Matti Lamb & Associates, Author at Matti Lamb & Associates

An Overview of Guarantees and Indemnities

It is important that anyone who is asked to provide a guarantee or indemnity understands precisely what their liabilities are under the arrangements.

In this article, we identify the distinguishing features of both guarantees and indemnities and consider the significant differences between the 2 kinds of arrangements.

Features of a guarantee

A guarantee is a contract by which the promisor (called the surety or guarantor) undertakes to be responsible to the promisee (creditor) for a debt default or miscarriage of a third party (debtor).

A guarantee contract includes three parties, namely the –

creditor who is granting the loan;
debtor who is utilising the amount of loan; and
guarantor who is giving the guarantee.

The debtor’s obligation is owed to the creditor under a principal contract. The guarantor or surety is liable to the creditor under a contract of guarantee.

The most common example of a contract of guarantee is where one person (guarantor) undertakes to be responsible to a bank (creditor) for the debts of a friend, relative, business colleague or company (debtor) who is borrowing money from the bank.

The liability of a guarantor is a secondary obligation which is only enforceable (contingent) on the debtor failing to perform the obligations which have been guaranteed. If the primary obligation of the debtor is discharged or becomes void, the guarantee falls away.

Features of an indemnity

An indemnity is a contract by one party to keep the other harmless against loss. Indemnities are also described as an obligation imposed by contract on one person to make good the loss suffered by another.

A contract of indemnity is a primary liability and may arise from an express or implied contract, or in equity.

This means that if you provide an indemnity for the performance of the obligations of someone else you may be called upon to perform those obligations yourself.

There are different types of indemnities which include:

Bare indemnity: “A” indemnifies “B” against a loss or liability incurred in connection with specified circumstances, without setting any specific limitations.
Proportionate indemnity: “A” indemnifies “B” against losses except those incurred as a result of any act or omission of “B”.
Third party indemnity: “A” indemnifies “B” against liabilities to or claims of “C”.
Party/Party indemnity: each party to a contract indemnifies the other for loss occasioned as a result of the indemnifier’s breach of contract.
Reverse/reflexive indemnity: “A” indemnifies “B” against loss or liability incurred as a result of party “B”’s own acts or omissions.
Compensatory and “prevent loss” indemnities: A compensatory indemnity is expressed as an obligation to pay or compensate for loss suffered. A prevent loss indemnity is a “hold harmless” indemnity.

Differences between guarantees and indemnities

The key differences between guarantees and indemnities include:

a guarantee imposes a secondary liability, which means that there will be another person who is primarily liable for the same obligation, whereas an indemnity imposes a primary liability.
in most States, guarantees must be in writing or evidenced in writing, whereas indemnities do not have to be in writing and may be implied by the Courts.
a guarantor’s liability is limited by the extent of the debtor’s liability. In contrast, an indemnifier’s liability is determined by the terms of the indemnity.
a guarantor is discharged from liability if the principal contract is void or unenforceable, whereas an indemnifier generally remains liable if another associated transaction is unenforceable or void.

Function of guarantees and indemnities

A guarantee contract is usually used to provide protection to a person, typically a bank or finance company, against loss suffered through entering into a transaction if the obligations of the other party to that transaction are not performed. It reduces the credit risk faced by a bank by giving the bank an entitlement to demand payment from the guarantor in the event of the debtor’s default.

In contrast, indemnities are designed to allocate risk between various parties to a contract, to eliminate the need to show causation as an element of a claim and to avoid the need to mitigate loss.

Indemnity clauses can be found in many different types of commercial contracts, for example, leases, sale of goods, construction contracts, manufacturing contracts and service agreements.

Conclusion

Both guarantees and indemnities can impose complex obligations. As such, they should not be agreed to lightly and should only be considered upon legal advice as to the effect of the specific terms created by the arrangements.

If you know someone who may need assistance or advice on how to proceed please contact us on (08) 8155 5322 or email [email protected].

First steps after separation – some practical considerations

The breakdown of a relationship, whether by choice or circumstance, can be complex and challenging. In Australia, the Family Law Act 1975 sets out the legal framework for divorce, the division of property and parenting arrangements after a relationship breaks down. An experienced family lawyer can provide valuable legal advice and guidance when it comes to navigating these laws.

Family law matters are not just legal problems, in addition to navigating the law and the emotional aftermath, addressing the practical side of separation can be equally important to transition into your new phase of life. There are a host of considerations, many of which will need immediate attention. Following are some typical practical matters that may need to be dealt with.

Living Arrangements

Accommodation and housing will naturally be a concern. You’ll need to decide who stays and who leaves the family home which might be influenced by employment needs, children’s schooling, and nearby family support.

If you are renting, decide who will stay in the current home, notify your landlord and have the rental agreement updated. If you have a mortgage, inform your bank of your separation and any decisions made regarding mortgage responsibilities.

If you are moving out, you will need to explore housing options that fit your budget and lifestyle, which can be particularly difficult in the current market. Ask friends and family for referrals and support.

If you are relocating, make sure you change your address with various organisations, and for added security, you may want to consider renting a post office box.

Children and Schooling

For families with children, their well-being and continuity in learning and development are paramount. Keep your children’s best interests in mind – try to put differences aside to work out arrangements that will cause them the least disruption and, where possible, foster a meaningful relationship with both parents.

If you can, establish a temporary agreement as a starting point, which can lead to a more formal arrangement later. Maintaining consistency is likely desirable in most cases. If possible, stick to your children’s current schooling and childcare arrangements to maintain stability in their lives.

Meet with school and childcare administrators to inform them about the separation and keep them notified of any changes so they are aware of the situation and can help. Schools often offer support and resources to help children cope with the change.

Coordinate with your ex-partner to work out a plan for childcare/school pickups, extracurricular activities, and parent-teacher meetings. Consistency and cooperation in these areas can significantly reduce stress for children.

Banking and Accounts

Contact your bank to discuss your mortgage, joint loans, savings accounts, credit cards, and every other aspect of your banking. You will likely want to open a separate savings account and close or put a hold on credit card facilities, lines of credit, etc. Major banks generally have online resources and checklists to help those who have separated to work through their banking needs.

Protect and help safeguard your privacy by updating passwords and login details for online banking accounts, email, social media platforms, etc.

Property and Record Keeping

Secure your personal documents and items. Ensure you have all necessary identification, financial records, and personal valuables in a safe place. Obtain originals or copies of important documents like passports, marriage certificates, birth certificates and insurance policies.

Ensure that your property (your home, other real estate, motor vehicles, boats, etc.) remains insured. Failing to retain insurance, should the unforeseen happen, can have devastating financial effects. Work out with your ex-partner who is paying for what and keep accurate records.

Prepare a list of assets and liabilities (and account balances as of the date of separation). Property, shares, investments, bank accounts, superannuation, mortgages, loans, and credit card accounts will all be relevant when it comes to finalising your property.

Document your agreed date of separation and keep a journal to record other significant events and timelines. This is important information when it comes to applying for a divorce and determining deadlines for filing court proceedings, if this becomes necessary later.

Support and Assistance

Contact the Department of Human Services to learn about child support and whether you are entitled to financial assistance.
Create a trusted support network and enlist help from friends and family as well as professional counselling or therapy, if needed. Family Relationships online – https://www.familyrelationships.gov.au/ provides various resources and information to help families and relationships.

Lean on your support network. Friends, family, support groups, and professional counselling can provide the emotional support needed during this challenging time. Remember, it’s okay to ask for help, and reaching out for professional guidance is a prudent way to navigate the complexities of separation.

Moving Forward

Don’t put off getting quality legal and financial advice from qualified professionals.

Consider making or updating your Will and other documents such as a power of attorney. You should also review your superannuation and life insurance policy, as relevant, as you may wish to make changes to the beneficiaries. Your lawyer can provide guidance and advice in these important estate planning areas.

Separation demands both emotional and practical resilience and working out some of the preliminary steps to take after a relationship breaks down can be difficult when you are emotionally charged. Fortunately, there are resources available to help you navigate these difficult times. We understand the sensitivity and intricacies inherent in family law matters – the legal and the practical issues – and our goal is to provide comprehensive support and guidance to all our clients.

This is general information only and you should obtain professional advice relevant to your circumstances. If you know someone who may need assistance or advice on how to proceed please contact us on (08) 8155 5322 or email [email protected].

Making a total and permanent disability claim – understanding the process

Facing a total and permanent disability is life-altering, bringing about significant physical, emotional, and financial challenges. In such trying times, having total and permanent disability insurance and understanding your rights and entitlement to claim benefits can provide much-needed financial security for you and your family.

This article provides general information only and you should obtain professional advice relevant to your circumstances. If you are considering making a total and permanent disability claim, we recommend seeking legal advice. A lawyer can help assess your eligibility, assist in gathering the necessary evidence, correctly file your claim, and negotiate with the insurer on your behalf.

What is Total & Permanent Disability?

Total and permanent disability (TPD) generally refers to a condition that prevents someone from returning to work or engaging in any gainful employment for which they are reasonably qualified by education, training, or experience. A TPD can arise from various illnesses and injuries, for example, serious medical conditions such as cancer, heart disease, or mental health disorders; and severe accidents resulting in permanent impairment, such as spinal cord injuries or traumatic brain injuries.

In Australia, TPD insurance is generally obtained through:

Superannuation: many superannuation funds include a TPD insurance component as part of their default cover.
Private insurance: individuals can purchase standalone TPD insurance policies from private insurers.

TPD insurance provides a lump sum payment if you can no longer work in your usual occupation or other type of employment, based on your qualifications, experience, and training. It is important to carefully review the policy documents to understand the specific eligibility requirements and any exclusions that may apply. Note also, that TPD cover through your superannuation fund can potentially end if you change funds, stop making contributions to your superannuation, or reach a certain age.

Eligibility for TPD Benefits

The eligibility criteria for TPD benefits can vary depending on the specific insurance policy or superannuation fund. However, some general requirements typically apply:

Definition of TPD: the policy document will define what constitutes TPD, often including conditions like being unable to work in your occupation or any occupation for which you are reasonably suited.
Waiting period: most policies have a waiting period (for example, six months) during which you must be continuously disabled before you can make a claim.
Medical evidence: you will need to provide comprehensive medical evidence from your treating doctors to support your claim.

The TPD Claim Process

Navigating a TPD claim can be complex and time-consuming. The general process is as follows:

Notify your insurer or superannuation fund: inform them of your intention to make a TPD claim as soon as possible.
Gather supporting documentation: this includes medical reports, employment history, and any other relevant evidence.
Complete the claim form: fill out the claim form accurately and comprehensively, providing all the requested information.
Assessment of your claim: the insurer or superannuation fund will assess your claim, which may result in requests for further medical examinations or interviews.
Decision: you will receive a decision on your claim, which can either be approved, denied, or require further information.

Tips for a Successful TPD Claim

While the TPD claim process can be daunting, following these tips can increase your chances of a successful outcome:

Seek professional advice: a compensation lawyer specialising in TPD claims can help guide you through the process, ensure you meet the procedural requirements, and advocate on your behalf.
Be organised: keep all your documents and correspondence related to your claim in one place for easy access – you might consider asking a trusted family member or friend to assist with this.
Be thorough: provide as much detail and evidence as possible to support your claim.
Be patient: the assessment process can take time, so be patient and persistent.
Don’t give up: if your claim is denied, you may have the right to appeal the decision. If you haven’t already, seek professional advice to explore your options.

How a Compensation Lawyer Can Help

A compensation lawyer with expertise in TPD claims can be invaluable throughout the process of making your TPD claim. Your lawyer can:

Assess eligibility: review your policy and medical evidence to determine your eligibility for TPD benefits.

Gather evidence: assist in collecting and organising all necessary documentation to support your claim. Lawyers generally have a network of medical and other professionals who can be retained to assist with preparing evidence.
Liaise with the insurer: this can be particularly helpful given the insured person will often be facing a traumatic and difficult period. Your lawyer can communicate with the insurer or superannuation fund on your behalf, ensuring your rights are protected and that the correct documents are lodged within any specific timeframes.
Negotiate a fair settlement: if your claim is approved, your lawyer can assess it to ensure it reflects the full extent of your disability and its impact on your future earning capacity.
Represent you at the Australian Financial Complaints Authority (AFCA): The AFCA helps resolve disputes between consumers, insurers and superannuation funds about products such as TPD insurance. Your lawyer can help lodge complaints about delays in processing claims, the calculation of entitlements under a policy, and an insurer’s denial to pay a claim.
Represent you in court, if necessary.

Conclusion

Claiming total and permanent disability benefits can be a complex and emotionally challenging process. Understanding your rights, eligibility criteria, and the steps involved is crucial to securing your financial future. Seeking professional advice from a personal injury lawyer can strengthen your chances of a successful claim.

You don’t have to navigate this journey alone – support and guidance are available to help you through this difficult time. If you know someone who may need assistance or advice on how to proceed please contact us on (08) 8155 5322 or email [email protected].

Transferring property between family members – key considerations

Transferring property between family members is a common practice, often driven by a desire to facilitate inheritance, support loved ones, or streamline estate planning. While the intention behind such transfers is usually rooted in familial bonds, navigating the legal and financial aspects of the process requires a practical and pragmatic approach. This article explores key considerations when transferring property within families, and flags the legal, tax, and financial implications involved. The information is general only and we recommend obtaining advice from experienced professionals that is tailored to your needs and circumstances.

Understanding the Motivation

Successful property transfers within families require effective communication and an understanding of family dynamics. It is important to clearly express the intentions behind the property transfer and address any concerns or questions that may arise.

Before delving into the intricacies of property transfers, it is also important to understand the motivations driving such decisions. By identifying the primary motivation, individuals can tailor their approach to the specific needs and goals of the family.

Legal Implications

One of the first considerations when transferring property between family members is the legal aspect. The method of transfer – whether through a sale, inheritance, will or gift – impacts the legal obligations and documentation required for the transfer. Each option carries its own set of rules and regulations that must be adhered to for a seamless and legally valid transfer.

Sales

Selling property within the family involves a formal transaction, and the terms should be clearly outlined in a legal contract, including the purchase price for the property. A sale within the family is often for a lower than market price. In such cases, consideration needs to be given to the impact on stamp duty and other obligations, as taxes are usually required to be paid on the full market rate. It is often necessary to have the property appraised to determine its value in current market conditions.

When selling property, capital gains tax (CGT) may apply on the profit earned. However, exemptions or reduced rates may apply. Understanding these tax breaks and planning accordingly can result in substantial savings.

Inheritance

If the property transfer is part of an inheritance plan, the most essential step is to establish a clear and legally binding will. The absence of a will often leads to complications and disputes among heirs, with the outcome that property may not be transferred as the deceased would have wished. Working with a qualified estate lawyer can help ensure that the transfer aligns with the legal requirements and the intentions of the deceased.

Some taxes may apply when receiving property through a will. Consulting with a tax professional can help optimise the transfer to minimise tax burdens.

Gifts

Transferring property as a gift involves giving ownership without expecting anything in return. While this can be a generous gesture, it is critical that the giver is aware of any tax implications. In addition to considering transfer duty, the donor should consider any CGT liability. Consulting with a tax professional can help optimise the transfer to minimise tax burdens.

In addition, a gift of property may not always be sensible if the recipient cannot afford the holding costs. Before transferring property, assess the financial stability and responsibility of the recipient. If the transfer is intended to support a family member in need, consider whether they can handle associated costs such as rates, maintenance, and other ongoing expenses.

Documentation and Title Transfer

Proper documentation is essential for a smooth property transfer, even when the transfer is amongst family members. To ensure that the title is transferred correctly and that all legal requirements are met, it is recommended to work with a lawyer or conveyancer. The correct legal documents in the prescribed format will be required for the transfer and registration of the property to the new owners. These need to be lodged with the relevant state titling authority. A property professional can also advise on transfer duty, investigate whether any concessions apply, and complete the relevant paperwork.

Professional Guidance

Seeking professional guidance from lawyers, conveyancers, tax advisors, and financial planners, as relevant, can help you navigate complex legal and financial landscapes. Their expertise can ensure that the property transfer aligns with both familial and legal aspects, promoting a smooth transition.

If you know someone who may need assistance or advice on how to proceed please contact us on (08) 8155 5322 or email [email protected].

Alternative dispute resolution explained

Litigation can be a costly and time consuming process and parties are increasingly seeking alternative forms of resolving disputes.

This article provides an overview of the main types of alternative dispute resolution (ADR) and their respective benefits and limitations.

What is ADR?

The term ADR is used to describe dispute resolution processes that do not involve traditional litigation procedures or final adjudication of a Court or Tribunal. The aim of ADR is to provide participants with a quicker and cheaper alternative to going to Court.

There are many different forms of ADR, including the following:

Mediation: involves a trained mediator facilitating negotiations, but with no authority to make binding decisions.

Conciliation: involves a neutral third party helping the participants to identify the issues in dispute, develop options and endeavour to reach a resolution. It differs from mediation in that a conciliator may offer an opinion or suggest a resolution. It has an element of advice.

Arbitration: involves a professional arbitrator who has the authority to impose a binding decision on the parties. An arbitrator’s award can only be appealed on limited grounds.

Expert Determination: is a process where an independent third party, with expertise in the subject matter in dispute between the parties, assists the parties to resolve their dispute.

Use of ADR

The commercial world has been seeking alternative forms of dispute resolution in order to avoid the costs of litigation and the executive time and energy expended on lengthy court procedures. Many commercial contracts contain arbitration, mediation or expert determination clauses making it a requirement that the parties commence an ADR process if a dispute materialises and as a prerequisite before commencing legal proceedings.

However, both the Courts and legislature have also driven the increasing trend of using ADR in order to try and alleviate the cost of litigation and the pressures of case management. This has further been encouraged by the obligation on prospective litigants in many jurisdictions to take ‘genuine steps’ to resolve their disputes before litigation is commenced. It is suggested that genuine steps include considering whether the dispute may be resolved before litigation through some form of alternative dispute resolution.

The advantages of ADR

ADR processes can deliver efficient and cost effective results which provide satisfactory outcomes for the parties involved. The primary advantages include:

the process is informal, quicker and cheaper;
it is a less intimidating process and parties can express their grievances without fear that their legal rights will be compromised;
ADR can remain confidential;
there is scope for non-monetary remedies; and
commercial relationships can be preserved by adopting a co-operating rather than adversarial approach.

The Disadvantages of ADR

The disadvantages of ADR include:

ADR might not be appropriate where a party requires emergency relief, for example, a court injunction;
agreements made at ADR may not be as easy to enforce as a Court or tribunal order;
ADR can be used as a delaying tactic; and
ADR is rarely successful unless all the parties to the dispute are committed to seeking to resolve the matter.

Conclusion

There are clear benefits to parties utilising alternative processes for resolving disputes. If you are considering whether ADR is suitable for a dispute you are involved in, we recommend that seek legal advice from your lawyer.

If you know someone who may need assistance or advice on how to proceed please contact us on (08) 8155 5322 or email [email protected].

What happens to a family business after a couple separates?

Divorce is almost always a difficult and disruptive life event. For couples who own a family business, the stakes are particularly high, as the fate of the business often becomes a central point of contention during divorce proceedings.

In Australia, a family business is considered part of the asset pool of the relationship, regardless of whether it was established before or during the relationship. Navigating the complexities of separating business and personal interests after separation requires careful planning and help from the right professionals.

Death of a Business

It is realistic to acknowledge that not all family businesses survive the upheaval of divorce. Some businesses may struggle to weather the financial strain and operational disruptions caused by the separation, leading to their eventual closure or liquidation.

Others may be irreparably damaged by acrimony and conflict between the spouses, making it impossible to continue operating in any meaningful capacity. In such cases, the spouses may be forced to sell off the business assets and divide the proceeds as part of the property settlement.

When this happens, the realised value of the liquidated business (if there is any) is simply added to the spreadsheet that tracks the total property pool of the relationship. The separating parties then need to agree on what percentage split each person is going to receive from the property pool. If they cannot agree then the Federal Circuit and Family Court of Australia will decide for them. In making this decision, the Court will consider things such as the length of the relationship, the contributions of each party to acquiring and keeping the assets of the relationship, and each person’s future needs.

Dividing a Living Business

If the business is to continue to operate, then the first step is to determine its value as a going concern. This can be a complex process, especially for businesses with significant assets, intellectual property, or goodwill. Valuation methods vary depending on the nature of the business and may involve assessing factors such as revenue, profits, market trends, and industry benchmarks. In some cases, forensic accountants or business valuation experts may be enlisted to provide impartial assessments of the business’s worth.

Once the value of the business has been determined, the next step is to decide how it will be divided between the parties. This can be particularly challenging when both spouses are actively involved in the business or have made significant contributions to its success.

The Court has broad discretion to make orders for the division of property. For instance, one spouse may be ordered to buy out the other’s interest in the business, either through a lump-sum payment or a series of instalments over time. This option allows one spouse to retain ownership and control of the business while compensating the other for their share of its value.

Alternatively, it may order the sale of the business and the equitable distribution of the proceeds between the spouses taking into account the distribution of other assets of the relationship (such as the family home or superannuation accounts).

While selling the business may not be in the financial best interests of either party or the business itself, the Court will make this order if it is the only equitable way to ensure that the property pool is divided between the parties.

In most cases, the Court prefers there to be a clean and final separation of all marital assets after the breakdown of a relationship. However, in some cases, the best option is for the spouses to continue operating the business together post-separation, either as joint owners or through a partnership or corporate structure. While this arrangement can be fraught with challenges, particularly if the spouses have a contentious relationship, it may be the best option for preserving the value of the business and ensuring its ongoing viability.

In such cases, it is essential to establish clear guidelines and protocols for decision-making, conflict resolution, and the division of responsibilities to minimise friction and maximise cooperation.

Conclusion

Ultimately, the fate of a family business after a couple separates in Australia depends on a variety of factors, including the value of the business, the contributions of each spouse, and the willingness of the parties to cooperate and compromise. While the process can be fraught with challenges and uncertainties, seeking the guidance of experienced legal and financial professionals can help couples navigate the complexities of dividing assets and planning for the future.

By approaching the situation with pragmatism, transparency, and a commitment to fairness, couples can mitigate the impact of divorce on their business and lay the groundwork for a successful transition to the next chapter of their lives.

Discrimination and Prejudice in Australian Law: A Harry Potter-Inspired Analysis

Introduction

“Harry Potter and the Chamber of Secrets” by J.K. Rowling explores the themes of discrimination and prejudice, particularly through the notion of blood purity among witches and wizards. This article examines the concept of discrimination and prejudice, both in the wizarding world and in the context of Australian law. It delves into the legal framework in Australia designed to combat discrimination and promote inclusivity, drawing parallels with the themes presented in the fictional realm of Harry Potter.

Anti-Discrimination Legislation in Australia

In the wizarding world of Harry Potter, the concept of “blood purity” divides witches and wizards into those with Muggle (non-magical) ancestry and those from magical families. In contrast, Australia’s legal framework is founded on principles that promote equality and inclusivity. The country’s anti-discrimination laws, at both federal and state/territory levels, protect individuals from discrimination on various grounds, such as race, gender, disability, age, and sexual orientation. This legal framework underscores Australia’s commitment to combating discrimination and prejudice in all their forms.

Addressing Discrimination and Prejudice

Australia’s anti-discrimination laws address a wide range of discrimination, ensuring that individuals are protected from various forms of bias. In the Harry Potter series, discrimination based on blood purity is evident, while Australian law tackles issues like:

Racial Discrimination: The Racial Discrimination Act 1975 prohibits discrimination based on race, ensuring that individuals are treated fairly regardless of their racial background.
Sex Discrimination: The Sex Discrimination Act 1984 safeguards individuals against discrimination based on sex, gender identity, sexual orientation, and more.
Disability Discrimination: The Disability Discrimination Act 1992 protects the rights of individuals with disabilities, ensuring that they have equal access to employment, education, and services.
Age Discrimination: The Age Discrimination Act 2004 aims to eliminate age-based discrimination, particularly in the workplace.

Challenges and Ongoing Efforts

Just as in the Harry Potter series, where efforts to combat blood purity discrimination are ongoing, Australia’s fight against discrimination and prejudice is continuous. While the legal framework is robust, challenges remain, and marginalized communities may still face discrimination. Australian society, like the wizarding world, must remain vigilant in its efforts to combat discrimination and prejudice through legal reforms, education, and social initiatives.

Conclusion

The themes of discrimination and prejudice, as explored in “Harry Potter and the Chamber of Secrets,” resonate with the real-world legal framework in Australia. The nation’s anti-discrimination laws are emblematic of its commitment to equality and inclusivity, reflecting a collective aspiration to create a fair and just society. The ongoing struggle against discrimination parallels the shared responsibility for all Australians to uphold fundamental human rights and equality under the law, echoing the themes presented in the world of Harry Potter.

This article is intended for entertainment and creative purposes only. Any discussions, analyses, or viewpoints presented herein are purely fictional and not to be taken seriously. The content in this article is not a source of genuine legal, financial, or professional advice. For any real-world inquiries or concerns, please consult with appropriate professionals who can provide accurate guidance in accordance with the applicable laws and regulations. Enjoy this article as imaginative exploration, but do not consider it a legitimate source of factual information.

Including Cryptocurrency in Your Will or Estate Plan

Cryptocurrency has emerged as a disruptive force in the financial world, offering a new frontier for investment and wealth accumulation. As both businesses and private interests increasingly diversify their portfolios with digital assets, it becomes crucial to consider the incorporation of cryptocurrency into estate planning. This article explores the complexities and considerations surrounding this innovative asset class, addressing what cryptocurrency is, the challenges in estate planning, storage and accessibility, as well as tax implications.

What is Cryptocurrency?

Cryptocurrency is a digital (or virtual) form of currency. It relies on cryptographic techniques to secure transactions and control the creation of new units. The most well-known cryptocurrency is Bitcoin, but there are thousands of other digital currencies with distinct features and purposes.

Unlike traditional currencies issued by governments and central banks, cryptocurrencies are decentralised, operating on blockchain technology. This means that no single entity, like a central bank, controls the currency, making it both a revolutionary investment opportunity and a unique challenge for estate planning.

Cryptocurrency – Challenges in Estate Planning

While once a novelty, in recent years it has become more common for deceased estates to include some form of cryptocurrency. Despite this increasing popularity, incorporating this asset class into an estate plan still requires careful consideration and proactive measures due to the number of inherent challenges.

Managing a deceased estate that includes cryptocurrency is more complex than administering an estate with only traditional assets. One of the challenges is that it is more difficult to prove ownership of cryptocurrency than it is traditional asset classes such as cash, shares, and real estate. In fact, identifying the existence and ownership of a cryptocurrency asset is often the greatest challenge for executors of estates involving cryptocurrency.

To help address this challenge, owners of cryptocurrency need to maintain detailed records of their holdings, wallet addresses, and private keys. Of course, this must be done in such a way that the information is kept secure during a person’s lifetime but can be easily accessed after their death. Ideally, legal documentation, such as a will or trust, should explicitly describe the nature of all cryptocurrency holdings to ensure that these invisible assets are not overlooked during the management of the deceased estate.

As part of your estate planning, you should also explain any process you have put in place for backup and recovery of cryptocurrency accounts. If something happens to you, your executor should be able to retrieve the assets without obstacle.

To help reduce complexity, your estate plan can also include information about how valuation of the cryptocurrency asset will be carried out to ensure equitable distribution among beneficiaries.

Cryptocurrency Storage

Estate planning with cryptocurrency necessitates the establishment of secure storage solutions and clear instructions for executors. Many cryptocurrency investors use offline hardware wallets to store their assets securely. If you choose this approach, you should ensure that your executor knows the location of your hardware wallet, its PIN, and recovery seed.

Other investors prefer offline paper wallets for added security – old school paper based records containing details of cryptocurrency storage and transactions. If that is your preference, you should instruct your executor on how to access and use these paper wallets.

For online wallets or exchange accounts, your estate documents should include clear guidance on how to access these assets, including login credentials, two-factor authentication details, and any other necessary information.

Tax Implications

Cryptocurrency’s tax implications are complex and can significantly impact your estate plan. Given the evolving nature of cryptocurrency regulations, we recommend consulting with tax experts and legal professionals who specialise in cryptocurrency to ensure compliance with tax laws.

Broadly speaking, in Australia cryptocurrency transactions are subject to capital gains tax, and beneficiaries who inherit cryptocurrency may incur tax liabilities when they eventually dispose of the assets. To help minimise these liabilities, adequate guidance on tax planning should be sought as part of the estate planning process.

Conclusion

If you own cryptocurrency, it is important to think about how to incorporate this asset into your estate planning. Cryptocurrency’s decentralised nature and its potential for growth make it a valuable asset class, but it also introduces unique challenges in estate planning.

To address these challenges effectively, it is imperative to educate your chosen executor on cryptocurrency, establish secure storage and accessibility procedures, and understand the tax implications associated with digital assets. Seeking guidance from experts in the field, including financial advisors, cryptocurrency tax specialists, and legal professionals, is key to creating a robust estate plan that accommodates this revolutionary asset class.

This is general information only and you should obtain professional advice relevant to your circumstances. If you or someone you know wants more information or needs help or advice, please contact us on (08) 8155 5322 or email [email protected].

How to Locate an Original Will

Losing a loved one is often an emotionally overwhelming experience, and amidst the grief, managing legal matters can add another layer of complexity. Yet it most often falls to those closest to the deceased to manage the administrative burden created by death. A crucial document in such circumstances is the Last Will and Testament of the deceased. A Will outlines the deceased person’s wishes regarding the distribution of their assets but may also express their intentions in relation to the care of children and pets, and other critical instructions. Unfortunately, the location of this critical document is often not obvious, and locating the Will is frequently a considerable source of frustration for those administering the estate.

What Makes a Will Valid?

The formal requirements for a Will to be considered valid in Australia usually include it being in writing, signed by the testator (the person making the Will), and witnessed by at least two competent witnesses who also sign the document. Each state and territory in Australia sets out the legal requirements for a formal Will in that jurisdiction.

When a document intended as a Will does not satisfy these requirements, it is known as an “Informal Will”. For example, if a Will has not been properly signed or witnessed, it will fail to meet the requirement of a Will as set out in the legislation, even if it is correct in every other aspect. In some circumstances, an Informal Will may be admitted to probate by the Supreme Court even if it does not meet the strict legal requirements.

How Do You Locate a Will?

The initial step to locating a Will is to start by searching the deceased’s home for a physical copy of the Will. You should look in secure places like safes and filing cabinets, or other places where the deceased tended to keep important papers. For instance, the Will might be held in safe custody with a bank or a storage facility. You can reach out to these institutions to inquire if the deceased had a safe deposit box or storage unit.

You can also contact the deceased’s lawyer who may have drafted the Will. Lawyers often retain the original of the Will for safekeeping, or they might have information about the location of the original document. You can also check with the relevant state or territory’s Supreme Court registry. They maintain records of Wills that have been registered, although it is important to know that most people do not register their Will.

Finally, you can conduct a Probate Search at the relevant Supreme Court to discover any lodged or granted probate of the deceased’s Will, which may help if another family member or friend already located the Will and began the administration of the deceased’s estate.

Legal Assistance

When a Will cannot be located using these initial strategies, you may need to seek guidance from a qualified legal professional or lawyer experienced in estate planning and probate matters. They can offer tailored advice, clarify legal obligations, and assist in addressing any concerns regarding administering the estate without a valid, original Will. Ultimately, proper documentation and legal guidance can significantly contribute to honouring the deceased’s wishes and minimising potential conflicts during the probate proceedings.

Do You Need the Original Document?

When a Will is made in Australia, especially when it is drafted by a lawyer, it is often copied. In such cases, the testator will usually take a copy for their records and the original is stored in a safe location. Understandably, it is often this copy that is found by the deceased’s family, but it is the original that is considered the primary document. This original document holds significant legal weight and is typically required for the probate process to validate its authenticity.

However, circumstances might arise where the original Will cannot be located after a person’s passing. In such cases, there are procedures in place that may accept a copy of the Will under specific conditions. These conditions often involve proving the authenticity of the copy through various means, such as presenting witness statements, providing evidence that the original was not destroyed with the intent to revoke it, or demonstrating that the copy reflects the true intentions of the deceased.

While a copy of the Will might be accepted under certain circumstances, it can complicate the probate process and potentially lead to delays or disputes among beneficiaries or interested parties. Therefore, it is strongly advisable to keep original Wills in a safe and easily accessible location, such as with a trusted legal advisor, the executor, or in a secure place like a safety deposit box.

Conclusion

The process of locating an original Will can demand patience, diligence, and often legal assistance. Understanding the avenues available and systematically exploring each option increases the likelihood of finding the document. While it may seem daunting, the efforts put into locating the original Will are invaluable in honouring the wishes of the departed and navigating the legalities of estate distribution.

This information is general only and you should obtain professional advice relevant to your circumstances. If you or someone you know wants more information or needs help or advice, please contact us on (08) 8155 5322 or email [email protected].

Saving your rights to see your grandchildren

If you are a grandparent facing the challenging circumstances of a break-up in your family group, you may be worried about your right to continue seeing much-loved grandchildren. Unfortunately, after separation or family conflict, some grandparents may only see their grandchildren at crowded school events or from the sideline at sporting occasions, if at all. Fortunately, in Australia, grandparents may approach a court for orders that they are allowed to spend time with their grandchildren or to express concerns about their grandchildren’s welfare.

What rights exist for grandparents and are they automatic?

While grandparents do not have automatic rights to see their grandchildren, they do have legal options available. The Family Law Act allows a grandparent (or other person concerned for the child’s care, welfare, or development) to apply for a parenting order. When determining children’s matters in Australia, the child’s best interests will always be the paramount consideration. In determining what orders to make, the court will consider:

the arrangements necessary to promote the safety of the child and all individuals responsible for the child’s care
any views expressed by the child
the child’s needs, encompassing developmental, psychological, emotional, and cultural aspects
the capacity of each person with parental responsibility, whether current or proposed, to meet the child’s developmental, psychological, emotional, and cultural needs
the benefits to the child in having a meaningful relationship with their parents, and people significant to the child
any other factors that the court deems relevant to the specific circumstances of the child

The courts have previously emphasised the importance of children having contact with as much of their wider family as possible and of growing up feeling part of an extended and supportive family group. In addition to parents and guardians, others with a close ongoing relationship who are significant to the child, such as grandparents, and can show they are involved in the children’s welfare can also apply for parenting orders.

Applying for orders

Parents who are separating often make plans for the future care of their children informally and will agree on where their children will live. Some may draw up a written parenting plan setting out their arrangements for caring for the children. If you are concerned about your future contact with your grandchildren, you can ask to be included in such plans. The parents can make these plans formal by registering them with the courts in consent orders. Orders made about children are called parenting orders and each person affected by the parenting orders must follow them.

If you cannot agree with separating parents about your future contact with your grandchildren, you can apply to the court for orders yourself. The court will decide what caring arrangements are in the best interests of the child and may make orders for a child to live, spend time, and communicate with a grandparent.

In most cases, the law requires that families first attend family dispute resolution or mediation before going to court. An independent person trained in helping families discuss their differences will try to help everyone come to an agreement. You will need a certificate from an accredited dispute resolution practitioner to show you’ve attempted mediation before you can take court action.

If mediation fails, you should obtain legal advice before going to court. You need to find out how strong your case is, what forms and documents you will need to lodge with the court to support your case (these are called affidavits), what orders you should ask for, which court to start your case in, and the costs of taking legal action. Even if you decide to represent yourself in court, it is recommended to get legal advice about how to prepare your case. You must remember that the child’s best interests are always the priority. You will also need to consider the practicalities of being able to implement any arrangements you wish to make.

Grandparents can sometimes get involved and can apply to the Children’s Court to have the children placed in their care. You can apply to court for your grandchildren to live or spend time with you whether their parents are together or separated. You will not need a certificate of dispute resolution if there is a fear of violence or if the matter is urgent, or a party cannot take part in mediation because of a disability.

In cases where there is strong parental opposition to court orders sought by grandparents, a court-appointed family consultant may be required to prepare a family report for submission to the court, to assist the court in deciding whether to grant a parenting order for the grandparent.

Conclusion

Family law and children’s matters are complex and challenging. When a partnership breaks down between parents, there is often a significant and heart-felt impact on all family members, including grandparents who have until the separation, played an important role in the lives of their grandchildren.

This is general information, and you should obtain professional advice relevant to your circumstances. If you or someone you know wants more information or needs help or advice, please contact us on (08) 8155 5322 or email [email protected].