by Katrina Brown | Nov 10, 2020 | Elder Law and Special Needs Advocacy – “Different-Ability Law”, Guardianship, Nautilus Law, Powers of Attorney and Estate Planning, Special Needs and Disability Planning, Succession Law
Queensland has updated the Capacity Assessment Guidelines which are to be applied in assessing an adult’s capacity to make decisions. The Guidelines assists practitioners, families and the public in testing the key criteria of capacity. The following summarises the critical sections of the Guidelines.
What is capacity?
Capacity is a legal term referring to the ability to exercise the decision-making process.
When an adult has capacity to make a certain decision, they are able to:
» understand and retain (even for a short while) the information relating to the decision
» understand the main choices available
» understand and weigh up the consequences of the choices
» communicate the decision
» make a decision freely and voluntarily.
It is the adult’s ability to exercise the decision-making process that is assessed when you carry out a capacity assessment.
It is important to remember that while an intellectual or cognitive impairment might impact on an
adult’s decision-making ability, it doesn’t necessarily mean they lack capacity. The same can be said
for mental illness, brain injury, dementia and age. Whether the adult makes a decision that others
might think is wrong, risky or immoral is also irrelevant.
The five principals in assessment of capacity:
- Always presume an adult has capacity: Under the law it is not up to the adult in question to prove they have capacity. It is presumed that every adult has capacity to make all decisions until proven otherwise. This presumption is not affected by any personal characteristics such as disability, mental illness or age (if the person is over 18 years of age). The responsibility is on the person seeking to challenge the adult’s decision-making capacity to prove the adult has impaired capacity. This can be done through a capacity assessment.
- Capacity is decision-specific and time-specific: Capacity is specific to the type of decision to be made and the time the decision is made. Someone might have capacity to make certain types of decisions (e.g. a personal decision about where to live) and not others (e.g. a financial decision about whether to sell their house).
- Provide the adult with the support and information they need to make and communicate decisions:
- Capacity can fluctuate: Capacity can change or fluctuate. An adult with a medical condition or illness may temporarily lose capacity, but then regain capacity at a later date. On the other hand, an adult with dementia or delirium, for example, might have capacity on some days (or during some parts of the day)and not others.
- Capacity can change with support: An adult’s capacity can improve depending on the support available to them. For this reason, an adult cannot be found to lack capacity until all practical steps have been taken to provide the support and information needed to make the decision.
- Assess the adult’s decision-making ability rather than the decision they make: An adult is free to make bad or poor decisions, provided they have the decision-making ability to make that decision. It is not the decision that is tested, but the capacity to make any decision.
- Respect the adult’s dignity and privacy: This process is perhaps the most invasive and overwhelming in the adult’s life. At all times, the adult is to be given dignity and privacy in the process and given full advantage of assistance to ensure that the adult’s decision-making capacity is truly impaired. Planning the capacity ahead of time and performing the assessment in circumstances comfortable to the adult are critical.
Tests of Capacity:
- General test of capacity —is applied when assessing capacity for decisions about personal,
health or financial matters. This test requires the adult to:
- understand the nature and effect of decisions about the matter;
- freely and voluntarily make decisions about the matter; and
- communicate the decision in some way.
- Test for making an enduring document—is applied when assessing capacity for making an
advance health directive or enduring power of attorney. This test requires the adult to:
- understand the nature and effect of the document. The law requires the adult to actually understand the powers the document gives and when it operates and how and when it can be cancelled or revoked; and
- make the document freely and voluntarily.
Our practitioners are frequently called to assist families in both the making of estate planning documents, and in effecting processes once loved ones lose capacity or there is a question of a loss of capacity. We are compassionate and understanding, and can assist in a wide range of services when this time comes.
If you or your family has a concern about capacity or wishes to make estate planning instruments, please do not hesitate to contact our scheduling director, Vicki Baker, on 61 7 5574 3560 or Vicki@nautiluslaw.com.au to arrange a meeting. We conduct meetings by Zoom or in person.
Thank you – Katrina Elizabeth Brown, Senior Lawyer (Katrina@nautiluslaw.com.au)
by Katrina Brown | Jun 14, 2020 | Estate Administration and Litigation, Nautilus Law, Succession Law
A Will is one of the most important legal documents you will make and must be tailored in accordance with your individual needs. It sets out your wishes for the distribution of your estate and provides directions as to who is appointed as your executor and how they should manage your estate.
The failure to execute a Will before your death will mean that you die ‘intestate’, leaving your assets to be distributed in accordance with legislative provisions (in Queensland, this is pursuant to the Succession Act 1981 (QLD) (the Act) – other States have similar legislation), which may not be in accordance with your wishes.
Further, a failure to seek professional legal advice to prepare a Will, attempting to draft your own Will, or neglecting to make sufficient provision for your spouse, descendants and dependants may result in a Family Provision Claim against your estate.
What is a Family Provision Claim?
Family Provision Claims are made under Part IV of the Act and are the most common type of challenge to a Will. The Act provides that whether a person dies testate (having a Will) or intestate (without a Will), the court may, in its discretion, apply such provision as the court thinks fit having regard to the status of the individual making the claim and whether they qualify as a dependant on the deceased.
Who can make a Family Provision Application?
A deceased person’s spouse, child or dependant is entitled to bring a Family Provision Application seeking proper support and maintenance from the estate of the deceased. Each potential claimant will be considered in detail below.
Spouse:
At law, a person’s spouse is entitled to a distribution from the estate if they are the husband, wife, de-facto partner or a registered partner of the deceased.
Children:
The definition of child under the Act is broad. Children who may bring a Family Provision Claim include not only the deceased’s natural or legitimate children, but also step-children and adopted children. Foster children may bring a claim if they can establish that they were wholly or partially dependent on the deceased and were a member of the deceased’s household.
Dependant:
A claimant may also fall within the category of a Dependant, which is defined as “any person who was wholly or substantially maintained or supported … by that deceased person at the time of the person’s death being:
- a parent of that deceased person; or
- the parent of a surviving child under the age of 18 years of that deceased person; or
- a person under the age of 18 years.”
Accordingly, a dependant may be a parent of the deceasd person.
So – if a Family Provision Claim can be made in any instance, what’s the point in writing a Will?
In the event of a Family Provision Claim, the Will is one of the primary documents upon which a court will rely, as this document sets out the testamentary intentions of the deceased.
While there is no concrete method of preventing a Family Provision Claim being lodged – there are various methods by which the chances of a claim being lodged, or of such a claim being successful, can be decreased.
When a court considers a Family Provision Claim, the deceased’s views will be considered. However, there is no guarantee that the court will uphold the wishes contained within the Will if the claimant can demonstrate the need for proper support or maintenance. It is, therefore, paramount to consider every possibility which may arise, and to draft a Will that considers all potential claimants and provides security and protection to ensure your estate is distributed as you intend.
If you are excluding any of the potential claimants from receiving a distribution under the Will, or effecting a distribution that is less than what may be considered by a court to be “proper entitlement”, it is important that you record the reasons for such exclusion or reduction with either a clause included in the Will or alternatively executing a signed statement to be kept with the Will. There are various supplementary documents which can be prepared by your solicitor setting out the reasons a lesser provision was made for potential claimaints.
If you would like to speak to our estate planning team about drawing a Will or potential Family Provision Claims, please contact our office on 07 5574 3560 or via email at info@nautiluslaw.com.au.
by Katrina Brown | May 22, 2020 | Elder Law and Special Needs Advocacy – “Different-Ability Law”, Estate Administration and Litigation, Succession Law, Wills
Is the Executor paid for acting in a deceased estate?
The duties and responsibilities of acting as the Executor of a deceased Estate can be onerous and time consuming; therefore, if appointing a person to act on your behalf, you should consider whether any provision should be made for such person to compensate them for taking on the role.
Under the Succession Act 1981 (Qld) (the Act), a person acting as the Executor of the Estate is entitled to receive a just and reasonable commission for their attendances in acting as the Executor of your Estate, provided such commission is authorised by the Will, authorised by the Court (in accordance with section 68 of the Act ) or agreed by all beneficiaries of the Estate. In the event such payment is authorised, it would be paid from the assets of the Estate prior to distribution.
However, depending on the value of the Estate, this is something that you may wish to specifically address in your Will; whether to authorise or prohibit such payment, or to make alternative provision.
For example, as a commission payment is generally paid as a percentage of the net value of the Estate, if the value of your Estate is significant, the payment of an Executor’s commission can be a large sum and may significantly reduce the value of your Estate (and, in the event your Executor is also a beneficiary of your Estate, could result in a disproportionate distribution to beneficiaries). This may be considered particularly unreasonable if the attendances by the Executor in administering the Estate have been minimal in comparison to the amount of compensation received by way of commission.
In order to avoid the payment of a percentage of your Estate as commission, or payment of a disproportionate sum, it is also possible to include a clause in your Will directing that your Executor is authorised to be paid for their attendances in administering your Estate at an hourly rate (set by you – such at a specified hourly rate, or a rate equivalent payable to bookkeepers in your local area at the date of your death).
If you wish to review your Will to ensure your Executor is appropriately remunerated for acting in the administration of your Estate, please contact our team on 07 5574 3560 or via email to info@nautiluslaw.com.au.
by Katrina Brown | May 11, 2020 | Powers of Attorney and Estate Planning, Succession Law, Wills
Talk about unfair…or was it?
In the matter of Calvin & McTier [2017] FamCAFC 125 (12 July 2017), the Full Court heard an appeal by a husband who argued that an inheritance received FOUR years after separation should not be included in the property to be divided. The Full Court held that the property to be divided in a matrimonial matter is the property held by the parties at the date of HEARING, not date of SEPARATION.
The husband’s counsel submitted a number of legal arguments to defeat the inclusion of the inheritance, including the proposition that if the inheritance was to be counted – the later acquired inheritance should be subject to a separate finding as to division (in that case, the inheritance equated 32% of the property pool, which the trial court awarded 65% to husband, and 35% to wife). The Full Court did not agree. The Full Court determined that a trial court has discretion to make decisions as to the whole of the assets of the parties, including assets acquired long after separation. To make matters worse, the husband was left to pay the parties’ costs.
The lesson here is that if your beneficiaries are separated, but have not resolved matters by a binding financial agreement or court orders (far preferred because of the finality), then you should be revisiting your estate planning and contemplating proper testamentary trust structures with adequate appointor and guardian provisions.
Also, if you have separated, but believe the cost of making a binding financial agreement and/or seeking court orders is “too hard” or “not worth the expense”, think again. It is far better to divide what is your marital pool, than risk dividing what is your later accumulated wealth. Whilst adjustments and contribution weighting may allow for a factor which compensates for your later accumulated wealth, you most likely will lose part of that accumulated wealth.
Life is a gamble, sometimes you win the gamble.
If you aren’t up for the gamble, we welcome you to contact one of the estate planning and/or family lawyers at Nautilus Law Group. Please free to contact Katrina Brown on (07) 5574 3560 or by email.
by Katrina Brown | May 5, 2020 | Business Strategies, Business Structuring, Commercial Law, Tax Advisory
CGT and the small business home office – big tax mistakes
The amount of Capital Gains Tax (CGT) you will be required to pay when you sell your home is calculated by multiplying the gross capital gains on the sale of your home by the percentage of business use over the period of ownership. To illustrate, if your home is sold for $800,000, but you invested $600,000 between acquisition costs and repairs – and you have deducted 5% of the costs of the home for your “business use” over a period of the 5 out of 10 years you have held the home – then your assessable capital gains will be calculated as follows: [($800,000-$600,000) x 0.05] x [10/5] = $5,000.
Caution needs to be had when opting to claim business expenses in respect to your home, via your annual business tax return. Although you are able to claim back a portion of your interest costs and other hold costs for the percentage of business use in your home, the loss of capital gains exemption for that part of the home may not justify the short term savings.
The ATO provides helpful tools for business owners to assist in assessing their personal circumstances and capital gains. Please click the following link to check out the tools offered by the ATO: ATO planning templates and tools.
Nautilus Law Group assists business owners in assessing and designing business and personal wealth structures, and consideration of capital gains tax is one of the services we offer.
If you are running a home office and have questions about your structure, please do not hesitate to contact our team to arrange a conference by emailing info@nautiluslaw.com.au or phoning our enquiries manager – Vicki on 07 5574 3550.
by Katrina Brown | Apr 23, 2020 | Estate Administration and Litigation, Succession Law
Following your death, your Executor is responsible for the administration of your Estate; this includes calling in the assets of your Estate, attending to payment of debts and liabilities, and distributing the net proceeds to the beneficiaries in accordance with your Will (subject to any direction of the Court).
There are various debts that must be considered in Estate administration:
Funeral expenses
Funeral expenses may be paid directly from the deceased’s bank accounts upon presentation of a certified copy of the Will and the funeral account to the deceased’s financial institution (however, this will result in freezing the accounts).
Costs of administration of the Estate
The Executor is authorised to engage professionals to complete the necessary works to administer the Estate. In doing so, the Executor personally engages accountants, lawyers, agents and other professionals, and in doing so the Executor is generally entitled to a full right of indemnity from the Estate in relation to the reimbursement of such properly incurred costs as an administration expense.
Estate debts
Aside from funeral, testamentary and administration expenses of the Estate (which take priority to other Estate debts in accordance with the Succession Act 1981 (Qld)), the remaining debts of the deceased and Estate must be paid prior to distribution of the Estate to the beneficiaries.
The Executor is not personally liable for the payment of such expenses, but rather they are borne by the Estate. In the event that the Estate does not have sufficient assets to attend to payment of all such debts, the Estate may become insolvent and be declared bankrupt.
The Executor becomes personally responsible for payment of Estate debts only in the circumstance where administration of the Estate has been completed without the Executor having given proper statutory notice to potential claimants.
If you would like to discuss the administration of an Estate, please contact our team on 07 5574 3560 or via email to info@nautiluslaw.com.au.
