by Katrina Brown | Aug 25, 2015 | Tax Advisory, Tax Advisory
“SMSF BLUEPRINT” LAUNCH – A WELCOME RESOURCE FOR SUPERANNUATION TRUSTEE PLANNING AND STRATEGY
During the last year, it has been my pleasure to assist Julie Dolan, of SMSF Blueprint, with ideas and concepts desperately needed by our clients who utilise self-managed superannuation funds (SMSFs) in their investment portfolios.I am pleased to see the launch of SMSF Blueprint in the industry, and have offered to share the platform with our clients to assist in the dissemination of what we believe to be a sound tool for our clients. The firm receives no remuneration whatsoever, but I believe strongly in the platform and its usefulness to our clients – so wanted to share this resource with you.
Whilst Julie is a consultant with the Firm, I find her educational platform to be an astounding educational benefit and compliment to the offering of our team generally.
I, along with Julie, have advised many trustees across Australia this year in respect to SMSF compliance, and this educational platform was established by Julie and her partners to address what appears to be an industry wide confusion as to trustee obligations and strategies. I have been consulted on a number of non-compliant SMSFs in the last year, and I am concerned about the expanding enforcement powers of the ATO generally (not to suggest that I disagree with the enforcement process, and its purpose in the marketplace).
Breaches of the rules and regulations can be a very costly exercise – as demonstrated by a recent case in which a 62 year old trustee was handed down an 80 hour community service order after failing to lodge multiple years’ tax returns.
Along with its existing compliance powers, the ATO introduced its new penalty regime effective from 1 July 2014. Penalties of up to $10,200 per trustee for certain breaches of the rules and regulations can be handed down by the ATO. These penalties are payable by the trustee and cannot be reimbursed from the fund.
I am a subscriber to SMSF Blueprint, and find the content to be brilliant and easy to use. I ca use it with clients for demonstration purposes, and general education. However, it is a platform that you can subscribe to for ongoing compliance and training purposes. Plus, Julie and her team offer strategic ideas in respect to planning ideas. The platform changes constantly, with new content on legislation and forward planning ideas.
I am recommending the platform for all of my clients, and making it a mandatory subscription for my new SMSF clients because the risks of not complying are too great. It is such an easy and convenient platform, you can watch the videos anytime and anywhere. It is like having a financial advisor at your fingertips – and certainly gives you the fuel for informed discussions with your financial advisor and accountant. I personally think the platform saves clients’ money, because they can do research and investigate ideas on their own – and then go to the specialists for advice on the suitability and implementation process on those ideas that they find worthwhile considering.
Of course, I am always here to help you in your SMSF planning – but I believe clients should be informed, and the SMSF Blueprint platform is a minimal cost for a vast resource to SMSF trustees.
If you would like to speak to Julie, please feel free to give her a call on 040 445 5001, or email her. Definitely have a look at SMSF Blueprint, if you are considering or managing a SMSF – I think you will be quite pleased at the platform.
For your convenience, you can click here to view the link that I use to link through to SMSF Blueprint.
Katrina Brown BA ATIA SSA TEP
Senior Lawyer
by Katrina Brown | May 8, 2014 | Elder Law and Special Needs Advocacy – “Different-Ability Law”, Special Needs and Disability Planning
Planning for a person with a disability takes careful thought and preparation. Luckily Nautilus Law can help you!
If you would like to enquire about planning for a person with a disability, we welcome you to contact Katrina Brown BA JD ATIA TEP SSA, Practice Director of Nautilus Law Group, is the Senior Lawyer overseeing the Commercial, Estate Planning and Tax Division of the Firm. Katrina can be reached by email at katrina@nautiluslaw.com.au or by calling our offices on (07) 5574 3560. We thank you for considering Nautilus Law Group.
by Katrina Brown | Oct 13, 2013 | Succession Law
Special Disability Trusts can be an extremely useful tool to both plan and provide for the future needs of your son or daughter with a severe disability. This Trust was introduced by the Federal Government in 2006 and is part of Australia’s social security framework. The Trust is designed to assist families to make their own legal planning provisions for their family member with a severe disability. Proper legal planning, such as the formation of a Special Disability Trust, ensures that any inability of a primary carer to maintain care is provided for and the needs of the person with a severe disability remain met.
WHAT ARE THE BENEFITS OF A SPECIAL DISABILITY TRUST?
Special Disability Trusts are Trusts established by a parent to meet the specific, long-term needs of their child with a severe disability both now and in the future. The Special Disability Trust can be established by parents whilst alive or through their Last Will. There are a number of key benefits in establishing a Special Disability Trust.
Firstly, the principal place of residence of the beneficiary becomes an asset of the Trust. As an asset of the Trust, the beneficiary has a life interest in the property. This provides security of tenure for the life of the beneficiary.
Secondly, the trustee may spend Trust assets on reasonable care that is directly related to the care of the beneficiary. To fall within this ambit, the need for the care must be for the primary benefit of the beneficiary and this need must be met within Australia. Examples of reasonable care needs could include any relevant aids, communication devices or vehicle modifications required for the beneficiary’s disability. This is certainly not a definitive list.
Thirdly, the trustee may also spend up to $10,500 per annum for care that is not directly related to the care and accommodation needs of the beneficiary. This is called discretionary spending. Whilst some may find this concerning, this recent legislative amendment ensures that there is some flexibility in meeting the day to day needs of the beneficiary. Examples could include workshops or recreational activities for the beneficiary, basic food as well as any required household cleaning. Again, this is certainly not a definitive list.
Fourthly, there are also significant social security benefits to a Special Disability Trust. These are outlined below.
THE SIGNIFICANT SOCIAL SECURTY BENEFITS
As noted, a Special Disability Trust enables parents to provide assets to their son or daughter. However, when social security such as a Disability Support Pension is applicable, the transfer of assets can have significant implications for a person’s entitlements. This is generally not the case in relation to Special Disability Trusts. The term ‘special’ in the name Special Disability Trust is not a reference to a beneficiary’s disability, but is in fact related to the special Social Security treatment of the Trust. This is because Special Disability Trusts are intended to encourage families to make their own arrangements for their family member with a severe disability. The Social Security treatment of Special Disability Trusts is outlined briefly below.
Firstly, the income test for Special Disability Trusts is unique. Money utilised for care, accommodation, maintaining the trust assets and on the discretionary spending noted above is not considered income for social security purposes.
Secondly, the assets test is also unique. As at July 2012 and indexed annually, the beneficiary may have assets worth up to $596,500 in Trust as well as the principal residence as noted above before there are any implications on the beneficiary’s Disability Support Pension or other relevant social security payment. This encourages families to ensure that there are sufficient assets to care for the beneficiary for their lifetime.
Thirdly, the gifting concession is also unique. As opposed to the ordinary gifting concession of $10,000, the gifting concession for Special Disability Trusts is $500,000 for immediate family members providing assets to the Trust. This figure is not subject to indexation and immediate family members may also receive concessional treatment. This encourages families and others to gift to the trust for the ongoing care of the beneficiary.
WHAT ARE THE REQUISIT COMPONENTS OF A SPECIAL DISABILITY TRUST?
Special Disability Trusts must confirm with a number of specific requirements. Firstly, a Special Disability Trust can only be established for a beneficiary with a ‘severe’ disability. The term ‘severe’ is defined under section 1209M of the Social Security Act 1991. Under this section, there are two means of classifying ‘severe’.
Firstly, a person 16 years or over must be eligible to qualify for the Disability Support Pension. The person must also have a disability that, if they had a sole carer, ensure the care is eligible for Carer Payments or Carer Allowance.
Alternatively, the beneficiary must live in an institution or group home where care is provided pursuant to Government funding. The beneficiary must also have a disability that limits the ability to work more than seven hours per week or above the relevant minimum wage. This reference to minimum wage regards the Supported Wage situation. However, amendments made in early 2011 now ensure that a beneficiary may work up to seven hours a week at or above the minimum relevant wage in open employment and still qualify.
If this definition is met, there are further requirements to establish a Special Disability Trust. Firstly, the Trust must have only one beneficiary. This ensures that there is one Trust per person. The Trust must also be established primarily to provide for the care and accommodation needs of the beneficiary. This ensures that the long-term needs of the beneficiary are protected. The Trust must also have a Trust Deed that contains all clauses outlined in the Model Trust Deed. A Model Trust Deed identifies who the relevant parties are, any important factors the trustee must consider, as well as the specific powers and duties of the trustee.
Whilst the Model Trust Deed governs the actions of the trustee, there are also important considerations for selecting a trustee for a Special Disability Trust. An independent trustee or, preferably, a panel of trustees must also be provided for by the Trust. If appointed solely, the trustee must be a prescribed person such as a solicitor, an accountant or the Public Trustee. Alternatively, a panel of two trustees who each do not qualify as a prescribed person may be appointed.
Finally, a Trust is a separate legal structure in relation to taxation. As such, the Trust has its own responsibilities to pay tax as required and submit tax returns. It is advisable that an accountant attends to these obligations. If the trustee is a company there are also ongoing legal and accountancy obligations to maintain the company.
IMPORTANT CONSIDERATIONS
Whist an excellent planning tool, Special Disability Trusts can be extraordinarily expensive to establish. This is highly unfortunate and in some situations they are not feasible solutions to a family’s planning needs. There are also ongoing legal and accountancy costs to maintain the Trust. These factors must be considered when planning for the future needs of a son or daughter with a severe disability.
HOW CAN NAUTILUS ASSIST?
Nautilus practices in Special Needs Law and has a team with significant experience in this area. We welcome you to contact our offices on (07) 5574 3560 or email info@nautiluslaw.com.au. We thank you for considering Nautilus Law Group.
Submitted by: Katrina E. Brown BA JD ATIA TEP SSA
by Katrina Brown | May 15, 2013 | Estate Litigation, Powers of Attorney and Estate Planning, Succession Law
Protecting Wealth for your Children from Predators of your Partner.
A successful estate plan is a coming together of a number of strategies and tools aimed to achieve your goals for the distribution of your estate, while addressing any prevalent issues, such as protection of the assets, family breakdowns and taxation consequences.
A life interest, in the context of estate planning, is a form of Testamentary Trust where the Testator grants an individual (in most cases the surviving spouse), a lifetime benefit from an asset or the income from an asset of the estate of the Testator.
The person to which the life interest is granted, also called the ‘life tenant’, is essentially granted the right to enjoy the asset for their lifetime or until such time as the life tenant stops complying with the terms of the trust. The benefit of a life interest is that when it ends, the remainder of the asset is passed down to the intended beneficiaries of the Testator. Ownership of the asset is held by the intended beneficiaries, and the life tenant is simply granted the benefit of the use of the asset for the duration of their lifetime.
A life interest is flexible in that it can be used to allow the life tenant to access income only, or may include capital and income.
How can a life interest be used as an estate planning tool?
A life interest is an estate planning tool that can be used in a number of situations, the most common of which are situations where couples are in their second or third marriages, often with children from each marriage.
In this situation, couples who have married later in life and have brought assets into a marriage may wish to ensure that they are able to pass their assets to their respective children. In these situations, assets are often kept separate, with the exception of the couple’s primary residence. A life tenancy allows an individual to ensure that their spouse is provided for, for his or her lifetime. Then, once the surviving spouse has passed away, the Testator’s share of the asset is then passed to the intended beneficiaries of the Testator (usually the biological children of the Testator).
As you can see, the life interest is a way of ensuring that the entirety of the Estate of the first spouse to pass away does not pass to the Estate of the surviving spouse. A life interest ensures that the first spouse’s share of the primary residence can still pass through their bloodline to their children, without any sacrifice of standard of living of the surviving spouse.
Another situation where a life interest can be beneficial is where a couple has amassed a sizeable Estate. If, after the passing of their spouse, the surviving spouse re-partners, a life interest will ensure that the assets of the life interest can be used to the benefit of the surviving spouse without becoming a part of the surviving spouse’s Estate – which will protect the asset upon the death of the survivor or on separation from the future partner. The asset is instead preserved for the intended beneficiaries (usually the couple’s children).
How do we grant a life interest?
As stated above, the most common asset of a life interest is the primary residence of the couple. Most couples will hold their primary residence as ‘joint tenants’. Joint tenancy is essentially a type of ownership of property where two or more owners hold the whole of the property jointly with the other owners. This means that each owner has an equal entitlement and interest in the property. The most relevant aspect of joint tenancy is that upon the passing of one joint tenant, the surviving joint tenant (or joint tenants) acquires the deceased joint tenant’s interest in the property automatically. The effect of this is that the interest that belonged to the deceased joint tenant will not form a part of his or her estate.
If you hold your primary residence as joint tenants with your spouse at the time of your passing, your primary residence will then pass to your spouse in its entirety. The whole of that property will then pass to the surviving spouse’s estate to be distributed in accordance with his or her Will, which can be undesirable in circumstances where your spouse remarries or where each spouse has children from a previous relationship.
In order to create a life interest, therefore, it is often necessary to ‘sever’ the joint tenancy and causes spouses to hold the interest in their property as ‘tenants in common’. The difference between tenants in common and joint tenancy is that, should a tenant in common pass away, the share of the property owned by the deceased spouse passes in accordance with the provisions of the Will of the deceased tenant in common. Shares in property owned as tenants in common can be transferred independently of each other.
Tenants in common allows a spouse to create a life interest to the benefit of the surviving spouse over their share of the property, while their spouse still owns the remaining share. Then once the life tenant has died, the property passes half in accordance with the first spouse’s estate, and half in accordance with the second spouse’s estate, to their intended beneficiaries.
If you think that a life interest may be beneficial to your circumstance, or you would like some information about life interests and how they work, please do not hesitate to contact us to discuss this further. We are able to assist you to incorporate life interests into your estate planning, and we are also able to assist you with severance of your joint tenancy if required.
For all questions or further information, we welcome you to contact our offices on (07) 5574 3560 or email info@nautiluslaw.com.au. We thank you for considering Nautilus Law Group.
Submitted by: Katrina E. Brown BA JD ATIA TEP SSA
by Katrina Brown | May 15, 2013 | Special Needs and Disability Planning, Succession Law
Whilst Australia has a widely recognised ageing population, the term ‘elder’ for the purposes of Elder Law is not defined at common law or in statute. In fact, the term ‘elder’ has no real legal meaning at all. Socially, the definition can also be difficult given the significant increase in average life span and the steadily increasing retirement age.
These obscurities aside, Elder Law is a recognised practice area that is rapidly developing within Australia. As such, it is important to understand who could be defined as an elder at law. To assist in defining the term ‘elder’, the Queensland Law Society has identified a number of State and Federal legislative provisions that are age-specific. The United Nations Population Fund Reports and general governmental policy documents on Australia’s ageing population can also be useful. These are outlined briefly below.
Pension Age
Firstly, regard can certainly be given to the pension age as provided by section 43 of the Social Security Act 1991 (Cth). For men, the pension age is 65 years and over whilst for women it is between the ages of 60 and 65, conditional on birth year. For women born before 1 July 1935 the pension age is 60 and for women born after 1 January 1949 it is 65. Notably, pension age is also five years earlier for veterans.
If you are of pension age, then Elder Law can apply to you. Upon retirement and access of the Aged Pension, there are significant decisions to be made that require forward planning. This includes potentially downsizing from your existing home and revising existing estate planning documents for your future.
Preservation Age
Secondly, regard can be given to a person’s superannuation age. This is known as ones preservation age. The preserved component of superannuation can generally only be accessed for people over the ages of 55 to 60. Again, this depends on the year of birth.
If you are of preservation age, Elder Law can certainly apply. Again, once reaching preservation age there are significant decisions to be made, such as asset protection, and indeed asset preservation. This can come within the ambit of Elder Law and lawyers and financial planners can offer considerable services in this area.
Elder Abuse as Serious Assault
Thirdly, an assault committed against a person aged 60 years and older constitutes a serious assault if committed against a person over 60 years of age as provided by section 340(1)(g) of the Criminal Code 1899 (Qld). This can relate specifically to Elder Abuse claims and the provision has significant implications for sentencing the offender.
Intergovernmental and Governmental Documents
Finally, given the international ageing population, there is also a plethora of governmental and intergovernmental policy documents and reports on ageing. Firstly, the United Nations has long recognised that there is an ageing population globally. In monitoring the ageing population, the Population Fund Reports generally assess the international ageing population from as low as 60 years of age and increasing incrementally to 80 years and over.
Secondly, the Australian Government has also produced extensive documentation on Australia’s ageing population, such as the Intergenerational Report. This Report projects that within the next 40 years the proportion of Australia’s population aged over 65 years will almost double to approximately 25 percent. This is in line generally with the Australian pension age criteria.
Conclusion
Overall, whilst relatively ambiguous there are a number legislative provisions, policy documents and reports that indicate that at approximately 60 years of age one could be considered an elder for the purposes of Elder Law. If you are nearing retirement age or are making decisions about your superannuation, Elder Law could be relevant and it is important to seek advice accordingly.
How can Nautilus assist?
Nautilus practices in Elder Law and has a team with significant experience in this area. If you would like more information on this area of law or have a specific concern, we welcome you to contact our offices on (07) 5574 3560 or email info@nautiluslaw.com.au. We thank you for considering Nautilus Law Group.
Submitted by: Katrina E. Brown BA JD ATIA TEP SSA
by Katrina Brown | Apr 23, 2013 | Special Needs and Disability Planning, Succession Law
Age is a natural and unstoppable process that obviously presents a wide variety of enhanced health-care needs. However, many fail to realise that age also brings a multitude of specific legal needs. This specifically surrounds issues of capacity, aged care and end of life decisions. Because of these specific legal needs, the practice area of Elder Law has developed. A very general outline of what Elder Law can comprise is outlined below. Each of these topics will be explored in greater detail in subsequent articles.
ESTATE PLANNING AND PROPER PREPARATION OF WILLS
Firstly, comprehensive estate planning through the preparation of a will or trust agreement is vital. A comprehensive estate plan will ensure that the elder’s wishes for the distribution of their estate are executed, whilst also ensuring that their assets are protected. This includes protection against challengers to the will and a myriad of potential taxation consequences. It is important that a will is drafted at a time when the elder has full capacity, and that the regularly updated to meet any changing circumstances.
RESPONDING TO SUPERANNUATION DISPUTES
Superannuation disputes have increased dramatically in recent years. Given Superannuation is often a primary source of income for elders, it is important that any disputes are resolved efficiently. There are two key instances of superannuation disputes. The first is a dispute between the superannuation fund and the elder over entitlements. The second relates to elder abuse which is discussed in more detail below. A person may persuade an elder to make a Binding Death Benefit Nomination for their superannuation benefit. This ensures the superannuation does not pass through the estate upon death but directly to the recipient. This may not be what the elder intended and can have a significant impact on the administration of the estate.
PROVIDING ADVICE ON AGED CARE ACCOMMODATION CONTRACTS
Elders must make many lifestyle decisions, be it simple downsizing from the family home to entering aged care facilities. Moving into aged care is a significant lifestyle decision and there are a number of factors to consider. Firstly, there are a number of living arrangements for the elderly, spanning from independent living, community living to assisted living. It is important that the right choice is made on what type of aged care accommodation is suitable. It is also important that this is planned for properly and that the elder’s family are aware of the elder’s wishes.
Secondly, the transition from the elder’s current home to accommodation involves a myriad of important issues. This is particularly due to the significant cost of attending aged care accommodation. It is important that both your personal interests and your estate are protected throughout this transition. As a result, legal and financial advice is integral.
CONTRACTUAL DISPUTES WITH VARIOUS SERVICE PROVIDERS
You may engage a significant number of service provides to assist you with your daily needs. Whilst it can often be overlooked, a number of disputes with service providers can be resolved through contract law. It is important when engaging a service provider that you are aware of the rights and obligations of each party to the contract. If a dispute arises, seeking advice from a lawyer is advisable.
APPOINTING ALTERNATE DECISION-MAKERS
Capacity is at the core of Elder Law. In Australia, there is a presumption of capacity for all persons over the age of 18, the age of majority. However, if capacity is questioned and this presumption is rebutted, the people important to the elder must rely on pre-prepared planning instruments to implement the elder’s wishes. There are a few key ways this can be achieved.
Firstly, an advanced health directive is a document that outlines what an elder intends if they become unable to make decisions during their lifetime. This often relates specifically to how an elder would like their health care needs met. However, including these details within enduring power of attorney documentation is an advisable alternative.
The appointment of a power of attorney or an enduring power of attorney is a legal document that authorises another person to act on the elder’s behalf and assists them with financial and health-care decisions. Actively appointing a power of attorney ensures that a trusted person or a trustee organisation can make these decisions on the elder’s behalf. Importantly, this appointment can only occur when the elder has capacity. It is therefore important to ensure that steps are actively taken to make any appointments.
RESPONDING TO CLAIMS OF ELDER DISCRIMINATION OR ELDER ABUSE
Elder discrimination and elder abuse are delicate topics that many people find difficult to discuss. However, it is important to that people know their rights as an elder.
Firstly, instances of discrimination may occur against an elder. Australia’s anti-discrimination regime is governed by a broad range of legislation, including the Age Discrimination Act 2004, the Australian Human Rights Commission Act 1986, the Disability Discrimination Act 1992, the Racial Discrimination Act 1975 and the Sex Discrimination Act 1984. It is important that all instances of discrimination are reported so that there can be recourse under the relevant legislation. To do this, legal assistance and the assistance of an advocate is often required to ensure an elder’s rights are protected.
Secondly, elder abuse occurs when there is a relationship of trust between a person and an elder, and this trust is compromised, resulting in harm to the elder. This harm could be physical, emotional or financial and could be perpetrated by a family member or friend, a service provider, or otherwise. When elder abuse occurs, public liability personal injury claims in Queensland is governed by the Personal Injuries Proceedings Act 2002 and the Civil Liability Act 2003. Criminal liability may also be apparent if the elder is a victim of a crime. The regime that governs criminal liability includes the Criminal Code Act 1899 and the Penalties and Sentences Act 1992 (Qld).
It is vital that when abuse occurs, or is suspected by a friend or family member, that it is reported and the appropriate remedies are pursued. In this instance it is important to remember that all accredited aged care providers must have an internal complaints process pursuant to the Aged Care Act 1997 (Cth). Assistance from a lawyer and an advocate is often vital.
HOW CAN NAUTILUS ASSIST?
Nautilus specialises in Elder Law and has a team with significant experience in this area. If you would like more information on this area of law or have a specific concern, we welcome you to contact our offices on (07) 5574 3560 or email info@nautiluslaw.com.au. We thank you for considering Nautilus Law Group.
Submitted by: Katrina E. Brown BA JD ATIA TEP SSA
