Litigation & Disputes

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].

Will I Have to Go to Court for My Personal Injury Claim?

When a person has suffered a personal injury, one of the most pressing questions that they have is often whether they will have to go to court to receive fair compensation. For many injured people who are already feeling vulnerable and struggling with daily life, the idea of having to go to court can be overwhelming. While it may be necessary to go to court to achieve true justice in some personal injury cases, in reality, most claims are settled through settlement negotiations, sparing the injured party the ordeal of a courtroom battle.

Here, we look at the dynamics of settling out of court versus going to trial, examining the benefits, risks, and considerations that go into this decision. The information is general only and we strongly recommend you seek advice from an experienced legal professional when pursuing a personal injury claim.

How Common is Going to Court?

Contrary to popular belief, most personal injury claims in Australia never see the inside of a courtroom. Even when a plaintiff (injured person) brings a formal claim through the courts, this does not mean that these matters continue until a final court hearing. Statistics reveal that upwards of 95% of claims are resolved through out-of-court settlements or alternative dispute resolution processes.

The legal system anticipates that most claims will be settled out of court and encourages this outcome. There is a requirement for the parties involved in a personal injury claim to first attempt to settle the matter through negotiations, with compulsory settlement conferences mandated in most jurisdictions. These conferences serve as a forum for parties to explore avenues for resolving their disputes without resorting to formal litigation.

Should You Settle Out of Court?

The decision to settle out of court is a personal one, that should only be made with the expert advice of a solicitor. However, the legal advice may be that either alternative is reasonable, and the matter is up to the personal preference of the injured party. Making this decision requires the plaintiff to evaluate a number of factors.

The largest benefit of settling out of court is the quicker resolution of the claim. A personal injury matter settled by going to court can take years before it is finalised. In addition, the process of going to court will incur substantial additional legal and other professional fees, including the costs of expert witnesses. In some cases, these costs can be deferred until the end of the case, but in others, the plaintiff may need to pay these costs up-front before the court hearing.

There is also an emotional toll to a court hearing which is by design an adversarial process pitting one party against the other. For people who are likely to already be vulnerable due to an injury, the impact of going to court might delay their recovery journey.

Out-of-court settlements can also give claimants a degree of certainty and control over the outcome, allowing them to negotiate terms that address their personal needs and concerns. This contrasts with court cases, where even with the best preparation and representation, the outcome is uncertain and entirely in the hands of the decision maker (which in Australia is usually a judge rather than a jury).

Settling out of court may also be preferable or beneficial when there needs to be an ongoing relationship between the parties, such as when the injury has occurred in the workplace. In the absence of an adversarial court process, an out-of-court settlement can help preserve the opposing parties’ relationship.

When Should You Go to Court?

While settlement is generally the recommended course of action, certain circumstances may necessitate the initiation of formal court proceedings. Personal injury matters that proceed to court typically involve disputes where liability is contested, for example, when the defendant either denies that they had a duty of care to the plaintiff, argues that the duty was not breached, or claims that the breach of duty did not result in the injury to the plaintiff. As such, certain cases may go to court if they are novel in some way, such as in a new category of duty not previously established in case law.

Disputes can also involve the extent of injuries claimed by the plaintiff or quantum, that is, the amount of compensation the plaintiff is entitled to because of their injuries.

Additionally, cases involving matters of principle may be taken to court because they require judicial intervention to provide clarity and precedent for future disputes. Because out-of-court settlements are confidential, this may not be the preferred pathway when a plaintiff wishes to increase awareness around a particular issue or lobby for changes in practices by a defendant. In such instances, the courtroom serves as the arena where the merits of the case are adjudicated, and justice is sought through the formal legal process.

Weighing the Considerations

On the one hand, litigation offers claimants the opportunity to present their case before an impartial adjudicator, backed by the rules of evidence and legal precedent. It provides a platform for robust advocacy and the pursuit of maximum compensation for the injuries suffered. However, the path of litigation is fraught with uncertainties, including the risk of an adverse judgment, lengthy delays, escalating legal costs, and the implication of costs orders. Moreover, the adversarial nature of courtroom proceedings can exacerbate tension between parties and strain relationships.

On the other hand, settling out of court offers the benefit of a swift and amicable resolution, with less of the hostility and uncertainty inherent in litigation. It allows parties to craft tailored solutions that meet their respective needs and interests while avoiding the pitfalls of prolonged legal battles. However, settlements may entail compromises and concessions, potentially resulting in less favourable outcomes than what could be achieved through litigation. Additionally, the absence of judicial oversight may raise concerns regarding the fairness of the settlement terms.

Conclusion

Most personal injury claims in Australia are settled out of court providing a quicker resolution, faster access to compensation funds, and protection from the adversarial nature of litigation. In some cases, however, court proceedings may be necessary or warranted to provide the best opportunity for a claimant to achieve justice and fair compensation. Getting advice from an experienced personal injury lawyer can help you decide what is best for 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].

A Step by Step Guide to the Litigation Process!

If you are a small business owner, there is a good chance that at some point you will consider suing someone to recover a debt, seek damages for a breach of contract or to resolve an employment dispute.

If you are considering commencing a legal action, it is important to understand the basic procedures involved. We set out below a step by step guide to commencing legal action and provide some insight into the litigation process.

When is a guarantee unenforceable?

A guarantee is a binding promise of one person (the guarantor), to be answerable for the debt or obligation of another (the debtor), if that other defaults. Guarantees become enforceable by the person to whom the guarantee has been given (the creditor) when debtors have defaulted on their obligations.