ByLawyers News and Updates

Conveyancing – Conveyancers’ Costs Disclosure precedents

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By Lawyers are pleased to announce the addition of Conveyancers’ Costs Disclosure precedents for NSW, VIC, NT, SA and TAS.

These precedents comply with the relevant legislation governing the costs and dispute resolution disclosure requirements for licensed conveyancers.

The Conveyancers Costs Disclosure precedents are now included in the following By Lawyers Guides:

  • Sale of real property
  • Purchase of real property
  • Mortgages
  • Leases

These are important precedents for all licensed conveyancers – if the necessary disclosure is not given before or at the time of the retainer, a client is not required to pay the conveyancer’s costs!

Conveyancing – 1 July fee increases and legislative updates

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1 July always sees legislative changes, including increases to many government charges related to conveyancing and property transactions. Happy New (financial) Year!

The following are some of the more important changes commencing 1 July 2018. By Lawyers publications in each state have been updated as appropriate.

CONVEYANCING

All states 

GST withholding provisions of the Taxation Administration Act commence.

Fee increases apply to all land registry services.

NSW

Mandatory electronic lodgement of all standalone transfers and caveats applies.

QLD

Additional Foreign Acquirer duty rate increased to 7%.

TAS

First Home Owner Grant scheme extended (to 30 June 2019).

SA

Stamp duty no longer charged on transfer of non-residential or non-primary production land: “Qualifying Land”.

 

Costs agreements and client service agreements – enhancement for protection against fraud

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All By Lawyers costs agreements and client service agreements have been enhanced within the Billing and payment arrangements section now including:

 

  •  Two-factor verification protocol: a suggestion that the client always telephone to notify the firm and confirm bank account details before making any electronic transfer of funds into the firm’s trust or office accounts. With recent incidents of fraud involving interception and hacking of lawyers’ emails and the fraudulent provision of incorrect bank account details to clients, this suggestion is in line with the advice of the various state regulatory bodies and, if followed, provides protection against such criminal activities; and,

 

  • Specific provision and authority for alternate payment options, including credit card, electronic funds transfer and instalment plans, confirming that clients are required to comply not only with the terms of the law firm’s costs agreement, but also with the terms of any third party agreement for payment, such as the agreement with their bank regarding the use of a credit card. This provides protection for the law firm against credit providers seeking to recover funds paid via unauthorised transactions.

Wills – Special disability trusts

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A special disability trust can be established to specifically provide for the care and accommodation of a family member with a severe disability. If compliant with the statutory requirements it will allow the disabled beneficiary of the trust to retain their full pension entitlement. There are also generous concessions for contributions to a compliant special disability trust.

Along with the recent addition of special disability trusts to By Lawyers Companies, Trusts and Partnerships guide, our Wills guide now also includes detailed commentary and precedents covering special disability trusts.

A special disability trust can either be established in the will, or a direction can be given in the will for the executor to establish a special disability trust from the estate as required. Which option is chosen will depend on the client’s wishes and family circumstances. The Library of discretionary trust and special disability trust clauses in the By Lawyers Wills matter plan contains appropriate clauses for insertion in the will.

It also includes the By Lawyers Special Disability Trust Deed, which fully complies with the legislative requirements.

The new commentary covers everything a practitioner needs to know about establishing a special disability trust for their clients, including:

  • beneficiary eligibility requirements;
  • contribution and concession guidelines;
  • the permitted use of special disability trust funds; and
  • three ways the testator can provide for a disabled beneficiary via a special disability trust:
    • establish the trust inter vivos by deed and provide in the will for a bequest to the trust;
    • establish the special disability trust in the will; or
    • direct the executor of the will to establish the special disability trust, either with or without separate testamentary discretionary trusts.

 

Wills – Additional clause – direction to executor regarding disposal of body

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All By Lawyers wills precedents have been updated to include a clause that directs the executor on the testator’s wishes for their remains. This clause is automated  for LEAP users.

Where the instructions are more detailed, the Burial, Cremation, Medical Research Provisions clauses from the Library of Clauses, Deeds, Contracts and Codicils are also available.

Our Retainer Instructions already include a section for burial, cremation and medical research, so that the testator’s wishes can be discussed and recorded.

Wills – Testamentary discretionary trusts

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The commentary on testamentary discretionary trusts in our Wills publications now has a more in depth discussion of:

  • the benefits of testamentary discretionary trusts;
  • when a testamentary discretionary trust is appropriate;
  • family trust elections.

There are several By Lawyers precedent wills which create testamentary discretionary trusts for individuals and spouses, as well as a library of testamentary discretionary trust clauses. These precedents can be used to establish a single testamentary discretionary trust for all assets and beneficiaries of the estate, or multiple testamentary discretionary trusts for specific beneficiaries. They can also be used to establish additional testamentary discretionary trusts to provide protection for specific assets such as quarantining a family business or to allow for the particular needs of an individual beneficiary due to say drug addiction.

Wills retainer instructions – All states – Burial, cremation and medical research details

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Retainer instructions in all states – for individuals and couples – have been enhanced with the addition of burial, cremation and medical research client details.

For instance, does the client wish to:

  • detail funeral service arrangements;
  • detail wishes regarding burial or cremation of their remains; or
  • make provision for ongoing cemetery or crematorium fees?

Estate planning – An exciting opportunity for small law firms – By Brad Watts

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Wills have traditionally been seen as valuable because they eventually bring the firm estate work, rather than valued for the fees associated with the wills themselves. However, estate planning is a different thing and many firms are now taking a far more comprehensive approach, with a far more profitable result.

Brad Watts has written an article outlining some of the opportunities for law firms in estate planning: Estate planning – An exciting opportunity for small law firms. We take this opportunity to introduce Brad to those who do not know him.

Brad has contributed to By Lawyers publications for over 10 years, and has this year joined By Lawyers as a Senior Consultant and Editor. Admitted as a solicitor of the Supreme Court of NSW in 1994, Brad worked in general practice for 21 years, before moving to the NSW Crown Solicitors Office as a Solicitor Advocate and then A/Director. Having owned and managed small law firms, with substantial experience in all aspects of general practice and extensive experience in criminal and civil litigation, Brad offers a wealth of knowledge and practical assistance to our subscribers.

 

Costs – All costs agreements now able to be signed electronically

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All of the By Lawyers costs agreements now have electronic signature fields allowing them to be signed electronically via DocuSign, which is available to LEAP in the cloud users. The fee disclosure for this service has also been added into the disbursement section of the costs agreements, should the client choose to take advantage of this service.

 

Estate planning – An exciting opportunity for small law firms

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The usual wills versus a will with estate planning

For most clients a will is a straightforward document that appoints an executor, an alternate executor, perhaps makes some specific bequests of personal items to certain family members, then leaves the balance of the estate to their spouse then their children with a default clause if none of these beneficiaries survive.

The fees charged by most firms are modest and reflect the reality that most clients do not wish to pay a great deal for something that they only reluctantly accept that they need and know they will never personally use and can prepare themselves using a form bought from the post office.

Wills have traditionally been seen as valuable because they eventually bring the firm estate work, rather than valued for the fees associated with the wills themselves. There is an old adage that the goodwill of a practice are the good wills in safe custody.

However, estate planning is a different thing and many firms are now taking a far more comprehensive approach, with a far more profitable result.

Estate planning is an area where small firms can grow their offering to existing clients and attract new, high net worth clients who require and appreciate professional expertise and assistance in this important area of practice.

It is far easier to offer this expertise than many small firms realise. The By Lawyers suite of testamentary trusts and wills clauses, together with the extensive commentary on wills and estate planning, means that firms can confidently advise clients who may have substantial assets including business interests held in company, partnership, trust structures or self-managed superannuation funds.

Whereas a firm might charge few hundred dollars for ‘husband and wife’ wills, the comprehensive succession planning required by a family with substantial assets and interests, including a review of existing structures and documents, preparation of wills which incorporate testamentary trusts, plus other appropriate documents such as powers of attorney and appointments of enduring guardian, is likely to involve fees of many thousand dollars, as well as extending the relationship between the firm and the family to other areas and members. Clients who have such assets and need such advice are mostly very happy to pay for it because they realise the value of the exercise and are as dedicated to retaining their assets for their family as they were to building up those assets in the first place.

Why testamentary trusts?

For clients with substantial assets, complicated families or family members who have medical or personal problems, the use of testamentary trusts has multiple benefits over usual wills, summarised below.

Creditor protection

To protect a bequest from being accessed by creditors of a beneficiary, including guarantees for a business venture.

Divorce of a child

To avoid family assets being redistributed by the Family Court. Assets held in trust are not assets of any individual and the Family Court cannot make an order requiring the distribution of those funds.

Education

Bequests via testamentary trust for payment of school and tuition fees for grandchildren is more tax efficient than simply leaving money to the child’s parents.

High risk beneficiaries

Where one of the beneficiaries is in a high-risk business or has personal issues with drugs or gambling which warrant strict controls being placed on access to any estate funds.

Remarriage of spouse

To limit access to existing family assets by a new family or spouse.

Tax benefits

To minimise tax payable, facilitate income splitting and distribute tax free to children under 18 on marginal rates with the no tax threshold.

Will challenges

Keeping estate assets in trust means they are not in the beneficiaries’ estates and therefore not subject to challenge when they die.

Disabled children

To ensure that any disabled or intellectually impaired children are provided for in the most effective way. A Special Disability Trust can provide a substantial bequest to a disabled child without impacting on any Centrelink benefits.

Identifying the right clients for complex estate planning

Although most clients potentially would benefit from a testamentary trust, their present circumstances do not suggest that one is necessary. In contrast estate planning is essential for clients with high net worth, multiple assets and asset types, business interests, complex business structures, existing family trusts, self-managed superannuation funds, complicated family arrangements and relationships and potential beneficiaries with special needs or personal problems.

Many clients have not considered the need for estate planning which with the aid of By Lawyers commentary and precedents can be offered by practitioners.

The benefits of testamentary trusts

  • The fundamental advantage of a testamentary discretionary trust is that the assets are held by the trustee for the beneficiaries, not by the beneficiaries themselves. This allows the protection of assets from claims against beneficiaries and from misuse.
  • Separate fixed trusts can be established for separate people or purposes, with conditions. For example, if one child has a drug addiction, a bequest could be left in trust for that child to receive appropriate maintenance and treatment, without them having access to the capital.
  • If a beneficiary faces bankruptcy, an inheritance for that beneficiary through a testamentary discretionary trust will not form part of the beneficiary’s bankrupt estate.
  • Assets held within a testamentary discretionary trust are not part of the matrimonial pool to be divided up in any family law property settlement in the event of divorce.
  • Testamentary trusts also provide an opportunity for testators to control assets after their death, by way of conditional access to trust assets. While not desirable for the beneficiaries, this can certainly be seen by many testators as an advantage.
  • Testamentary trusts can be very tax effective – income, capital gains and franked dividends can be distributed among all beneficiaries each year in the most tax-efficient way.

By Lawyers precedents and commentary

Using By Lawyers publications gives your firm the tools and confidence to assist clients with their estate planning, bringing profitable new work and quality new clients into your firm.

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