The Powers of Attorney Amendment Act 2016 and the Power of Attorney Amendment Regulations 2017 have come into effect as and from 1 May 2017.
The updates provide the long awaited ability to appoint multiple ‘alternative’ attorneys.
This is particularly useful where clients wish to appoint their spouse as their attorney in the first instance, and only on the death or incapacity of that spouse, then an appointment of two or more of their children. Although this was previously possible by executing multiple enduring powers of attorney documents with special conditions, it is now possible to simplify this arrangement in a single document.
The updates also provide minor alterations to the forms, including the removal of the revocation clause in most instances. Unless specifically stated in the document, the execution of a new enduring power of attorney will revoke all previous appointments regardless of whether those appointments were made under the Instruments Act or the Guardianship and Administration Act or the Powers of Attorney Act.
Enduring powers of attorney remain an essential part of all estate plans. Should you wish to discuss any of the new changes please contact Jesse Rankine on 03 5226 4106 or by email at email@example.com.
If a person dies without signing a valid will they die ‘intestate’. This means that the distribution of their estate will be made in accordance with the rules of intestacy.
These rules can be simple or complex depending on your family situation.
Two common misconceptions are that, if you die without executing a will, then:
1. Your estate will pass to the government; or
2. Your surviving spouse will inherit 100% of the estate.
Although both scenarios are possible, both are relatively rare. One requires the person to have died leaving no next of kin and the other requires the person to have died leaving a spouse but no children.
It is more common for a person to die leaving both a spouse and children. The current intestacy rule for this situation is as follows:
In the above example, the child obtains significantly more than the spouse. Most people would want the opposite.
Perhaps this is the reason why the new Administration and Probate and Other Acts (Succession and Related Matters) Bill 2016 now proposes to change the rules of intestacy. Under the new rules if a person dies leaving both a spouse and children the division will be as follows:
This means that, typically, 100% of the intestate’s estate will pass to the surviving spouse unless there are children from other relationships.
The introduction of the above Bill illustrates the importance of having your own will as opposed to leaving the distribution of your estate to the default rules of intestacy. Because the rules are updated from time to time, it is impossible to know what the rules will be at the time of your passing. It would be naive to assume that the rules will not change again at some point. The only way to be completely confident of how your estate will be dealt with is to have your will prepared and executed with a suitably experienced solicitor.
Should you wish to know more on these issues, please contact Jesse Rankine on 03 5226 4106 or by email at firstname.lastname@example.org .
For many families of children with severe disabilities the future can represent a time of uncertainty and angst. As parents age, questions as to the ongoing care and accommodation needs of their adult child can loom large.
In 2006, the Federal Government amended the Social Security Act 1991 (Cth) (‘the Act’) to allow for the creation of what is known as a ‘Special Disability Trust’. The purpose of a Special Disability Trust is to enable families to provide for the future needs of a person with a severe disability or medical condition. This can be done by way of contributing, for example, a home and money to a Special Disability Trust, established for the benefit of a specific person, known as the beneficiary. A beneficiary is only entitled to have one Special Disability Trust established for their benefit.
In broad terms, a Special Disability Trust can provide for reasonable accommodation needs (which may include the payment of rent or the purchase of a primary residence), reasonable care needs (such as mobility aids, modified vehicles, communication devices etc), medical and dental expenses (including health insurance) and limited discretionary expenditure of up to $11,000 per year. The discretionary expenditure can be used to meet additional costs relating to the health, wellbeing, recreation, independence and social inclusion of the beneficiary.
A beneficiary may have up to $636,750 in trust assets (as at 1 July 2015 and indexed annually to the CPI) before their Disability Support Pension, or other social security payments, are affected. In addition, a home can be contributed to a Special Disability Trust, and provided it is the beneficiary’s primary residence, it will be exempt from asset test assessments. By way of example, parents could contribute a house for their adult child to live in as their primary residence, along with $500,000 for their care. In such a scenario, the house would be exempt from assessment and the $500,000 is under the current concessional limit, therefore there would be no effect to the beneficiary’s receipt of a Disability Support Pension.
In order to qualify for a Special Disability Trust, a beneficiary must meet eligibility criteria and the definition of severe disability as provided for by s 1209M of the Act. An impairment which qualifies the beneficiary for receipt of a Disability Support Pension is an example of eligibility, however there are a number of specific criteria which must be met, and which are assessed by Centrelink.
Not any trust can be classified as a Special Disability Trust. A Special Disability Trust must be established by trust deed which complies with clauses as set out in the Model Trust Deed provisions under the Act. Such a trust can be established whilst family members are still alive or alternatively as a testamentary trust established through a Will, in which case the Special Disability Trust will not come into effect until such time as the person making the Will is deceased. Establishment of a trust whilst family members are still alive can provide substantial taxation and social security benefits by way of generous gifting concessions of up to a combined sum of $500,000 for eligible immediate family members of the beneficiary.
A Special Disability Trust terminates on the death of the principal beneficiary and the assets of the trust will then vest in the residual beneficiaries named in the trust deed. A trust can also end at an earlier point in time if all the assets are fully expended.
Special Disability Trusts must comply with strict rules, reporting and auditing requirements and do not suit the needs of all families. However, if you believe a Special Disability Trust has the potential to be of assistance to you and your family, and provide peace of mind then please contact us to discuss this further.
The Powers of Attorney Act 2014 (“ the Act ”) introduced significant changes to enduring powers of attorney in Victoria. The changes under the Act, outlined below, came into force on 1 September 2015.
Importantly, the Act does not invalidate any pre-existing enduring power of attorney and it does not make any changes to enduring powers of attorney for medical treatment.
There is some new terminology in the Act. The person giving the power is now referred to as a ‘principal’ (previously donor). General powers of attorney are now referred to as ‘non enduring powers of attorney’.
‘Enduring Power of Attorney’ (“EPA”)
The Act has introduced a new enduring power of attorney form which is entitled ‘Enduring Power of Attorney’ or ‘EPA’. EPA combines the documents which were previously known as ‘ Enduring Power of Attorney (Financial) ’ and ‘ Enduring Power of Guardianship ’.
The Act now labels guardianship matters as ‘personal matters’. Personal matters have been expanded to include:
Under the Act it is now possible to appoint more than one personal attorney in the same manner that was previously only available to the appointment of financial attorneys.
Additionally, the Act now allows for the appointment of ‘majority attorneys’.
Although the new EPA form now allows for the appointment of financial attorneys and personal attorneys in the one document, there are situations where separate documents are preferable. Fortunately, the Act provides flexibility on whether a combined document or separate documents are used.
The Act has amended the witnessing requirements for EPAs. Previously, two witnesses were required to be present, with one being authorised to witness statutory declarations. It is now a requirement that one of the two witnesses is authorised to take affidavits or be a medical practitioner.
There is now a prohibition on the witnesses being related to the principal or to any attorney appointed in the EPA. There is also a prohibition on the witnesses being care workers, health providers or accommodation providers for the principal.
Furthermore, there is a prohibition on the principal appointing a care worker, health provider or accommodation provider as their attorney. The Act is referring to
care workers and accommodation providers. Centrelink carer’s pensions are specifically excluded from consideration when determining whether an attorney is a care worker for the principal. Similarly, a principal that resides with an attorney is permitted provided the attorney is not acting as a professional accommodation provider for the principal.
A supportive attorney is a person who is authorised to exercise any of the following powers:
Supportive attorneys are unable to assist in ‘significant financial transactions’ (defined generally as a transaction dealing with land or finances in excess of $10,000.00). Additionally, a supportive attorney is only able to exercise their powers whilst the principal retains capacity.
The Act now outlines the duties of an attorney. These duties are as follows:
It is now an offence for an attorney to obtain or to use an EPA to obtain financial advantage or to cause loss to the principal. A fine of up to 600 penalty units or up to 5 years imprisonment can apply where an attorney is guilty of an offence.
Additionally, an attorney who breaches their duties and causes loss to the principal will be liable to indemnify the principal or the principal’s estate.
It is important to note that the new offence provisions under the Act will apply to all attorneys, whether authorised under the (new) Act or the Instruments Act 1958 .
Finally, attorneys are now unable to enter into ‘conflict transactions’. A conflict transaction is simply a transaction that conflicts between the interests of the principal and the attorney, or a relative, associate, or close friend of the attorney. A principal may authorise an attorney to conduct conflict transactions in the EPA document and it is therefore important to consider what type of conflict transactions should be permitted at the time of preparing the EPA.
Enduring powers of attorney remain an essential part of all estate plans. Should you wish to discuss any of the new changes or would like to know more on these issues, please contact Jesse Rankine on 03 5226 4106 or by email at email@example.com .