But what if there isn’t a Will? Well… there still is a way, but it does become a bit trickier and more involved process for the relatives of the deceased person.
If a person dies without making a Will or if they make a Will, but it fails to dispose of all assets properly or there is no beneficiaries who have survived the testator, then that person is deemed to have died intestate.
The Succession Act 2006 (NSW) deals with intestacy and outlines the general rules for who will benefit from a person’s estate if they die intestate.
So who gets your things if you die without a Will?
That really depends on your situation. Generally speaking, if you have a spouse, they will be entitled to your estate. The exceptions are if you have more than one spouse or you have children from a previous relationship.
If you have more than one spouse, your spouses are entitled to equal distribution of your estate.
If you have children from a previous relationship, then your spouse will be entitled to your personal effects, a gift of $350,000.00 (adjusted by CPI) and half of the rest and residue of the estate. Your children will be entitled to the balance of the rest and residue to be shared between them equally.
If you do not have a spouse, the general order for entitlement is as follows:
Your children (but where a child has died and left children, their share will go to your grandchildren); and if none
Your parents; and if none
Your siblings (but where a sibling died and left children, their share will go to your nieces and nephews); and if none
Your grandparents; and if none
Your aunts and uncles; and if none
Your first cousins; and if none
The NSW Government.
If there is more than one beneficiary, then the share will be divided equally between them.
It is a common misconception that if you die without a Will, then the Government will receive all your assets. As you can see this is only true if the person who died had no immediate relatives that survived them.
Overall, it is much simpler for your relatives if you make a Will before you die because the process to administer an Estate of a person who died intestate is more complex and costly as the deceased did not give any person the authority to administer the Estate. This means that a grant of Letters of Administration must be sought so that there is someone with the authority to do the things necessary. More importantly, without a Will, your assets may not go to the people you wish to benefit.
If you would like to make a Will or have any questions about making a Will, please contact Everingham Solomons because Helping You is Our Business.
This is an often asked question by Purchasers and Real Estate Agents. Typically, someone will have bought a property at auction in their own name or for an off the plan development and then decide they want to buy the property in the name of their spouse or some other entity like their Superannuation Fund.
The decision to change names often happens after the purchaser has discussed the purchase with their accountant and/or solicitor and considered things like asset planning, funding and asset protection.
Most people seem to think they can simply change the “purchaser’s name” on the contract by inserting the words “or nominee” on the contract.
That process in most cases will not work and will result in you paying double Stamp Duty.
In New South Wales the name on the Contract needs to be the same name on the Transfer. On a $1 million purchase price the Stamp Duty payable is over $40,000.00.
If the purchaser on the Transfer document is different from the Contract, then the Transfer will be treated as a sub-sale, resulting in a second or additional Stamp Duty amount of over $40,000.00 being payable, (total of $80k plus).
There is a limited exemption set out in the Duties Act that allows the ultimate purchaser to be a different person from the purchaser in the Contract, so long as they are “related persons” as defined.
A related person includes a spouse, parent and child. It can also be a private company where the person is a director or majority shareholder of that company. It can also be a Trust where the natural person is a beneficiary of the Trust. There is a catch. For that section of the Duties Act to apply, the ultimate purchaser must have been in existence when the Contract was entered into. You cannot form the Company or Trust after the date of the first Contract.
If the “related person” exemption is not available, then your only real alternative is to persuade the seller to rescind the original Contract by agreement and enter into a new Contract.
There is no obligation on the seller to do this and if they do, undoubtedly you will end up paying the sellers legal costs of the rescission of the initial Contract and the preparation and exchange of the new Contract.
The best option is to seek appropriate advice as to the purchasing entity, prior to buying and entering into the Contract in the correct name from the beginning.
Our property team at Everingham Solomons can assist you with all your property related matters, because Helping You is Our Business.
A recent matter in the District Court of NSW considered a claim of negligence brought against a Council.
The claimant was a high school student participating in a touch football competition on a sports field maintained and owned by the Council.
During the game, the claimant fell to the ground alleging her foot got stuck in a hole in the playing surface of the field causing her injury to her knee.
To succeed in her claim, the claimant needed to prove on a balance of probabilities, that there was a hole in the playing surface of the field that caused her to sustain her injury.
The claimant admitted that she did not see any hole in the ground and ultimately was unable to establish that she fell into one.
The Council was also able to show evidence that groups such as touch football associations were issued permits to allow them to play on sports fields on the condition that the sporting entity had to inspect the playing field and surrounding areas prior to play for hazards and defects (such as holes) and any identified risks needed to be fixed before play and reported to the Council.
There was no evidence presented of any reports or defects in the playing surfaces from the touch football association or other sporting bodies who had recently used the sporting field.
Further the sporting Association gave evidence that their usual practice was to inspect the playing fields for risks prior to play and this was supported by a completed checklist which did not identify the hole in the surface of the field.
Additionally, Council had a system of maintenance of the park where the fields were regular inspected by a number of workers and no reports had been lodged of any defects in the playing surface.
The case highlights the importance of bodies having the control or ownership of public areas, having risk management procedures integrated into the day-to-day operation and management of public places such as sports fields, parks etc, to enable the early reporting, identification and elimination of risks on public land.
It also highlights that a claimant should have sufficient evidence and documentation to prove negligence and to prove their case as otherwise it could be an expensive gamble.
At Everingham Solomons Solicitors, we have the legal expertise to advise you regarding all of your legal matters, because Helping You is Our Business.
We are often asked whether a local council requires an easement for its water and sewer pipes to remain on a person’s private land and further whether council is entitled to enter upon the private land to carry out repairs and works on that infrastructure.
The Local Government Act provides the answer in respect of storm water works, sewer and water supply works.
Section 59A of the Local Government Act provides that Council is the owner of all works of water supply, sewerage and storm water drainage installed in or on land by the council, whether or not the land is owned by council.
This means that even where council’s infrastructure is located on private land, the works themselves, if installed by council, belong to council.
The works may be considered to have been installed by council even if a developer partly funded the installation and also applies to council infrastructure that was installed prior to Section 59A being legislated.
The Section of the Local Government Act, goes on to allow the council to operate, repair, replace, maintain, remove, extend, expand, connect, disconnect, improve or do any other thing to those works to ensure their efficient operation for the purpose for which they were installed.
This enables the council to both use the works for the purpose they were installed for example, to drain storm water, water supply and sewerage and also to maintain and extend or replace the works.
In effect the section means that council owns the infrastructure works despite the fact that there is no easement or other interest registered on the certificate of title of a private person’s land and allow the council to operate, repair, replace and maintain the works and no easement is required.
It is, however, normal for council with respect to new subdivisions to require easements to be registered on the title of land being created for essential services such as water, sewerage and storm water.
The result is that a landowner cannot require council to remove any such works or prevent council from exercising those powers.
If you have any property enquiries or need assistance in a property related transaction, contact us at Everingham Solomons, because Helping You is Our Business.
Where a farming enterprise has been carried on a rural property, for a minimum of 5 years and where the purchaser intends to carry on a farming operation, then generally the sale will be exempt from payment of GST.
A recent matter highlighted the importance of ensuring that each transaction is examined on its facts and generalisations such as the above rule, are not adopted on a wholesale basis.
The facts: The sellers had operated a farming enterprise (sheep) on their property for many years. They had agreed to sell 15 acres from their rural property to a Purchaser.
The purchaser indicated that he intended to run sheep on the property and has been advised that the GST farmland exemption will apply. That is, no GST is payable in addition to the purchase price.
At first glance this looks to be a reasonable proposition, as the seller has run a farming business for more than five years and the purchaser wishes to run sheep on the property.
The real issue to enable you to determine whether the GST exemption will apply to this sale, is whether the purchaser intends to carry on the business of primary production being the carrying on of a business of maintaining animals for the purpose of selling them for their bodily produce and natural increase.
The issue is whether the running a few sheep on a small block of land amounts to the purchaser “Carrying on a business”.
Factors which the Courts have indicated are relevant in indicating whether a primary production business is being carried on include:
a. Does the activity have a significant commercial purpose or character;
b. Does the taxpayer have more than just an intention to engage in business;
c. Is there repetition and regularity of the activity;
d. Whether the activity is similar to other businesses carried on in that line of business;
e. Is the activity planned, organised and carried on in a businesslike manner;
f. Is the activity directed at making a profit;
g. What is the size scale and permanency of the activity; and
h. Is the activity better described as a hobby, form of recreational or sporting activity?
In the above factual scenario, the running of a few sheep is unlikely to satisfy the commerciality test of “carrying on a business” and accordingly the sale would not be GST free for the sale of farm land.
At Everingham Solomons we have the expertise to advise you on all of your property needs because Helping You is Our Business.
The State Revenue Legislation Further Amendment Act of 2020 has received Royal Assent.
In short, the Act indicates that any discretionary trust or family trust or testamentary trust that owns or will purchase residential property, may be subject to surcharge land tax and surcharge stamp duty.
This means that if a discretionary/family/testamentary trust is purchasing residential property, it will be charged an additional 8% of the market value of a property by way of surcharge stamp duty.
In addition, surcharge land tax over and above the standard rate, is increased by 2% on the unimproved value of the land.
Land tax is particularly nasty as it is levied each year on the 31 December.
Further there is no threshold amount when a trust is involved and land tax is payable on the entire unimproved value of the land annually.
If you have a discretionary/family/testamentary trust, it is more than likely you will receive a letter from Revenue New South Wales indicating that a trustee of a discretionary trust/family trust is deemed to be a foreign person and potentially subject to such additional surcharge taxes.
There is, however, a way to avoid the surcharge.
This involves reviewing the terms of the Trust Deed and if appropriate, amending the trust deed (provided it has an amendment power) to exclude current and future foreign person beneficiaries and ensuring that such amendments to the trust deed are irrevocable.
If you wish to take advantage of that opportunity however, you must make the amendment prior to the 31 December 2020.
If you do not make that change to your trust deed, your trust will not be able to avoid the surcharge duties and taxes.
Revenue New South Wales are regularly requesting copies of trust deeds to check whether those amendments have been made.
If you have a discretionary/family/testamentary trust and own or intend to own residential property, you need to get urgent legal advice.
At Everingham Solomons we have the expertise to assist you because Helping You is Our Business.
If you own a Family Trust that owns residential land in NSW or intend to purchase residential land and/or premises using your Family Trust, please note that Revenue NSW considers a Family Trust to be automatically subject to the foreign person surcharge on stamp duty and Land Tax.
The surcharge for land tax is 2% above the usual charge of 1.6%.
The surcharge for a foreign Person purchasing land is 8% of the purchase value.
Land Tax is charged every year so it is a particularly penal and unfair provision. It takes the annual land tax charge to 3.6% per year. If you had land with a land value of the $400,000.00, your annual land tax bill would be $14,400.00!
Stamp duty on the purchase of a $400,000.00 property would increase from $13,432.00 to $ 45,432.00, a 32,000.00 penalty!.
Most Family Trusts deeds, have a very broad definition of a “beneficiary”. Revenue NSW has taken the view that if the definition in your Trust Deed could possibly permit a benefit to be paid to a foreign person (even if that has never occurred or is never likely to occur), it will deem the Trust to be automatically subject to foreign person surcharge on stamp duty and/or Land Tax.
You may or may have already received a letter from Revenue NSW advising that your Family Trust may be subject to the 2% land tax surcharge.
There is however a way to avoid the surcharges, provided you don’t have foreign persons as beneficiaries.
Most Family Trust Deeds permit the terms of the Trust Deed to be amended. The solution is to exclude foreign persons as potential beneficiaries of your Trust.
Each terms of each Discretionary Trust Deed are different and accordingly a thorough reading of the Trust needs to be undertaken to enable the amendments to be made to protect your interest.
At Everingham Solomons, we have the expertise to assist you in all of your legal matters because Helping You is Our Business.
It is said, “The only constant in life is change”. How true, particularly in law where legislation seems to be constantly changing.
For those of you who are looking to develop residential property or purchase new residential property you need to be aware of the new requirements which came into effect on 1 December 2019.
A developer is now required to provide a Disclosure Statement which should be attached to the Contract.
The Disclosure Statement needs to include:-
• A draft plan of the property prepared by a Registered Surveyor showing the lot number, location and area;
• A draft floor plan and location plan of the property;
• Any proposed bylaws, development Contract (including strata development contract) and management statement; and
• Schedule of finishes to be included in the property.
Also of particular note are the following changes:-
• The Cooling Off period for a purchase “off-the-plan” has been extended from 5 business days to 10 business days;
• If there are any material changes to the subject property the developer is required to serve a “notice of change” which may trigger a
right for the purchaser to rescind or claim compensation of up to 2% of the purchase price from the developer. The purchaser may only
rescind if the change was such that the purchaser would not have entered into the off-the-plan Contract and they would be materially
prejudiced by the change;
• The purchaser is not required to settle earlier than 21 days after receiving copies of the registered plan and other documents
associated with the plan; and
• The deposit paid by the Purchaser must be held in a Trust Account or Controlled money account (investment) by a Real Estate Agent,
Licensed Conveyancer or Legal firm pending completion and cannot be released to the developer.
The above seem to imply that the legislation relates to strata unit developments. That is not the case as the legislation also includes vacant land which is capable of having a residence constructed on it.
Everingham Solomons can assist whether you are a purchaser or developer because Helping You is Our Business.
The position of a trustee of a trust is an important position which is governed by State and Commonwealth Legislation and Case Law.
Trustees of a family trust have many duties. Broadly speaking, these include the trustee:
• Acting in good faith;
• Acting personally;
• Acting unanimously where multiple trustees are involved;
• Not being dictated to by others such as beneficiaries;
• Having a duty to consider how distributions should be made and to whom; and
• Having a duty to avoid fettering of any discretion they have.
So can a trustee appoint someone else to perform the trustee’s duties, like an attorney? It is not uncommon to see where a Trustee has executed a power of attorney in favour of third party.
The law is that a trustee cannot delegate these duties unless permitted by the Trust Deed, legislation or a Court Order.
The office of trustee is viewed by the Courts as one of trust and personal confidence.
A trustee must not execute a Power of Attorney to a third party granting the attorney, general or wide powers relating to the authority of the trustee. A trustee who does this will be acting outside the scope of the trust and the law and any transaction entered into utilising such Power of Attorney is likely to be unenforceable.
Section 10 of the NSW Powers of Attorney Act states that a prescribed Power of Attorney does not confer authority to exercise any function as a trustee.
Accordingly, a trustee cannot delegate their powers and authorities.
There is a statutory exception with respect to trustees of a self-managed super fund.
Trusts, trust deeds, trustee duties and the law surrounding them are complex.
At Everingham Solomons, we have the expertise to assist you because Helping You is Our Business.
Quite often, land developers place restrictive covenants on land. For example the restrictive covenant be that: the land shall only be used for residential purposes, the buildings must be of a certain size or of a certain material or type of construction or design.
Are these restrictive covenants enforceable? The answer is sometimes yes and sometimes no.
Let’s take another example. If you purchase land in a subdivision which contains a restrictive covenant that permits the erection of a single residential building only, can you legally erect a multiple occupancy dwelling such as a duplex or triplex?
Despite what most people think, if the Local Government zoning laws permit multiple occupancies and a Development Consent to build multiple occupancies is granted by the Local Council, then the Council’s Development Consent overrides the restrictive covenant on the land. Therefore the restrictive covenant is ineffective and you can build a multiple occupancy dwelling on the land.
This is because of the provisions of Section 28 of the Environmental Planning and Assessment Act 1979 which clause is mirrored in Clause 1.9a of the Tamworth Local Environmental Plan, provides that to enable any development that has been approved by the Local Council, any covenant or other restriction on use of the land, shall not apply.
The aim of the legislation is to permit any development that is permitted by the zoning laws to be carried out irrespective of private covenants.
Section 28 however only affects a restrictive covenant to the extent that the covenant conflicts with a planning instrument or a consent.
Accordingly, Section 28 will not affect a restrictive covenant where the covenant does not conflict with an environmental planning instrument or development consent. For example in a restrictive covenant in relation to design of a structure, the type of fencing, the type of lawns etc, will remain valid and enforceable.
Land Law is complex.
At Everingham Solomons we have the expertise to assist you in all of your land dealings because Helping You is Our Business.