Mitchell Evelyn | elringtons lawyers

Charitable Gifts in Wills

Posted on13, November 201816, November 2018AuthorMitchell Evelyn

Leaving a gift to a charity in your Will can be a great way to provide generous support which might ordinarily be outside your financial means. As with any other gift in your Will, it is important to make sure that any charitable gift is clear, well considered and carefully drafted to ensure that your wishes are carried out after you have died.

Here are some of the key issues that you may wish to consider:

Why give to a charity in your Will?

The main reason people tend to give to charities in their Will is to support a cause which they care about.

However, we often see people include charities in their Will for other reasons. For example, a gift can be left to a charity contingently on certain other gifts failing in the Will. This process uses the charity as a safeguard to prevent the gift going somewhere the Will maker did not intend.

For example:

Mary is a single person with one son named Jack. Mary wants to leave her whole estate to Jack, and puts this in her Will. However, Mary and Jack both die at the same time in an accident and Mary’s gift to Jack fails. The statutory intestacy formula applies and Mary’s whole estate goes to her brother, who Mary does not get along with and would not wish to benefit under her Will.

Mary could instead provide in her Will that she leaves her estate to Jack, or if that gift fails, her estate will instead go to a charity of her choice.

Which charity to choose?

People choose charities carefully – often because they have either given to that charity regularly during their life or because they feel a close connection to the work done by that charity.

Before leaving a significant gift to a charity, you should investigate that organisation and make sure that you are comfortable with them. You should certainly ensure that they are a legitimate charity, and also be comfortable with how they will use your gift. Many charities will be very happy to speak with you over the phone and explain how your bequest might be applied if you do leave them a gift in your Will.

You should also be precise in identifying the charity – for instance, by including its Australian Company Number (ACN) or Australian Business Number (ABN). You should also keep in mind that some charities are administered as a group of state or territory organisations, so ensure that you nominate the correct one in your Will.

You may also wish to include substitution provisions, to allow for your gift to be made to a similar charity to the one you have nominated in the event that the charity no longer exists at the date of your death.

For example:

Mary leaves a gift to a local charity which helps to take care of people’s pets if they become seriously ill and can no longer do so themselves. This is a small charity, and after its founder passed away, the charity was wound up.

Mary’s Will includes a substitution clause, which provides that if a charity she has nominated no longer exists when she dies, then her Executor may give the gift to another charity of a similar purpose. Mary’s Executor instead makes the gift to the NSW RSPCA.

Purpose of donation

The conventional wisdom is usually that charities prefer to be given gifts which are specified as being “for their general purposes”. This permits the charity to decide how and where that donation is applied – some may go to the general overheads of the charity, and the rest may go into various projects or services being offered by the charity.

If you intend to make a bequest which is intended to serve a particular purpose – for instance, a gift which is expressed to specifically be for the purposes of assisting research into pancreatic cancer – it would be best to contact the charity directly and confirm that they are able to direct your donation to that specific purpose.

Recommended clauses

Family Provision Claims

The Family Provision Act 1969 (ACT) and Part 3 of the Succession Act 2006 (NSW), as well as equivalent statutes in each State and Territory, provide mechanisms for certain people (including close family) to challenge a Will in cases where they have not been afforded adequate provision under the Will.

You should be cautious if leaving a significant portion of your estate to a charity if that gift is at the expense of your children, spouse, or another person who you might be expected to provide for in your Will. If you do intend to substantially benefit a charity over people who are eligible to make a claim on your estate, this should be done only with very carefully considered legal advice from one of our estate planning experts.

For more information about when a person might be eligible to bring a Family Provision Claim against an estate, please see our article Disputing a Will: When can a person apply for provision out of an estate?

Elringtons Lawyers are big believers in giving back to our local community, so if you are considering leaving a gift to a charity in your Will, call elringtons experienced Estate Planning team on (02) 6206 1300 and make an appointment today. For information about elringtons’ partner charities, see our community page.

For more information or to make an appointment in either our Canberra or Queanbeyan office please do not hesitate to contact Mitchell Evelyn or Kerin Cotchett:

+61 2 6206 1300 | e: info@elringtons.com.au

(No Ratings Yet)

What to know before you buy a business!

Posted on1, November 20181, November 2018AuthorMitchell EvelynLeave a comment

When you buy a business, you are often doing much more than purchasing some business stock or equipment. You are placing yourself in the heart of a complicated network of business and legal relationships with customers, employees, suppliers, and many more.

Buying a business means not just transferring business assets, but ensuring that you are buying what you believe is required to continue the running of the business. This means that a comprehensive due diligence process is an absolute must before you commit to anything.

Some of the considerations to take into account in any purchase of a business include:

Reviewing the sale contract

to make sure that it is fair, and ensure that it properly covers your interests. This often means negotiating to add additional protections into the contract – for instance, to stop the seller from immediately competing with you and eroding your goodwill, or trying to poach customers or staff after the sale. Your lawyer could assist with identifying any unusual or onerous terms and you may decide to instruct your lawyer to assist with suggesting amendments to ensure you have a more purchaser-friendly contract before you bind yourself to a set of terms.

Identify the Intellectual Property

Checking equipment

Transferring a Lease to you

Employees

entitlements are set out in the Fair Work Act 2009 (Cth). If the employment agreements are to be assigned to you, you should ensure that the Vendor has complied with the requirements of the legislation and any applicable modern award in order to avoid potential disputes. If you have chosen to re-employ some transferring employees, you are required by law to recognise certain previous entitlements of the employees. In this instance, you should ensure that adjustments to the purchase price is made to take into account employee entitlement obligations you are taking on from the vendor.

Making sure there is a “clean break”

Transferring other agreements

Price apportionment

And many more matters

If you are buying a business, it is very important to only do so with quality professional advice from both your lawyer and your accountant. Elringtons’ Commercial Law team have assisted in the purchase of countless businesses ranging from small family-owned businesses right up to large commercial enterprises in both the ACT and NSW. Different complications and considerations arise apply to the various types of businesses. We can help guide you through this complicated legal process.

You may also be interested in our article – What to know before you sell a business.

For more information or to make an appointment in either our Canberra or Queanbeyan office please do not hesitate to contact Shalini Sree or Mitchell Evelyn:

+61 2 6206 1300 | e: info@elringtons.com.au

(No Ratings Yet)

What you need to know about selling your business!

Posted on1, November 201810, November 2018AuthorMitchell EvelynLeave a comment

Selling a business can be a very complicated affair. You are doing much more than simply selling an asset – you could be severing or transferring a multitude of contracts to the buyer, transferring both tangible property (for instance, stock or equipment) and intangible property (such as Intellectual Property, goodwill, or even social media accounts), and extricating yourself from the complex network of promises, personal guarantees, and personal business relationships.

Selling a business – and doing it properly – involves taking each of the small components which together make your business run, and transferring them to someone new. Most of these will not follow the business automatically. Some of the most common considerations which need to be taken into account in any sale of business are listed below:

Your Premises Lease

Equipment Leases or Service Contracts

Employees

will need to either be terminated (often to be rehired by the new employer), or their employment contracts assigned to the buyer. The approach taken with the employees will determine how employee entitlements, such as annual or long service leave, are to be addressed. If the buyer does not wish to re-employ an employee of your business, the employee will become redundant as there is no business for the employee to work in. This termination will trigger all the ordinary entitlements that an employee has in cases of genuine redundancy.

Goodwill

Securities

Personal Guarantees

Apportionment of Purchase Price

And many more things

You may also be interested in our article – What to know before you buy a business.

For more information or to make an appointment in either our Canberra or Queanbeyan office please do not hesitate to contact Shalini Sree or Mitchell Evelyn:

+61 2 6206 1300 | e: info@elringtons.com.au

(No Ratings Yet)

Top Tips for Estate Planning

Posted on28, September 201828, November 2018AuthorMitchell Evelyn

By Mitch Evelyn

Our team helps hundreds of people each year put together their plans for death or incapacity. Our role is to understand what your wishes are and ensure these are reflected in your Will. We often see well planned sensible Wills – however, we are also often instructed to prepare Wills (against our advice) which miss the mark and create headaches for friends and family after death.

Here are some of our top tips for making a good Will.

Keep it general

How your Will might work now could be very different from how it might work in a few years. We prepare our Wills so that they are flexible enough to account for large changes in your life between when you make your Will and when you die.

It is often better to describe things generally – such as “my primary residence” or “any motor vehicle I might own” if there is a risk that you won’t own them at your death. These sorts of gifts need to be phrased very carefully to make sure that they do not fail, so it is important to only include them in your Will with a lawyer’s help.

Talk to your family and ask them what they would want

Remember, you aren’t only making a Will for you, but for your family or your beneficiaries. If you are going to give specific things to certain people, you should make sure that you are giving them things which they actually want or need.

Sometimes beneficiaries are embarrassed by being given a larger share of an estate – to the point where they actually give some of their share to other beneficiaries. Sometimes, people receive property which they simply don’t want or need, and either give it away, sell it, or forget about it.

Don’t put too many people in charge

The old saying about “many hands” doesn’t apply in all situations. Generally speaking, having one or two executors at a time is ideal – more than that can often slow down the administration of your estate and create double handling issues.

If you appoint, say, four executors, then your executors need to work around four separate availabilities. This can be further complicated if one lives far away or doesn’t get along with the others. Weeks can be added to the winding up of your estate as documents are sent back and forth across the country.

Resist the urge to appoint everyone as an executor – one or two, with a backup executor to step in if your first executor cannot act, is more than enough.

You can’t plan for everything

When we prepare a Will, we stress test it by imagining what might happen if your circumstances were to change. However, there comes a point where there is no need to keep planning and the best course is to let things run their course and change your Will if your circumstances change in the future.

A good Will plans for contingencies – for example, by giving the whole of your estate to your partner, and if partner has died before you, to your children, or if your children have died, to their children. A Will which tries to plan for every contingency will often be more expensive and unnecessarily complex, both to prepare and administer.

Don’t rule from the grave

We sometime see people create elaborate and complex Wills which are heavy-handed in controlling how their family will receive and use their inheritance. Often, these include contingent gifts (for instance, person X will receive their inheritance only if something happens), or creating trusts which “drip feed” an income to beneficiaries.

These methods sometimes have their place. However, it is also important to bear in mind that you may be restricting your beneficiaries from reacting to changes in their own circumstances or needs – for instance, if their health takes a turn, or they lose everything in a natural disaster.

Beware of gifts which carry obligations

When you gift a house to someone, you are also giving an obligation to pay rates or maintenance, or possibly even refinance a mortgage to keep the property. If your beneficiary cannot afford to do this, then they are often placed in a difficult position – they may not be able to afford to keep your gift.

Some gifts can also be tax time bombs – for instance, if you give shares or property which may be subject to Capital Gains Tax to a person who is on a higher annual income, that person may need to pay more tax if they choose to sell those shares in the future.

You should also be careful when making provision for pets away in your Will. Always make sure the person has the financial means to care for the animal, and to provide it with a healthy physical environment and exercise.

We encourage you to think carefully over your Will and, if appropriate, discuss it with your family. When you are satisfied that you know what your Will should look like, call elringtons and ask to speak to one of our experienced Estate Planning lawyers at either our Canberra or Queanbeyan office.

e: info@elringtons.com.au | p: +61 2 6206 1300

(No Ratings Yet)

Why your bank is making you see a lawyer!

Posted on26, September 201830, September 2018AuthorMitchell Evelyn

By Mitch Evelyn

The banks are under increasing scrutiny and stringent regulations these days to ensure that they practice responsible lending. To meet these obligations, and to comply with the National Credit Code, your bank will often require you to have loan or guarantee documents reviewed by a lawyer, and insist that your lawyer provide a certificate confirming that they have given this advice. This means that a bank can lend to you, or accept a personal guarantee, confident that you understand exactly what your obligations are.

What will my lawyer do?

We often get enquiries from people saying that they just need a lawyer “to witness something” or “to sign off on some forms”. A lot of people are annoyed or upset when they show up at their lawyer’s office, documents in hand, to find that their lawyer is refusing to sign them – at least right away.

It is important to bear in mind that your lawyer is not just witnessing your signature on these documents – they are certifying that they have given you legal advice. This means that your lawyer needs to:

Read the documents
Understand the documents in context – who is borrowing, who is guaranteeing, and why
Understand the key players – for instance, is the borrower a family member, a family trust, or a company?
Understand the protections afforded to you by law and how these might affect the documents you are signing
Review the security being provided and what could happen to you or to your family if that security is called upon
Comply with the additional regulations placed on lawyers when providing this specific service
Meet with you in person to explain the documents and their effect to you

What can I do to speed up the process?

Chances are that you – or someone you care about – are in the middle of a large, exciting, or time sensitive transaction when you need one of these certificates signed.

Here is what you can do to help your lawyer give you fast, and accurate legal advice:

· Get the documents to your lawyer as quickly as possible so that they can review them. Keep in mind that these are often long, and complicated documents – they may take a few hours to review, especially if you are not using a bank whose standard forms your lawyer is familiar with. Often your lawyer will also need to prepare additional documents which we are legally required to retain on file.

· Make an appointment – do not walk in and expect a lawyer to drop what they are doing. Remember, they are not only witnessing your signature, they are certifying that they have given you legal advice. You should allow your lawyer at least two or three days to review everything.

· Provide all relevant background and related documents as soon as you can. Often, the bundle of documents your bank provides will have all related documents in it, such as copies of trust deeds, or registered mortgage terms. If they do not, then your lawyer may ask to see these.

· Make sure your lawyer knows who they are advising. If there are multiple guarantors, make sure your lawyer knows whether they are advising only you, or whether they are also advising other guarantors. This is very important, as your lawyer needs to ensure they comply with additional regulations that may apply when asked to advise multiple guarantors at the same time.

· Make sure that you have everything your bank asks for. Some smaller banks will have very onerous identification requirements – make sure that you bring copies of all relevant ID, and check that none of the documents have expired.

What does it cost?

Legal costs will vary depending on the complexity of the documents, the number of people involved, and the banks requirements. You should send a copy of your documents through to your lawyer so that they can ascertain how much time will be involved, and provide you with an estimate of what their fees will be.

If you need someone to provide independent advice on documents provided by your bank, contact us at either our Canberra or Queanbeyan office and ask to speak to one of our experienced commercial or property lawyers. Please bear in mind that your lawyer will need to meet with you in person at least once in order to provide you with this advice.

p: +61 2 6206 1300 | e: info@elringtons.com.au