the trust and carries on the business on behalf of the beneficiaries of the trust. A trustee can be an individual or a company. A formal Deed is required to set up a trust and there are annual tasks for a trustee to undertake. As such, it can be expensive and complicated to set up and administer a trust.

The advantages of a trust are that there is flexibility in income distribution and income can be streamed to low income tax beneficiaries to take advantage of their lower marginal tax rate. Furthermore, assets can be protected through a properly drafted Deed. The disadvantages are that trusts can be costly to set up and there are more compliance and legal requirements.

Company

A company is a separate legal entity capable of holding assets in its own name. The words “Pty Ltd” after a business name show that the business is a registered legal entity trading in its own right. A company is owned by shareholders and directors manage the company’s day to day business and affairs. The shareholders of a company receive any company profits in the form of dividends. Shareholders can limit their personal liability and are not generally liable for the company debts. Instead, the financial liability of the company is limited to the company assets.

Companies are governed by Corporations Law and there are a number of duties and obligations for company directors. Primarily, directors have an obligation to act in the best interests of the company. Establishment of a company and ongoing administrative and compliance costs associated with Corporations Law can be high. There is also a requirement to publicly disclose key information.

Conclusion

Each business will vary and no business owners’ circumstances will be the same. It is advisable to talk to an accountant or solicitor about the costs and risks of each business structure, to make sure that the business structure used is the right one for the business and its needs going forward.

If you or someone you know wants more information or needs help or advice, please contact us on 02 9955 6692 or email lee@hslegal.com.au

Verification of Identity in property transactions

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Verification of Identity in property transactions (VOI) is a process used to confirm the identity of a person.

Lawyers and other parties involved in property transactions have an obligation to ensure that the person claiming authority to deal with land is legally permitted to do so. This includes confirming a person’s capacity to act as agent for a company or as an attorney.

The VOI process is particularly important in land and property dealings as it assists in reducing identity theft and land title fraud. Verification of Identity has always formed part of good practice however from 1 August 2016 it became mandatory for land transactions.

Lawyers and other parties must take ‘reasonable steps’ to verify the identity of their clients, their client’s agents and persons to whom title deeds are being provided.

This means that your Lawyer will need to formally verify your identity during a face to face interview or use other approved methods to confirm your identity and authority to enter into the contemplated transaction. The VOI requirements extend to any person authorised to act on behalf of the client.

When do I need to prove my identity?

Land and Property Information (LPI) is the central registration authority for real property (land) dealings in New South Wales. The LPI registers hundreds of transactions affecting land every week.

New provisions under the Real Property Act 1900 (NSW) allow the Registrar-General to make rules (Conveyancing Rules) regarding the verification and identity of particular classes of persons with respect to certain transactions (Conveyancing Transactions).

The Conveyancing Rules set out the framework required for VOI processes which also reflect the methods used by recently-introduced electronic conveyancing procedures.

Broadly, a Conveyancing Transaction is a transaction between one or more parties involving the creation, disposal or transfer of an interest in land. A typical conveyance, mortgage, charge or lease over property falls within this category.

The registration, recording or removal of an interest or notation in the titles register are also Conveyancing Transactions and will be subject to VOI processes. Examples include the registration of an easement, caveat or plan of subdivision.

The VOI process must also be used for documents that do not require registration at the LPI (such as a contract for sale and purchase of land and agreement for lease).

How does the VOI process work?

Your Lawyer must be satisfied that he / she is dealing with the person claiming to be authorised to enter transactions regarding the property. Likewise, Lawyers acting for the party on the other side to your property transaction must confirm the identity of their client. The idea is to create an ‘even playing field’ in the conveyancing and property transaction setting. By ensuring all sides to a transaction undertake diligent VOI measures the parties are better protected against property fraud.

If you are involved in a property transaction such as the sale or purchase of land or borrowing money secured by a mortgage, you will need to meet personally with your Lawyer or other agency to provide documents and formally prove your identity.

During the VOI process you will be asked to produce original documents so that your identity can be compared (ideally) with a document containing photo identification.

The documentation required for the VOI process is similar to the present ‘100 points’ system commonly used for banking and other identification processes. There are various categories and combinations of documents which may be used to prove your identity. These include an Australian or foreign passport, drivers licence or photo card, birth or citizenship certificate, Medicare, Centrelink or Department of Veterans’ Affairs card. For those persons who are not Australian citizens or residents, other types of documents may be used.

The types of documents you need to produce are categorised with the higher category documents being the preferred VOI source, for example an Australian passport and driver’s licence.

If sufficient identification documents are not available, an Identifier Declaration may be used which enables another person to identify you. Your Lawyer can advise you on this process.

Verification of Identity documentation relating to a property transaction must be kept securely by your Lawyer for seven years. Once the VOI process is carried out, further verification need not take place for two years. This means that you need not undertake a further VOI process for a subsequent property transaction that occurs within two years of the initial VOI.

What if I cannot visit my Lawyer?

If you are unable to attend a face to face interview with your Lawyer, an Identity Agent can be used to confirm your identity. This is practical for clients who are travelling or do not reside close to their Lawyer’s office.

Australia Post and other reputable agents offer this service and your Lawyer can refer you accordingly. The Identity Agent will complete the VOI process in a similar manner as required by your Lawyer and provide an Identity Agent Certification.

What about companies and attorneys?

If a party involved in a Conveyancing Transaction is a corporate entity, a company search will be obtained to confirm the existence of the company and to establish those persons authorised to sign on behalf of the company. The authorised representatives will then need to undergo the VOI process.

Similarly, attorneys entering transactions on behalf of their principal must provide the document authorising such a transaction and complete the VOI process to verify their identity.

Conclusion

Identity theft leading to the registration of fraudulent documents and dealings over land is not a new phenomenon and can have devastating financial and other affects. Verification of Identity is an important safeguard against fraud and is an essential risk management tool.

By imposing standard and reciprocal requirements for Lawyers and Conveyancers to identify their clients, mandatory VOI rules are likely to offer better protection and safeguard you against a possible fraud in connection with your property transaction.

For more information about VOI, talk to one of our experienced Property Lawyers or if someone you know wants more information or needs help or advice, please contact us on 02 9955 6692 or email admin@hslegal.com.au.

What it means now 457 visas have been axed

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The Temporary Work (Skilled) Visa program (457 visa) commenced in 1996 with the objective of addressing genuine skill shortages in the Australian labour market. Employers (known as business sponsors) could recruit overseas workers for skilled positions for which they could find no suitable local candidates.

 

The 457 visa allowed migrants to work in Australia for four years and for many, provided a pathway for permanent residency. Visa holders could also apply to bring family members to Australia on a 457 secondary visa.

 

In April 2017, the Government announced that the 457 visa will be abolished and replaced with a completely new skilled migration scheme. Changes will be implemented in stages with a new Temporary Skill Shortage (TSS) visa anticipated to be fully operational, and the 457 visa obsolete, by March 2018.

 

The reforms are expected to improve the integrity of Australia’s skilled migration program which has previously been subject to exploitation, and to increase the supply of Australian skilled labour by encouraging employers to invest in local training and development.

 

Visa applicants will face more stringent processes for securing a visa and businesses will have fewer alternatives and higher requirements for sourcing skilled labour from overseas. Several occupations have been removed from the eligible categories list and higher thresholds must be met for the grant of a visa.

 

This article explains the implications of the reforms to employers and visa holders.

 

The new TSS visa – what it means for visa applicants and employers

 

The TSS visa will comprise a short-term and medium-term stream.

 

The short-term stream will permit employers to fill temporary skills gaps identified from a list of occupations on the Short-Term Skilled Occupations List (STSOL) for two years.

 

The medium-term stream targets long-term skills gaps and is designed to fill more narrowly-defined and highly-skilled occupation categories appearing on the Long-Term Strategic Skills List (MLTSSL). This visa will last for four years.

 


 

Less occupations available for visa grants

 

The STSOL and MLTSSL replace the previous listings of eligible occupations for skilled migration, reducing the number of categories from 651 to 435. Of these, 268 will be available for the short-term (two year) visa and 167 for the long-term (four year) visa.

Amongst the most commonly-used occupations to be removed are human resource advisors, production managers in the manufacturing industry, sales representatives (industrial products), IT professionals (web developers) and training and development professionals. Other occupations and industries affected include accommodation and food services, biochemistry, performance and arts, legal workers and migration agents.

Shorter visa stays and less opportunity for permanent residency

The grant of a 457 visa enabled the holder to remain in Australia for up to four years and, if eligible, to apply for permanent residency after two years. The reforms have had a significant impact upon this.

The maximum duration for the short-term TSS visa will be two years with a once-only onshore renewal capacity. The visa will not provide an opportunity for permanent residency.

The maximum duration for the medium-term TSS visa will be four years with an onshore renewal capacity. The medium-term TSS visa will provide a pathway for permanent residency however visa holders will need to wait for three years before applying (as opposed to the two-year wait under the 457 visa).

Essentially, there will be fewer occupations and opportunities enabling work-related migration to, and permanent residency in, Australia.

More stringent processes for visa applicants

Short-term and medium-term visa applicants will need to demonstrate at least two years’ relevant work experience in their chosen occupation category. This was not previously necessary under the 457 program.

The minimum age limit for a temporary work visa under the previous system was 50 years – this has been reduced to 45 years.

Official criminal clearances will be mandatory for both categories as opposed to the self-declaration system used previously.

Higher standards of English proficiency will apply – applicants for a short-term visa will need a minimum EILTS (or equivalent) score of 5 with a minimum of 4.5 in each test component and applicants for a medium-term visa will require a minimum of IELTS 5 (or equivalent test) in each component. The exemption for certain applicants to meet the English language requirement (currently those whose salary is over $96,400) will be removed.

Visa holders will need to provide Tax File Numbers to the Department of Immigration and Border Protection for cross-checking with the Australian Taxation Office to ensure conformity with salary requirements.

More stringent processes for businesses

Businesses must pay visa holders a market salary rate and meet the Temporary Skilled Migration Income Threshold (TSMIT) to ensure that overseas workers are not exploited and Australian workers cut out of a position.

Non-discriminatory workforce testing will also apply, designed to ensure businesses are not actively discriminating against Australian workers. Labour market testing will continue to apply in most cases.

Business sponsors will be required to contribute to a Skilling Australians Fund at the time of nominating a visa applicant. The fee will be $1,200 per year or part year for small business (with a turnover of less than $10 million) and $1,800 per year or part year for all other businesses.

The application fees for TSS visas will be higher than the 457 visa which was last set at $1,060. The fee for the short-term visa will be $1,150 and for the medium-term visa $2,400.

Business sponsors who fail to meet their obligations under the skilled migration visa scheme will be made public.

What about current 457 visa holders and applicants?

The reforms will not affect current 457 visa holders with existing conditions remaining intact.

Applicants for 457 visas who lodged an application on or before 18 April 2017, for an occupation that has been removed from the previous eligible categories, and the sponsoring business for the applicant, may be eligible for a refund of fees.

Conclusion

The reforms narrow the range of occupations available for overseas workers to apply for a visa and restrict businesses to fewer opportunities to recruit from overseas. The deletion of several occupations is considered more suited to Australia’s skills shortage and the overall changes necessary to protect Australian workers, discourage exploitation and encourage more investment in training and development.

The visa process is notoriously complex and the reforms have significant impact upon visa applicants and employers.

If you think you will be affected by the new reforms, or you know somebody who wants more information or needs help or advice, please contact us on 02 9955 6692 or email admin@hslegal.com.au

Six things to know about Binding Financial Agreements

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There are many names for Binding Financial Agreements or BFA’s, including;

  • Pre-nuptial Agreements (commonly known as pre-nups),
  • Post-nuptial Agreements (post-nups); and
  • Cohabitation Agreements.

They are known by the courts as Binding Financial Agreements. There have even been movies about them and their enforceability and plenty of sensational newspaper stories but this article sets out the six key points you need to know.

How do they work?

A BFA allows a couple to agree in advance on an acceptable division of assets. After a relationship between a couple breaks down or is no longer workable, a BFA can reduce the financial stress of a separation and allow the couple to amicably separate without the need for costly, time-consuming and stressful court action.

Therefore entering into a properly drafted and executed BFA can prevent the courts from interfering with the agreed property distribution and provide certainty at the time of the breakdown of any relationship.

When do the parties enter into a BFA?

BFA’s can be entered into before the commencement of a marriage or relationship or at any point during the marriage or relationship and even after separation.

How binding are they on the Courts?

The short answer is that they are binding, provided they have been set up correctly. To be binding, there are certain requirements that BFA’s need to meet, if these items are not met, then the agreement can be void or set aside.  It is important that the parties obtain independent legal advice and have a solicitor draft and sign the document to avoid the agreement being set aside.

In addition, BFA’s should also be reviewed about every two years or after a significant event in the lives of the parties, such as the birth of a child or one party receiving an inheritance.


 

What does a BFA usually cover?

A BFA can specify how the parties have agreed to divide the asset pool in the event the relationship fails. They deal with property, financial resources as well as maintenance, generally described as:

  • The financial settlement (including superannuation entitlements);
  • The financial support (maintenance) of one spouse by the other;
  • The agreed arrangements for the children; and
  • Any incidental issues

This means the following practical issues that commonly arise, are dealt with in the BFA:

  • Protect existing assets or likely inheritances;
  • Ensure that children of previous relationships inherit;
  • Preserve family farms or other businesses for future generations;
  • Provide more weight to the contribution of a higher income earner; or
  • Avoid disputes about financial matters at the end of a relationship.

What a lawyer will need to know when advising about BFA’s

When a lawyer is advising a party about a BFA and before an agreement can be drafted, many factors are taken into account, for example:

  • The parties’ occupations and future capacity to earn an income.
  • Their superannuation entitlements.
  • Their current assets including chattels, vehicles, shares, furniture, valuables.
  • The current value of these assets.
  • The current market value of property a party intends to own personally.
  • Details of each party’s liabilities including any loans, mortgages or debts.
  • Whether there is any other family law financial agreement which may apply.
  • The date when the cohabitation commenced between the parties.
  • The date when the relationship commenced between the parties.
  • Whether or not either party has been married previously.
  • The number and age of any children.

 

What are the benefits?

A correctly executed BFA may provide some degree of certainty to the parties and thus avoid unnecessary arguments, in the event that a relationship ends, as they have agreed in advance as to how the property will be divided.

It can also make parties feel secure knowing that the property they have accumulated before the relationship or marriage is safe. By reaching agreement in advance, the issues that occur after a break up are more likely to be carried out without costly legal expenses or court delays.

In summary

BFA’s can provide significant comfort to parties before any relationship issues arise. They not only provide certainty if done properly but reduce stress and costs as well as provide a timely solution without having to experience any court delays as would occur if there was a prolonged argument between the parties.

Note though the importance of not only getting it done properly at the beginning but of having BFA’s reviewed from time to time.

If you know someone who may need assistance get them to call us on 02 9955 6692 or email admin@hslegal.com.au.

Employment Law – How to Avoid Redundancy

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Employers can easily fall into dispute with their employees by failing to properly handle redundancies. There is often uncertainty surrounding redundancy, in terms of handling it within the law, as well as cost.

Redundancy commonly occurs when a business is sold and a new owner offers jobs to the vendor’s existing workforce. Some employees decline the offer of employment by the new owner. In this context, an issue can arise as to whether or not redundancy payments need to be made to an employee who rejects an offer of employment by the new owner.

Notice and Severance distinguished

Notice and severance payments should not to be confused. The period of notice provides the employee with a chance to seek other employment while a severance payment is intended as compensation for the loss of future entitlements to long service leave and accrued sick leave.

Redundancy

Let’s examine what redundancy means. The best way to define redundancy is that the employer no longer wishes the duties the employee has been performing to be undertaken by anyone. Termination of the employee on this ground has therefore nothing to do with poor performance or misconduct. Essentially the work or role is no longer required to be performed by any employee. Redundancy can also happen when an employer becomes insolvent or bankrupt, or following a re-structure, in order to increase the competitiveness or profitability of a business.

The employer must meet any requirements under a relevant award or enterprise agreement regarding redundancy. This includes discussions with the employee about the prospect of redundancy in view of operational changes or restructuring.

Employers need to be aware that a redundancy which does not meet the above criteria may expose them to an unfair dismissal claim. It should also be appreciated that a redundancy does not remove the need for notice or payment in lieu of notice.

Some employers fall into the trap of going through a ‘redundancy’ and then immediately afterwards advertising the same position. From an employer’s perspective it is prudent to assume the former employee will check your advertised positions.

It is not uncommon for an employer to seek to portray what may in fact be, a wrongful termination of an employee, as a “redundancy”.

The employer needs to ensure that, on examination of the facts, whilst the employee may have no legal claim to a severance payment, there is no basis of a common law claim.

What is a ‘genuine redundancy’?

If an employee has been made redundant and that redundancy is a “genuine redundancy” as defined by the Act then the employer will be able to defend a claim for unfair dismissal.

Under the Act, it is a “genuine redundancy” if:

  • the person’s employer no longer required the person’s job to be performed by anyone because of changes in the operational requirements of the employer’s enterprise; and
  • the employer has complied with any obligation in a modern award or enterprise agreement that applied to the employment to consult about the redundancy; and
  • it is not reasonable for the employer to redeploy the person in the employer’s enterprise or an associated entity of the employer’s enterprise.

It is important that the employer who is making an employee redundant, not only complies with the consultation provisions of any applicable award or enterprise agreement, but also makes enquiries to make sure that there is not a suitable alternative position available within the employer’s business or any other “associated entity” of the employer.

When should a redundancy payment be made?

When an employee is made redundant then usually a redundancy payment will be required by the employer and this is often called severance pay.

However, the employee is not entitled to redundancy pay under the Fair Work Act if the employee:

  • resigns
  • is terminated other than due to redundancy, e.g. misconduct or performance issues
  • has been employed for less than 12 months
  • is employed in a small business with less than 15 employees
  • was employed for a fixed term and that term has ended
  • is a casual employee

The amount of any redundancy payment is calculated by reference to the employee’s years of service. By way of illustration if the employee has worked for a period greater than one year but less than two the redundancy period payable would be 4 weeks. If the term was between 9 to 10 years the period would be 16 weeks.

However, an employer may not be required to pay the redundancy for the full length of service if the employee did not have any redundancy entitlements with the employer in question, prior to 1 January 2010. In those circumstances the period from which redundancy payments are calculated is 1 January 2010 rather than the full length of service.

In conclusion – take care

It is easy to fall into one of these employment law traps and employers should be satisfied as to the circumstances that constitute a redundancy, carefully review payments to be made and comply with the Act’s requirements in relation to a “genuine redundancy”.

Regardless if you are an employer or employee, if you feel you need assistance call one of our employment lawyers on 02 9955 6692 or email admin@hslegal.com.au.

 

Testamentary Trusts

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Testamentary trusts can be very effective estate planning tools to assist in providing for spouses, children and grandchildren, and are becoming increasingly popular as more people become aware of their advantages.

A Testamentary Trust is any trust established under a will, but the term is usually used in the context of a discretionary family trust established under a will.

Why are they becoming more popular?

Their increasing popularity arises from the very considerable benefits that can flow from their establishment and use, including the fact that although assets of the trust may be controlled by the intended beneficiary, they do not form part of that beneficiary’s estate. Major benefits of a testamentary trust include the ability to protect assets and to possibly reduce tax paid by the beneficiaries from income earned from their inheritance – providing a greater level of flexibility and control over the distribution of assets to beneficiaries.

Reasons why you should consider a testamentary trust include:

CGT benefits

Assets owned by the deceased that would have been subject to capital gains tax (CGT) had the deceased sold them before their death, can pass through their estate to a testamentary trust without a CGT event occurring.

If an asset was a pre-CGT asset, the trust will receive a cost base equivalent to the market value of the asset at the date of death. If the asset is a post CGT asset, then the trust will inherit the deceased’s cost base. This is particularly important where the assets have significant unrealised capital gains. This also provides a good opportunity to “reset” the ownership of assets subject to CGT.

If for example, mum and dad own the shares in a company that is the corporate beneficiary of their family trust. The shares may have a nominal cost base but because of trust distributions made over a number of years (and often not paid in cash) the company may have become very valuable. All of that increased value is potentially subject to CGT if mum or dad changed the ownership of these shares during their lifetime. However, after their death the shares can be moved to a testamentary trust and dividends from the company can then be distributed by the trust to a range of beneficiaries, tax effectively.

In addition, trust assets may be transferred to beneficiaries without incurring CGT (but only in respect of assets of the trust that were owned by the deceased when they died).

Income Tax advantages

Income can be distributed from a testamentary trust to infant beneficiaries (under the age of 18) and taxed in those children’s hands at adult marginal tax rates (instead of at the top marginal tax rate as would otherwise be the case). Testamentary trusts may, over time, sell and replace the original assets received from the estate and the distributions to infant beneficiaries will continue to be taxed at (more beneficial) adult rates.

With the tax free threshold of $18,200 since 2013/14, testamentary trusts are even better vehicles for clients because children and grandchildren under the age of 18 years who receive income from a testamentary trust are taxed on that income at adult rates, and enjoy a tax free threshold of $18,200 (or $20,542 if the low income tax offset applies) and the marginal tax rates which apply to adults.

Without this special provision trust distributions to minors may only access a tax free threshold of $416 and thereafter the effective tax rate applied to the minor’s income is 66% of income up to $1,307 and 45% after $1,308, on the entire amount of income received.

Flexibility to the Trustee

The trustee can buy and sell underlying assets of the trust (and thereby enhance the value of the trust) without losing or endangering any tax advantage.

We suggest it is desirable that clients provide the trustee with some guidelines about the administration of the trust, but they should be carefully framed in order to avoid any confusion or legal or accounting complications.

Protection of assets

Testamentary trusts provide a level of protection to the assets held in the trust, including against creditors of the beneficiaries who may want to recover from the trust assets an amount owing to them by a beneficiary, and in the Family Law Court in the case of the divorce of a trust beneficiary.

It is quite common for a wife to guarantee her husband’s business venture and vice versa, to some extent we can all be at risk whether in high risk occupations or not. However, if a bankrupt has received an inheritance through a testamentary trust it will be protected from creditors.

In the Family Court, an inheritance held within a testamentary trust is unlikely to be the subject of a Family Court order in the case of a marriage break-up.


 

Protecting ’at risk’ beneficiaries

It is not uncommon for people suffering a variety of disabilities to be unable to properly manage their financial affairs.  At the same time, families may wish to ensure that an adequate fund is set up to meet the beneficiaries’ reasonable needs, and so as not to affect any pension rights they may have.

These people can be described as being ’at risk’, a description that may for example include people who are drug or gambling addicted, mentally or physically disabled or simply spendthrifts who are not capable of looking after any wealth that is left to them.  For these people a testamentary trust can be managed by a trustee (who should be) a responsible and capable person (or people) who take action for the benefit of the ’at risk’ person.

Summary

It is becoming much more common to steer away from the traditional husband and wife will, which provides for a husband and wife giving everything to each other and then to the children, and to replace this with one or more testamentary trusts controlled by the surviving spouse and/or children under which the spouse and children are potential beneficiaries.

If the funds in the estate justify it (and remember this may include the proceeds of life insurance policies, or superannuation), wills providing for testamentary trusts can provide that on the death of the spouse, sub-trusts come into existence for the benefit of each child and that child’s family – controlled by the child concerned.

Testamentary trusts are a very powerful and useful estate planning tool. The flexibility of such trusts, especially if combined with a memorandum of wishes as to how the trust should be administered, can be an appropriate arrangement as well as providing a highly advantageous tax mechanism, for many years into the future.

To find out more about how testamentary trusts can benefit you, contact us to speak to one of our Estate Planning Lawyers on 02 9955 6692 or email admin@hslegal.com.au.

Family Law – The perils of representing yourself in the Family Court

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The Family Court of Australia was one of the first courts to recognise self-representation by litigants as a permanent and significant client group in family law matters.

Research indicates that 20 to 30 per cent of Family Court cases involve a party who is self-represented at some point.

It is important to weigh up the benefits of using a lawyer even if you don’t have to as the consequences of not following the correct process, filing incorrect documents or filing them out of time could be disastrous.

In this article we examine some of the issues that can be encountered.

How the Family Court can help

The Court has gone to considerable lengths to streamline the process for self-represented litigants at court, providing them with increased support by simplifying its procedures to encourage the early resolution of disputes, and to make the Court more user-friendly.

The Court now provides do-it-yourself kits for guidance and assistance on completing some of the most common forms, including consent orders, financial statement, affidavit and service.

In addition and where possible, the Court provides a duty registrar to assist self-represented litigants with Court processes and procedural advice.

Things to consider about the Court process

  • Where one or more of the parties is a self-represented litigant, the principal effect on the judicial officer is to increase the time spent on the case, both before and during the trial and may include more delays than is usual and more adjournments. Family Court staff and court officers while not being able to give legal advice, are required of necessity to explain the court processes and procedures to the litigant.
    • Self-represented litigants often fail to identify a known cause of action in their pleadings.
    • A common complaint is that judges extend too much leniency to self-represented litigants in making submissions. There may be a perception that judges sometimes take the line of least resistance and let the self-represented litigant ‘get it off their chest’.
    • Situations frequently arise, particularly in the family law or domestic relationships jurisdictions, where self-represented litigants use the court proceedings as an opportunity to embarrass or harass their former partner. This may or may not be deliberate.
    Instructing a lawyer too late
    We have encountered many potential clients who are either in the process of representing themselves in the Family Court or where their matter is already complete.
    What we usually discover in these cases is that the outcome could have been better, the matter requires the immediate attention of an experienced lawyer or that it may have been so badly put together or presented that it is past the point where even the best lawyer can help.
    There are also many practical issues that your lawyer can advise you about, that don’t appear in a DIY kit, if you are separated or in the process of divorce.
    Some tips, traps to avoid and issues to consider
    • Agreeing to move out of the matrimonial home can cost you a lot of money. Seek legal advice first.
    • Everything you say, text, email, tweet or put on Facebook including things said in the strictest confidence to family or friends can get back to your former partner.
    • Don’t rely on memory – keep a diary but remember it may be read by the Judge, so be careful what is written. Perhaps limit it to points that will jog your memory.
    • If you decide to engage a lawyer, then make it worthwhile and have a comprehensive discussion, not just those points that you feel are in your favour.
    • Before you separate take photographs or photocopies of bank books or accounts, taxation records and superannuation papers, so the sums and account details are identifiable.
    • Before you move out take all your personal papers with you, including jewellery and your personal items.

Conclusion

What many people attempting a DIY divorce don’t know is how much they don’t know. It is like many tasks where experience can help speed the process and lead to a more successful outcome.
Self-represented litigants often have difficulty identifying and pleading a cause of action, which may result in more court attendances as well as confused and lengthier trials.
It is most advisable to see an experienced family lawyer first to identify the appropriate issues, advise you on your options on those issues, fight for a positive outcome on those issues, and make sure all of the issues have been examined.
If you know someone who may need assistance get them to call one of our experienced family lawyers on 02 9955 6692 or email admin@hslegal.com.au.

What are my legal rights? Most people do not know!

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This might seem a basic question but so many people simply do not know what their legal rights are. If you have teenage or adult children it is prudent to check their understanding. For some in the community, particularly if they are young or unworldly this can unexpectedly land them in trouble with the law. Unfortunately this can have consequences later in life.

The following information is for general information and is not legal advice. You should always contact and consult a lawyer for advice specific to your circumstances and before deciding on a course of action. It’s best to have a lawyer in mind rather than to be handed the Yellow Pages by a Policeman.

 

What then are my legal rights?

Generally if a policeman asks, you don’t have to tell him your name and address. However there are cases when you are required to, for example, when you are the driver of a motor vehicle. There are other cases as well and rather than expect you to remember them should we list them, our advice is, avoid confrontation.  You do not need to go further though, by telling them anything else or answering any other questions subject to them telling you why you are being asked. Generally in cases where you must answer questions you will be told that if you refuse to answer you may be liable to be charged.

 

What if you are being arrested?

If you are being arrested the arresting office should tell you that you are being arrested and why you are under arrest.

If this happens remember that it is an offence to resist arrest, pulling your arm away or resisting in the slightest way, can result in another offence.

It is fundamentally important to know that you have the right to silence. You do not need to say anything (after giving your name and address) and often admissions are freely made by people when otherwise the offence could not be proven if they had remained silent.

You are entitled to contact your lawyer.

If you have been arrested and need medical help, you have the right to that.

You also have the right to contact a friend or relative and notify them of your whereabouts.

If you cannot understand English you have the right to be provided with an interpreter, or other qualified person.

 

 

 

Do I have to submit to a search?

Yes, if you have been arrested the police are allowed to search you and take your photograph, fingerprints and a DNA sample.

 

What do I do if the police want to search my home or car?

In some circumstance the police can search your home or car without a warrant. Some (but not all) of those occasions are:

  • If the owner, occupier or operator consents; or
  • If the police enter the property to make an arrest; or
  • If you, or an occupant, are under arrest, or
  • If the police have reasonable suspicion a crime is being committed or has been committed or will be committed; or
  • If they suspect terror related activities.

What do I do if the police want to interview me?

The Police may request you attend, or accompany them to, a police station to answer questions however you are not required to go with them unless you have been arrested in relation to an offence.

You do not have to answer any questions (other than to provide police with your personal details) and you are not required by law to participate in a video record of interview.

We recommend at this point, if you have not already done so, that you contact a lawyer. We would advise you in this sort of case not to consent to an interview and under current laws it would be unwise for a solicitor to be present when that advice is given. If a solicitor is present then your refusal to participate in an interview and depending on the charges your refusal could be used against you in a later trial.

If you proceed and take part in a police interview anything you say on or off camera can be used against you in court.

It is also worth remembering, even if the police are proceeding, with proper legal representation you may have the ability to minimize the penalty by having competent representation in court, applying for bail or possibly even negotiating with the Police to have them proceed with a less serious charge or to submit a set of facts to the court that you find more accurate.

We recommend you keep a note of our contact details should this ever happen to you or someone close. Call us on 02 9955 6692 or email admin@hslegal.com.au.

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