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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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