Acting as the Executor of an Estate can be a demanding task, especially if the deceased had complicated business affairs and/or left a complex Will. So can an Executor charge for time and effort spent in administering an Estate? In short: Yes.
There are two basic types of payments an Executor may claim:-
Professional fees for services provided to the Estate by the Executor acting in a professional capacity (i.e. accounting or legal services); and
Commission for the Executor’s “pains and trouble” suffered as a result of acting as Executor of the Estate.
Professional Fees
Many Wills will contain a clause which specifically allows an Executor to charge professional fees for work performed in his or her professional capacity in connection with the Estate.
If such a clause is present, an Executor will be able to recover payment for work performed in a professional capacity, provided that:-
he or she renders the Estate with accounts for work performed; and
the residual beneficiaries of the Estate (i.e. those whose share of the Estate will be diminished by the payment to the Executor) authorise such payment.
If there is no such clause present in the Will, an Executor cannot charge the Estate directly for professional fees. An Executor may, however, seek to have professional services provided to the Estate taken into account in a claim for commission under Section 86 of the Probate and Administration Act 1898 (“the Act”).
Commission
The Act provides that the Court may allow an Executor to be paid commission for “pains and trouble” as is “just and reasonable”.
Some factors the Court will look at when assessing how much (if any) commission to allow an Executor include:-
The time spent by the Executor in performing the duties;
The skill and responsibility displayed by the Executor;
The success which attends the Estate’s administration etc.
An Executor is able to claim commission without going to Court, if the residual beneficiaries unanimously consent to the commission being paid.
If you are an Executor and need guidance, please contact the experienced team at Everingham Solomons because Helping You is Our Business.
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Effect of Willmott Growers Group v Willmott Forests
In Willmott Growers Group v Willmott Forests (“the Willmott case”) the High Court has confirmed that a liquidator can disclaim a lease if a landlord company is liquidated.
Facts of the case
Willmott Group (“Willmott”) leased land to a tenant for a period of 25 years.
Willmott subsequently became insolvent and was wound up.
Willmott’s liquidators disclaimed the lease in accordance with the Corporations Act (“the Act”).
Result
The High Court found that the liquidator was entitled to disclaim the lease.
The tenant lost its rights in regards to the land and was left only with a claim as an unsecured creditor in the liquidation.
Effect of Willmott on tenants
Tenants may be disadvantaged if their landlord enters into liquidation;
Banks may be reluctant to hold leases as security due to the potential for leases to be disclaimed, resulting in it being more difficult for a tenant to obtain finance;
Tenants may lose the benefit of certain assets brought onto leased land if such assets cannot be relocated when a lease comes to an abrupt end (i.e. the Willmott case involved the planting of trees on the leased land which the tenant lost the benefit of when the lease was disclaimed).
Possible Solutions for tenants
Unfortunately, there is nothing tenants can do to prevent their landlord from being wound up and, should this occur, a liquidator can disclaim a lease. With that said, it may be beneficial to creditors for a liquidator to keep a tenant in place.
Some possible safeguards available to tenants include:-
Negotiating a condition of the lease by which the landlord grants a registerable mortgage over the land to the tenant to secure payment of damages if the lease is ever disclaimed. This would ensure that tenants have priority as secured creditors in a liquidation scenario.
Including a clause in the lease to the effect that title in any property, fixtures or fittings bought on to the land by the tenant will not pass until the landlord has paid the tenant the market value for such property, fixtures or fittings. Registration of a security interest on the Personal Property Securities Register may also be necessary.
Obtaining personal guarantees from the director/s of the landlord company.
It is worth noting that section 568B(3) of the Act allows the Court to set aside a disclaimer of lease “if satisfied that the disclaimer would cause, to persons who have… interests in the property, prejudice that is grossly out of proportion to the prejudice that setting aside the disclaimer would cause to the company’s creditors.” This section was not argued in the Willmott case but is an avenue available to be utilised by tenants in future cases.
For assistance in relation to your leasing issue, please contact the experienced team at Everingham Solomons, because Helping You Is Our Business.
Passing ownership of assets to a disabled beneficiary can have the undesired result of reducing the beneficiary’s government pension.
The introduction of the Special Disability Trust (SDT) in 2006 was the Australian Government’s response to this problem.
SDTs can be established in a Testator’s Will and allow assets to be left to a disabled beneficiary without having adverse effects on their Centrelink entitlements.
SDTs may also be set up whilst you are alive and the restrictions and concessions applicable will be the same as those that apply to SDT’s created by a Will.
Who is eligible?
SDTs are only available to beneficiaries who meet the definition of “severely disabled” as defined in section 1209M of the Social Security Act 1991.
What are the benefits?
1. Asset Test Exemption
The assets of a SDT up to the value of $609,500.00 (indexed annually) will not be included in the beneficiary’s asset test;
Income from the assets of a SDT will not be included as income of the beneficiary; and
The principal home of the disabled person is not counted in the asset test.
2. Gifting Concession
Gifts up to the value of $50,000.00 to a SDT by a person who:-
is an immediate family member of the severely disabled beneficiary; and
is receiving an eligible form of social security pension; will not affect the giftor’s social security payment.
Summary
Whilst SDTs are potentially beneficial for persons with severe disabilities and their families, they are not suited to everyone.
For more information on whether a Special Disability Trust is right for you, please contact the experienced team at Everingham Solomons because Helping You is Our Business.
A testamentary trust is a trust established by a Will that comes into existence upon the death of the testator (the person making the Will). Creating a testamentary trust provides an alternative from giving a gift to a beneficiary absolutely. Instead, the gift is given to the trustees of the trust (usually the executors of the Will), to distribute to the intended beneficiary at a later time.
Benefits of Testamentary Trusts
Including a testamentary trust in your Will can have various benefits, including:
Providing trustees with flexibility and the ability to respond to the changing circumstances of various beneficiaries;
Protecting your assets from being squandered by an irresponsible beneficiary;
Providing an avenue to protect assets that are intended for a disabled/ underage beneficiary; and
Various taxation benefits.
Pitfalls of Testamentary Trusts
Whilst testamentary trusts have the potential to provide numerous benefits, they are not without their drawbacks. Namely:-
The cost of having your Will prepared will be increased and there will be ongoing administrative costs once the trust comes into existence;
Your affairs may be unnecessarily complicated; and
A great responsibility and onus is placed on trustees to administer the trust.
Who should include a Testamentary Trust in their Will?
The inclusion of a testamentary trust should be considered by all persons making a Will, however, they will not be suitable to everyone.
Testamentary trusts may prove particularly useful in the following cases:-
Where there is a large asset pool;
Where the minimisation of tax will be particularly important to beneficiaries; and
In families with young and/or disabled children.
For more information about testamentary trusts and how they can benefit you, please contact the experienced team at Everingham Solomons because Helping You is Our Business.
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Retail Leases are covered by the Retail Leases Act 1994 (‘The Act’). The Act sets out a number of requirements that Landlords must follow when a Retail Lease is prepared, to ensure that the Lease is enforceable against a Tenant. They include:-
A Landlord must not advertise a retail shop for lease unless he has a copy of the proposed Lease in his possession. Maximum penalty for Landlords = $5,500.00.
A Landlord must make a copy of the proposed Lease as well as a copy of a Retail Tenancy Guide available to prospective Tenants as soon as negotiations are entered into. Maximum penalty for Landlords = $5,500.00.
A copy of a Lessor’s Disclosure Statement (LDS) must be provided to a Tenant at least 7 days before the Lease is entered into. If a Tenant does not receive a LDS within this time frame, or if the LDS is incomplete or contains information that is materially false or misleading, the Tenant may terminate the Lease at any time within 6 months after the Lease was entered into (unless a permitted exception applies). Landlords should further note that any requirement for a Tenant to contribute towards the Landlord’s cost of any finishes, fittings etc. is not enforceable if it is not disclosed in the LDS.
If a Landlord requires a particular standard of fit-out to be carried out by a Tenant, the relevant information relating to the standard required must be contained in a Tenancy Fit-Out Statement and provided to a Tenant at the same time as the Lessor’s Disclosure Statement, or included in the Lease itself.
A Tenant is not obligated to carry any of the Landlord’s fit-out requirements if they are not contained in a Tenancy Fit-Out Statement.
It is not good enough to simply have all of the Lease terms and conditions contained in the Lease itself.
To ensure that a Retail Lease is enforceable against a Tenant, a Landlord must ensure that all procedures prescribed by The Act are followed and that all required documents are provided.
For assistance in ensuring that your Retail Lease is enforceable, please contact the experienced team at Everingham Solomons because Helping You is Our Business.
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The Privacy Amendment (Enhancing Privacy Protection) Act 2012 amends the existing Privacy Act 1988.
When?
New laws taking effect from 12 March 2014.
Who is effected?
The new laws effect businesses and most government bodies that collect and transfer personal information in Australia.
What are the main changes?
Of the 13 newly introduced Australian Privacy Principles (APPs), the most significantly changed are as follows:-
APP 1 (open and transparent management of personal information): Entities must ensure that they manage personal information in an open and transparent way. Entities must have a clearly expressed and up to date privacy policy which deals with a number of prescribed matters.
APP 4 (unsolicited personal information): If an entity receives unsolicited information, the entity must, within a reasonable period, determine whether it could have legally collected the information itself, and if not, the entity must, as soon as practicable, destroy or un-identify the information.
APP 5 (notification of collecting personal information): The requirements regarding notifying an individual of the collection of personal information have been greatly expanded.
APP 7 (direct marketing): An organisation must not use or disclose personal information collected about an individual for the purpose of direct marketing, unless one of the various prescribed exceptions apply.
APP 8 (cross-border disclosure of personal information): Before an APP entity discloses personal information about an individual to an overseas recipient, the entity must take such steps as are reasonable in the circumstances to ensure that the overseas recipient does not breach the Australian Privacy Principles. In certain circumstances, an entity may now be deemed to be liable for a breach of the APPs by an overseas recipient of personal information disclosed by the entity.
Non-compliance
Non-compliance with the new legislation risks civil penalties of up to $1.7 million for corporations and $340,000 for individuals.
How to Proceed
In light of the impeding changes in the law, now is the time for businesses to be familiarising themselves with the new APPs and reviewing and updating their privacy policies accordingly.
For advice on whether of not your business’ privacy policy complies with the new law, please contact the experienced team at Everingham Solomons because Helping You is Our Business.
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Both companies and individuals need to be prepared for the end of the PPSA Transitional Period which is rapidly approaching.
What is the PPSA?
The Personal Property Security Act (PPSA) came into effect on 30 January 2012, aiming to regulate interests in ‘personal property’. That is, property other than real estate.
Who does the PPSA Apply to?
Essentially, the PPSA may apply to any of the following parties:-
sellers or buyers of personal property;
lessors or lessees of personal property;
persons supplying goods on retention of title terms (e.g. hire arrangements); or
financiers taking security over personal property.
What is the PPSA Transitional Period?
When the PPSA came into effect, any person with an existing security interest in personal property was granted a two year transitional period in which to register his or her interest on the newly established Personal Property Security Register (PPSR).
During the two year transitional period, the interests of secured parties were deemed to be “temporarily perfected”. Essentially, this meant that their interest took priority over competing interests in the same property.
What do I need to do?
From 31 January 2014 onwards, any unregistered security interest will loose its status as “perfected” and secured parties will be at risk of loosing their priority and ultimately, the title to their property.
Now is the time to perfect your security interest and protect your personal property. Depending on the nature of your property, perfection can be achieved by either registration, possession, or (when applicable), control.
For advice on how to perfect your security interest and for assistance in registering on the PPSR, please contact the experienced team at Everingham Solomons, because Helping You is Our Business.
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Land tax is imposed annually on the total land value of all taxable land owned in NSW. However, land that is used for primary production is exempt.
Qualifying for the primary production exemption is not a straight forward process. The Office of State Revenue (OSR) has implemented increasingly strict guidelines surrounding what land qualifies.
Under the Land Tax Management Act 1956 (NSW), land that is zoned rural and is used for primary production qualifies for the exemption. However, land that is not zoned rural must pass a stricter test. Not only must non-rural land be used for primaryproduction, it must also:
have a significant and substantial commercial purpose or character; and
be engaged in for the purpose of profit on a continuous or repetitive basis.
Determining whether an operation has a “significant and substantial commercial purpose or character” may take into account:-
The size of the herd;
productivity of the operation;
attempts made to improve the land/operation; and
time spent conducting the operation.
The requirement that the primary production “be engaged in for the purpose of profit” does not mean the operation must in fact be profitable, however, it has been suggested that a lack of profit can be used as evidence of a lack of a profitable purpose.
The starting point in demonstrating that land qualifies for the primary production exemption is to keep thorough records for the land. This may include detailed trading records, buy/sell records etc. Historical records detailing past use of the land are also useful in demonstrating that the primary production use has been engaged in “on a continuous or repetitive basis.”
At Everingham Solomons we have the expertise to assist land owners with in dealing with land tax issues as well as with any other dealings with the OSR.
If you have any questions regarding the primary production land tax exemption, please do not hesitate to contact the experienced team at Everingham Solomons because Helping You is Our Business.
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The Retail Leases Act 1994 attempts to correct the power imbalance traditionally existing between landlords and tenants. This is seen in relation to market rent reviews.
When rent is to be reviewed by reference to current market rent in a retail lease, either the landlord or tenant must suggest a new rental to the other party in writing at least 60 days before the rent review date.
If parties are unable to reach an agreement at least 30 days before the new lease is due to commence, the Retail Leases Act states that current market rent will be determined by a specialist retail valuer. The valuer can either be agreed to by the parties or appointed by the Tribunal.
Parties have 14 days from the date that they receive notice of appointment of the valuer to make written submissions about what they believe the current market rent is and why.
Considerations the valuer should consider include:
the rent that the landlord could expect to receive if the premises was unoccupied and put onto the open market;
the advantages and disadvantages of the property as a whole; and
the tenants use of the premises.
The valuer has one month from the date of acceptance of the role to decide what the current market rent is. The decision made is final and binding.
Obtaining an independent valuation is a time consuming and expensive process, (the cost of which is born by the parties equally) and should be used as a measure of last resort.
It is particularly important to be proactive in a market review situation from a Landlord’s perspective, as if negations fail and neither party seeks a valuer to be nominated before the next rent review date passing, the rent will not change.
At Everingham Solomons we have the expertise to assist both landlords and tenants when carrying out a rent review, as well as with any other retail lease concerns.
If you have any questions regarding retail leases, please do not hesitate to contact the experienced team at Everingham Solomons because Helping You is Our Business.
The Retail Leases Act (NSW) applies to all retail leases in NSW. The definition of retail lease encompasses any agreement under which a person grants another person a right to occupy a premises for the purpose of using the premises as a retail shop.
At it’s core, the Retail Leases Act is a piece of consumer protection legislation for small business . It is designed to address perceived imbalances in power that may exist between landlords and small business tenants.
As well as regulating particular terms of retail leases, the Act emphasizes the fundamental importance of disclosure before a retail lease is entered into.
Under the Act, it is illegal for a landlord to advertise property for a proposed retail use without first having:-
A draft lease prepared; and
both the draft lease and of any applicable retail tenancy guide ready to provide to prospective tenants.
Failure to meet these disclosure obligations will not only delay a transaction when a tenant is found, it will in fact constitute a breach of the Retail Leases Act, potentially resulting in liability for both landlords and their leasing agents. The current penalty imposed under the Act can be up to $5,500.
Failure to fulfill disclosure obligations can be both costly and time consuming for landlords and their agents.
At Everingham Solomons we have the expertise to assist both landlords and tenants in regards to the above disclosure issues, as well as any other retail lease concerns.
If you have any questions regarding retail leases, please do not hesitate to contact the experienced team at Everingham Solomons because Helping You is Our Business.
Acting as the Executor of an Estate can be a demanding task, especially if the deceased had complicated business affairs and/or left a complex Will. So can an Executor charge for time and effort spent in administering an Estate? In short: Yes.
