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LOAN OR GIFT? Contributions from your parents and property division

August 1st, 2022

It is common for parents to continue to support their children financially, even when they become adults with partners and children of their own. Parents may help their children by providing money to assist with the purchase of a house, payment of a loan or for many other reasons. This money may sometimes be a gift, and in other cases it may be a loan which is expected to be repaid.

The question of whether money contributed by a parent was a loan or a gift plays a particularly important role in family law proceedings. If the adult child is going through a relationship separation, they or their parents may wish to argue that the money was a loan which will need to be repaid while the former spouse may wish to say it was a gift. If the money is a gift rather than a loan, it may be included in the assets available for division and the spouse may be able to claim some entitlement to that money.

The following questions can provide some guidance as to whether a parent’s contribution would be viewed as a gift or a loan:

1. Is the agreement in writing?

If there is no written agreement it is less likely that the contribution would be considered a loan.

2. Are there any repayment terms (i.e. set amounts to be repaid within certain timeframes)?

If there are no repayment terms, the arrangement is unlikely to be considered a loan.

3. Are the repayment arrangements similar to those of a traditional loan?

If they are, this would indicate that the contribution was a loan.

4. Have the repayments been made?

If so, this would indicate a loan arrangement.

5. Has there been any demand for repayments?

Requests for repayments would suggest the money was loaned and there was an expectation that it be repaid. The timing of the requests is important. If made during the relationship, this would indicate the money was a loan, however if demands were only made leading up to separation this is not conclusive, as there could be other motives behind such requests.

6. Capacity to repay?

Without real prospects of repayment it is harder to argue the contribution was a loan. An ordinary lender would consider the person’s ability to repay before loaning any monies.

7. Do the facts and evidence provided suggest there was an intention to create legal relations?

This can be determined on a case-by-case basis. Where parents and children want to ensure that money loaned gets repaid in the event of the adult child’s relationship breakdown, they may take a number of steps prior to separation including:

1. Ensure the loan is documented in writing and there are provisions such as, repayment on sale of the property, or other repayment terms.

2. Take partial ownership of the property or asset in question.

3. The child and their partner enter into a binding financial agreement that upon separation any monies loaned would be repaid to the parents.

If you require assistance with the division of your property post-separation you can contact our family law team on 07 4092 3555.

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.au Domain Name extension; truncations and changes

July 22nd, 2022

As of 24 March 2022, a new domain name extension for Australian Websites came into effect.  The au Domain Administrator (“auDA”) has announced that registration for the new .au extension commenced on 24 March 2022.

What is the new extension?

The new .au extension is a truncation of the previous domain names (for example — .com.au, .org.au and .net.au).  Under the new regime yourwebsite.com.au could also be registered as simply yourwebsite.au.

So how does it work?

On 24 March 2022, all names in the registry prior to launch were reserved for six months, being the priority allocation period.

During this time, a person with an existing xyz.au domain name will be able to apply for the same domain name with the extension of .au.

For domain names not currently registered, there will be no limitations on applying for a .au name.

So what if two domain names are similarly entitled under priority allocation, for instance joespizzas.com.au and joespizzas.net.au?  In those cases, the .au priority system applies.

The priority system works as follows:

  1. first priority is given to names registered on or before 4 February 2018 (category 1 applicants);
  2. second priority is given to names created after 4 February 2018 (category 2 applicants);
  3. category 1 applicants will prevail over any category 2 applicants;
  4. where there are multiple category 2 applicants, priority will be given to the earliest in time; and
  5. where there are multiple category 1 applicants, the applicants must come to an agreement and notify auDA, otherwise the registration will simply remain reserved until agreement can be reached.

In circumstances of point 5, the parties will have to renew their application every 12 months or lose their priority.  A name will remain reserved until agreement can be reached, or there is only one remaining applicant with priority.

It is important to note that even if your application is uncontested you will need to apply within the priority allocation period, or the name will be available on a  first come, first served basis after six months.

Despite the changes, any existing domain names will remain unaffected, and simply subject to the existing licence renewals process.

In order to obtain priority, it is essential that the applicant is the current licence holder of the existing domain name.

Changes like this to the system are a timely reminder to undertake an intellectual property audit, and ensure that not only does the correct entity or person hold the domain name, but also that relevant trademarks and other intellectual property protections are in place.

At Miller Harris Lawyers, our experience in complex and sophisticated commercial law matters means we are able to help you identify and mitigate any risks or issues, including in relation to any intellectual property queries.

If you would like more information on this or other matters, please do not hesitate to contact us on 07 4036 9700.

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Domestic violence and parenting

November 9th, 2021

It is important that children grow up in a safe environment where they feel secure, loved and protected.  If you are a parent who is a victim of domestic violence and you have a child who has been exposed to domestic violence, you can make an application for a protection order protecting both you and your child from domestic violence.

At a minimum, all protection orders ensure that the parent against whom the order is made must be of good behaviour towards you and any child named in the order.  You should seek advice about what other orders may protect you in your situation.

Protection orders

Whilst a protection order is made to protect those named in the order, it does not deal with the living arrangements or the authority to make decisions for your child.  Parents must carefully consider the following:

  1. if there is no existing agreement in relation to the living arrangements for a child named in an order, whether or not a meaningful relationship between the child and parent (against whom the order is made) can still be maintained, taking into consideration the need to reduce any risk of harm to the child; and
  2. if there is an existing agreement in place in relation to the living arrangements for a child named in an order, whether these arrangements need to be modified for the safety of the parent and child, and to ensure that a continuation of the existing arrangement does not lead to a breach of the protection order.

If you need a lawyer to assist you with parenting and domestic violence matters, please call Amelia King, Associate in our family law department on (07) 4092 3555.

If you are in immediate danger you should call the police on 000.

You can also access free counselling, support and information and referral for assistance by calling Cairns Regional Domestic Violence Service on 4092 3290 or DV Connect on 1800 811 811.

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Business succession – what are the options?

October 14th, 2021

As a business owner, you may think, what happens if my business partner dies or is permanently injured and is no longer able to work with me?

While these are morbid thoughts, the answers may surprise you.

In the case of your partner’s death, you may well find yourself in business with the deceased’s spouse.  This means that you could be running a business with someone who has little knowledge of it, and possibly, no business experience at all.

Where your partner is permanently injured, unless there is an agreement to the contrary, an inability to work does not mean that your injured partner can be forced to give up their share in the business.  Rather, you could be left with a business partner who can’t contribute to the business, but is unable to leave it.

But what if you are the deceased or injured partner?  Most of us would like to ensure that our spouse or loved ones are adequately provided for, and in an effort to achieve that outcome, it’s not uncommon to seek to be bought out of the business should you pass away or suffer a catastrophic injury.

While the objective may be for you to sell your interest in the business to your partner at fair value, what happens if your partner cannot afford to pay you out?

The short answer is nothing.  You, or your executor, will continue to hold an interest in the business and as such, may remain exposed to business liabilities which are incurred both before, and after, the time of injury or death.  A less than ideal scenario.

Succession planning

How can this be avoided?  Business succession planning.

Anyone who operates a business with others (whether as partners, shareholders, unit holders, lenders or in another capacity) should consider the merits of adopting a Business Succession Agreement.

Agreements of this type take many forms but one form involves each partner giving the other an option to acquire his or her interest in the business, in the event of death or total and permanent disability (“TPD”).

The options are generally supported by insurance so that in the event of death of or TPD affecting a partner, insurance money will be available to fund the “buy out” of the affected partner’s interest in the business.

Not only do agreements of this type ensure business continuity in the event of death or TPD of a partner, and that the affected partner will be paid fairly and in a lump sum for his or her interest in the business, they generate peace of mind for both partners.

Business Succession Agreements contain a myriad of traps for the unwary including unintentional tax consequences if prepared incorrectly.  However, these issues can be easily overcome if the document is prepared correctly.

The team at Miller Harris Lawyers have years of experience in the preparation of agreements of this type.  We welcome enquiries and questions, and if you need any further information please contact our office on 07 4036 9700.

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Are your super and life insurance beneficiary nominations up to date?

September 22nd, 2021

As it approaches the end of the year, now is a good time to ensure that your superannuation and life insurance beneficiary  nominations are in place and up to date.

What a lot of people don’t realise is that your superannuation and life insurance do not typically form part of your estate in the first instance to flow through your will.

In order to direct who your superannuation and life insurance is to go to, you should have beneficiary nominations in place with your superannuation funds and life insurance companies.

If you do not have a binding death benefit nomination in place (or your nomination has expired), the trustees of your superannuation fund have discretion to determine who they pay your superannuation death benefit to and in what amount, which may or may not be in accordance with your wishes.  Also, these nominations usually lapse every 3 years.

It is important that you read the beneficiary nominations carefully when completing as, while they may appear to be simple forms, they are still legal documents that require certain elements to be met in order to be binding and effective.

If you have any questions or would like assistance preparing your estate plan and getting advice on how your superannuation and life insurance beneficiary nominations fit into that plan, please call Lauren Doktor, Wills and Estates Lawyer on 4092 3555.

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Demystifying probate – what is probate and why do I need it?

September 7th, 2021

When you are appointed as an executor of an estate in most cases one of the first decisions you will be confronted with is whether you need to apply for a grant of probate.

What is a grant of probate?

Probate is the official recognition by the court that the executor appointed under a will has the right to administer the deceased’s estate (i.e. collect in assets of a deceased person and distribute them to the beneficiaries in accordance with the will). The executor of an estate applies for a grant of probate as “proof” that the court is satisfied that the person was correctly appointed under the will.

It is not always necessary to apply to the court for a grant of probate, but some recent decisions of the courts serve as a reminder of the potential consequences if assets of an estate are released to an executor without a grant of probate.

As an executor, you may seek to avoid applying for a grant of probate to avoid costs in the administration of the estate. In almost all cases, in order to have assets released by organisations such as banks, they will seek that the executor release and indemnify them from any liability by signing a document to this effect. This means that the executor personally promises to cover the bank should there be any problems in the future, for example if they pay the money incorrectly.

Most of the time, an executor would request that the requirement to produce probate be waived in situations where the estate is small or assets sought to be released are low in value.

Why do I need to get probate?

More and more we find that institutions and organisations are reluctant to release assets without a formal grant of probate. The reason for this is well demonstrated in the recent case of Public Trustee v CBA & Ors [2018] SASC 25.

In this case Ms Martin passed away in 2008. Prior to her death, she had made three wills as follows:

• a 2008 will, appointing her son, Michael as the executor;
• a 2007 will, appointing her daughter-in-law, Alba as the executor; and
• a 2002 will, appointing the public trustee as the executor.

A grant of probate was not made until 2013, and the grant was for the 2002 will that appointed the Public Trustee as the executor of the estate on the basis that Ms Martin did not have the mental capacity to make the later wills.

However, in 2008 after her death, her son Michael had contacted the Commonwealth Bank and the Bank of South Australia to seek to have her accounts closed and money in them given to him as the executor under the later 2008 will.

Each of the banks initially asked for a grant of probate, but waived the requirement at Michael’s request on the basis that there were minimal assets in the estate. Each of the banks released the funds ($69,290.33 and $108,461.00 respectively) to Michael as executor and Michael signed an indemnity in favour of each bank.

Following the grant of probate being issued to the Public Trustee in 2013 on the basis of the earlier will, the Public Trustee demanded that the Banks repay the proceeds of the accounts to them as the lawful executor of the estate. When the banks refused to do so, pointing to the earlier payments made to Michael as the executor and their discharge from liability due to the indemnities he had signed, the Public Trustee commenced proceedings against the banks.

Michael was unable to be located for the proceedings and his whereabouts are unknown.

The banks argued that they had a defence to the claim on the basis of the discharge that they had received from Michael.

Lessons for an executor

While the banks were ultimately successful in relying on the indemnity as a set-off against the claim, this case highlights why institutions like banks are more frequently insisting on a grant of probate being issued before they will release funds. A grant of probate protects them from having to defend a claim in court and effectively reduces the risk an institution is taking when releasing assets to an executor in the course of administration of a deceased estate.

If you would like further information about the production or waiving of a grant probate in estate administration matters or are an executor who needs assistance applying for a grant of probate, please do not hesitate to contact our wills and estate planning solicitor Lauren Doktor on 07 4036 9700.

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A guide to building inspections before your purchase

August 10th, 2021

For many Australians, buying property is one of the most significant transactions that they will ever make, which is why it is important to know the condition of the house or unit you are buying before you move into it.  Getting a building and pest inspection may seem like a significant expense at first, but it can save you a lot of money in years or even just weeks down the track.

What does a building and pest inspection involve?  A building inspection involves a thorough visual assessment of the property, including examining the structure and physical condition of the dwelling.  A building inspection can identify repairs required, structural defects and signs of mould, wood rot, and moisture in the property that was unknown to either the agent or the buyer.  A pest inspection further identifies whether there are active termites, previous termite activity and damage, or conditions conductive to a termite infestation.

Before buying a house or unit you should always engage a qualified building and pest inspector to carry out your building and pest inspection.  Building inspectors have the expertise and experience to identify potential problems which a buyer might otherwise miss.  They will also inspect parts of the building to which a buyer often does not pay much attention, such as the roof, ceiling cavity and foundations.

Once a building and pest inspector has completed his or her inspection, the inspector will issue a written report detailing any issues identified, and usually include photographs.

It is recommended that your purchase contract provide that the contract is subject to a building and pest condition.  If your contract is subject to a building and pest condition you will have an avenue to terminate the contract if there are significant defects or the property is infested by termites.  You may choose to try to negotiate a reduction in the purchase price or for the seller to carry out some repairs, rather than terminating the contract.  If you do not have a building and pest inspection condition, then you have to take the property with all defects and lack of repair.

If you need help purchasing property, feel free to contact our firm today. When it comes to protecting your rights in a property transaction, we have your back.

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How will a family lawyer help me?

June 1st, 2021

Family lawyers assist people considering or experiencing separation in more ways than you might think.

We will advise you on the law as it applies to you; that part is fairly obvious.  But what isn’t is just how many legal issues family lawyers have to consider.  They include:

  • separation and divorce;
  • de facto and matrimonial property settlements;
  • spousal maintenance applications;
  • parenting issues;
  • applications by grandparents and other significant people in children’s lives;
  • child support;
  • child protection;
  • domestic violence,

and the list goes on.

Family lawyers in and out of court

Family lawyers assist separated people both within and outside of the Family Law Court system.  The majority of matters can be resolved by consent without the need to apply to court for orders.  This saves the parties the stress, costs and emotional toll of being involved in court proceedings.

A settlement outside of court is most commonly achieved through lawyers conducting negotiations on your behalf, or if necessary, via mediation or settlement meetings.  Your family lawyer can then take the necessary steps to make the settlement legally binding.

If your matter can’t be settled outside of court, or is urgent, your family lawyer can prepare the court material to commence the court application.  Your lawyer will advise you every step of the way, represent you in dealings with the other party and their lawyer, the Judge and relevant court experts.  Your lawyer will appear for you at court events including court mentions and hearings and court-ordered mediations.

Going to court

There is still a very high chance that even if your matter proceeds to the courts, it will settle along the way.  Only about 5% of matters actually proceed to a trial at which a Judge makes the decision.  This is good news.  Even if you require the court to assist you to resolve your matter, statistics tell us that there is still a very good chance that you and your former partner will, in the end, be able to reach agreement on settlement.

Initially however, the real value in consulting an experienced family lawyer comes from their ability to analyse your particular situation and the applicable law and create a separation plan with you.  For example, if you have children, property investments, insufficient income to support yourself and are in the process of separating, the laws relating to divorce, matrimonial property settlement, spousal maintenance, children’s matters and child support are all relevant to your situation.

Feeling overwhelmed?  You needn’t.  An experienced family lawyer who specialises in the practise of family law can advise you and map out the way forward.  This can usually be achieved during a 1 hour initial consultation.

Our job is to take a complicated situation and make it as SIMPLE as possible.

If you are separating or divorcing or considering it, feel rest assured we are here to help.   Contact me or one of our experienced family lawyers today on 07 4036 9700 to book your no-obligation consultation.

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Are you in a de facto relationship?

April 6th, 2021

The answer to this common question is not as simple as you might expect.  A person will be considered to be in a de facto  relationship if, looking at all the circumstances of the relationship, they have a relationship as a couple and are living together  on a “genuine domestic basis”.

The most well-known test for determining whether two people are in a de facto relationship, is whether they have been living together as a couple for more than two years.

It is important to know that a couple can be living together for less than two years and still be considered to be in a de facto  relationship.  Most commonly, this happens where the couple have a child together, or have intermingled their finances, such as by purchasing a property together.

A lot of people want to avoid being in a de facto relationship because they believe their partner will automatically be entitled to  a share of their assets.  This is not true.

Even if you are considered to be in a de facto relationship, your partner is not necessarily entitled to a share of your property or  assets.  The court must first determine whether or not an adjustment of property between the spouses is necessary to do justice between them, based on their respective contributions to the relationship and their future needs.  In some circumstances the  court will not intervene if the property interests as they stand are just and equitable.

If you would like to discuss your relationship, property settlement or obtain advice on your family law matter, contact
one of our family lawyers today.

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Resigning as a Director? Don’t be late or the last

March 4th, 2021

From 18 February 2021 changes to the Australian Law were introduced by the Treasury Laws Amendment (Combating Illegal Phoenixing) Act 2020 meaning that:

  1. if a director’s resignation is not notified to ASIC within 28 days, the resignation will take effect on the date of notification; and
  2. a director’s resignation will be rejected if it leaves the company with no director.

The legislation is one of a raft of measures aimed at preventing illegal phoenixing – stripping a company of assets and starting another in its stead (the phoenix).  Other more substantive reforms are already in place but these recent procedural changes will affect all directors, not just those involved in creditor-defeating restructures.

Company Director Resignation

ASIC must be notified within 28 days of a director’s resignation.  Previously, a failure resulted in a late fee; now the consequence will be that the director’s resignation date will be recorded as the date of notification to ASIC.  ASIC will override the actual date of resignation with the lodgement date.  This change is to prevent improperly ‘backdating’ a resignation to avoid director liability.

Regardless of their actual resignation date, directors will now be deemed to have continued as a director until the notification date, and will be responsible for actions taken by the company during that time.

An application may be made to ASIC or the court to fix a different resignation date.  This is discretionary and there are time limits for the application.

Resigning directors should make sure that their company lodges notice of resignation on their behalf, or lodge directly themselves to make sure their tenure is accurately recorded.

Last Man (or Woman) Standing

A director’s resignation will now be rejected by ASIC if, at the end of the day on which a director resigns, there will be no other directors of the company.  This measure is designed to prevent directors resigning to avoid the consequences of company insolvency.

Directors should be mindful of this where there is an internal dispute or financial difficulty.

For more information or legal advice about your role as a company director, please contact Miller Harris.

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