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 13, 2020 | Conveyancing, Property Law
Understanding cooling off is critical!
A recent matter has prompted us to write an article warning of the dangers of entering into a contract for the purchase of a property without being absolutely sure that you are ready to do so.
We recently received a call from a client who told us that they had signed an unconditional contract for the purchase of a property the previous day, but after a night of contemplation, the client had decided that the contract made them nervous, as they were waiting on their current property to sell. The client called to ask for our advice on whether they could terminate the contract.
We have found that although many clients are aware that the standard contract for residential purchases in Queensland (the Real Estate Institute of Queensland Contract) contains a statutory clause enabling them to terminate under a five-day cooling off period, they are not aware of the fact that a 0.25% termination penalty applies. On the face of it, 0.25% does not sound like much, but in this instance, when the purchase price was $900,000.00, the termination penalty was $2,250.00.
The client chose to terminate that same day and the seller issued the penalty as anticipated. The issue of the penalty was not changed by the fact that the property sold the following day to another purchaser. The fact that this scenario seems unfair does not change the rights of the seller to impose this penalty.
The worst part of this situation was that it would have been easy for the client to have inserted one special condition into their contract making the contract conditional upon the sale of their current property if they had first sought legal advice (in this instance, there would have been no penalty in the event of termination and the client could have purchased their ideal home without the stress encountered in our client’s situation).
If you need assistance in drafting special conditions into your Contract, please feel free to contact our office on 07 5574 3560.
https://www.qld.gov.au/law/housing-and-neighbours/buying-and-selling-a-property/buying-a-home/making-an-offer-on-a-home/contract-of-sale
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.
