News & Events

  • Queensland now the latest State to follow the recognition of de facto and step-children’s rights

    Queensland now the latest State to follow the recognition of de facto and step-children’s rights

    A few weeks ago we wrote about the Victorian Court of Appeal recognising the rights of de facto children in the case of Scott-Mackenzie v Bail. The case concerned an applicant whose mother was in a domestic relationship with the deceased for 40 years until the mother’s death years prior to the deceased’s death. The applicant bought a claim under Part IV of the Administration and Probate Act 1958 (Vic) in a (bold and successful) attempt to widen the Courts interpretation of “Step Child” to including one where the parties were not married.

    This case was handed down in May this year.

    Queensland has now followed by recently introducing major changes to the Succession Act 1981 (Qld).

    Two major changes include:

    1. A new section 15B being inserted which sets out that the end of a de facto relationship revokes any gifts to the de facto partner and the appointment of the de facto partner as executor – this in effect treats de facto relationships the same as marriages.
    1. The expansion of the definitions of “Step Child” contained in section 40A for the purposes of making a family provision claim. A step child/step parent relationship is deemed to have ended upon the ending of the de facto relationship and not merely because the step child’s parent died before the deceased person (if the de facto relationship subsisted at the time the parent died) or if the deceased person remarried or entered into another relationship or de facto relationship after the death of the stepchild parent.

    The “movement” towards highlighting the changing familial values in Australia all started with the Western Australian case of Blyth v Wilken [2015] WASC 486 which was only handed down very recently in 2015 and at the time, this was truly a landmark decision of its kind Will in Australia.

    In the case of Blyth v Wilken, the deceased left a Will dated 2 December 2003 giving the bulk of his estate to “my de facto wife Katherine Mary Murray”.

    The deceased and Ms Murray ended their relationship in 2011 and the deceased subsequently died in 2014 without changing his Will.

    The Court decided that Ms Murray did not receive the gift under the Will because her relationship with the deceased had ended. The Court recognised that the deceased had only intended Ms Murray to receive the gift if she continued to be his de facto spouse – and not in any other instance. In other words, the Court held de facto relationships on the same platform as marriages when it came to the interpretation of a Will.

    At the time the judgement in Blyth v Wilken was handed down, there was a lot of scepticism by commentators that this judgement would be appealed or otherwise challenged in the future.

    With Victoria and Queensland following the trend towards recognising these relationships, it may be safe to say at this stage that other Australian jurisdictions are likely to follow down the path of recognising  de facto and step children’s rights.

    To make sure that your will and estate plan takes care of your loved ones, please contact us.

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  • Litigation enlivened by Facebook "liking"

    Litigation enlivened by Facebook "liking"

    Gone are the days where defamation cases solely concerned allegations in newspaper articles or remarks on the radio. Now Australian courts are hearing trials over tweets, feuds over Facebook and litigation over Linkedin. But a Swiss court has taken it one step further making a finding of defamation against a Facebook user for liking a post.

    A statement from the Zurich district court has revealed that a 45-year old man has been fined for liking what a judge deemed to be defamatory Facebook posts.

    The comments accused Erwin Kessler, the president of an animal rights group, of racism and anti-Semitism. The posts arose on Facebook during discussions about which animal activist groups should be allowed to participate in Veganmania Schweiz, a large vegan festival in Switzerland.

    The posts claiming that Kessler was racist and that his welfare group was a neo-Nazi association were liked by several Facebook users, including the defendant.

    Kessler commenced legal action against several people who contributed and participated in the posts. Several users who posted on during the discussion were found guilty of defamation, but the defendant is believed to be the first person to have been fined for simply “liking” such comments. Court documents reveal that the defendant’s “liking” of the posts were an “affront to [Kessler’s] honour” and was a clear endorsement of the “unseemly content”.

    Social media defamation cases are going viral in Australia. Last year a Facebook post insinuating that the plaintiff was a paedophile cost one Facebook user $150,000. Justice Gibson of the NSW District Court, warned social media users that:
    The anonymity instantaneous and wide-ranging reach of the Internet and social media make it a dangerous tool in the hands of person who see themselves as caped crusaders or whistleblowers, or alternatively want to ‘troll’ other members of the community for the purpose of gratifying their own wishes or fears or for the purpose of gaining attention”

    But the decision of the Swiss court reinforces the need for caution in maintaining a social media presence. While Australian courts have so far restricted finding the requisite ‘publication’ of defamatory remarks to those who post, it may not be long before “liking” results in more than Facebook notifications.

    Written by Laura Scotton. If you would like to more about defamation, please contact us.

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  • World Elder Abuse Awareness Day – 15 June 2017

    World Elder Abuse Awareness Day

    15 June 2017 was World Elder Abuse Awareness Day — a day designated by the United Nations General Assembly to raise awareness on the potential mistreatment and abuse inflicted on members of the elder community.

    As the number of older persons continues to steadily increase among the Australian population, so does the risk of elder abuse.

    What is elder abuse?

    The World Health Organisation defines elder abuse as:

    “a single, or repeated act, or lack of appropriate action, occurring within any relationship where there is an expectation of trust which causes harm or distress to an older person. Elder abuse can take various forms such as physical, psychological or emotional, sexual and financial abuse.”

    World Health Organisation (WHO – 2002)

    It is apparent therefore that elder abuse can take a number of forms and is not just limited to financial or psychological abuse.

    How common is elder abuse?

    Various studies (primarily conducted in Victoria, Queensland and New South Wales and which were based mostly on anecdotal evidence) suggest that it is more common than we realise.

    The available evidence suggests that prevalence of elder abuse varies across different types with physiological and financial abuse being the most commonly reported types of abuse recorded. Women are more susceptible to elder abuse than men. There has been no reported study conducted in the ACT on elder abuse to date.

    On an international level, the United Nations estimates that based on the available information, 5 to 10 per cent of the elderly population may experience some kind of financial exploitation.

    Signs of Elder Abuse

    Very broadly, some warning signs of elder abuse might include the following:

    • Control of access to bank accounts and other household money;
    • Denying access to internet, phone or transport or withholding mail;
    • Denying access to other family members or support persons;
    • Moving into the home of an older person (with or without consent) and failing to contribute to household costs;
    • Coercing or influencing the older person to sign paperwork including loan documentation, Wills, Loan Agreements and Powers of Attorney;
    • Neglect or not giving the person the care and medical attention they require;
    • Using a power of attorney of an older person inappropriately.

    Part of raising awareness of World Elder Abuse Awareness Day includes understanding and being able to recognise the signs of Elder Abuse.

    What is being done about Elder Abuse Australia Wide?

    Early last year, the Australian Law Reform Commission (ALRC) launched a national inquiry and on Thursday 15 June 2017 (to coincide with World Elder Abuse Awareness Day) released its final report on the topic.

    In its report, the ALRC has urged the Federal Government to seize a “once in a lifetime opportunity” to stop the financial and physical abuse of the elderly. The report contains 43 recommendations for the Attorney-General, George Brandis, to consider. The recommendations include:

    • proposing an incident response scheme, requiring aged care providers to report allegations of physical, sexual, and financial elder abuse to an independent oversight body
    • putting in place guidelines for financial institutions (including amending the Code of Banking Practice) to ensure banks take reasonable steps to prevent the financial abuse of vulnerable customers
    • putting in place a national register of enduring powers of attorney to prevent abuse of the document

    What can you do to prevent Elder Abuse?

    Be aware, raise awareness and know how to recognise (and when to report) Elder Abuse

    Recognise the warning signs in the older person, in the caregiver, in the home and among family. The majority of abusers are those in close contact with the older person and usually family. Of family member abuses, about 50% are reported to be adult children and 20% to be intimate partners of the older person. As mentioned above, the data indicates that women are more susceptible to elder abuse than men.

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  • Reference Checking

    The importance of reference checking

    Below is a short case study around the importance of reference checking, and what can happen if you don’t keep accurate records.

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  • WHEN CAN AN EMPLOYER DIRECT A WORKER TO ATTEND A MEDICAL APPOINTMENT

    When can an employer direct a worker to attend a medical appointment?

    It is a well-established employment law principle that a worker must follow the lawful and reasonable instructions of their employer.

    A recent decision of the Federal Court in Grant v BHP Coal[1] has upheld the dismissal of a worker for refusing to undergo a medical examination by a company-nominated doctor.  A Queensland boilermaker, who had undergone surgery for a work-related shoulder injury, was cleared by his GP as “fit to return to normal duties” after 8 months’ sick leave.  His superintendent directed him to see a company-nominated occupational physician to assess his fitness before he resumed work.  The worker refused and was eventually sacked.

    The Court did not have to consider whether an employer has an implied contractual right to order a worker to undergo a company medical examination (in the sense that it was not an unlawful direction and, accordingly, fell within the scope of the contract of employment).  Here, the broad obligations under Queensland’s coal mining legislation for mine safety and management applied and makes it clear that a mine worker could be required to undergo a medical examination in cases where there might be a risk to the safety and health of the worker and other mine workers because of his injury.

    The case does not stand for the general proposition that every direction by an employer to a worker to attend a medical examination with a doctor chosen by the employer will be reasonable.  Whether such a direction is reasonable will depend on the circumstances of each case.  For example, a worker may only have been sick for a short period of time, or may have already given sufficient information to their employer about their illness.  In this circumstance, it is unlikely that a direction to attend a specific doctor would be reasonable.

    If an employer was uncertain of a worker’s health status and had genuine concern as to their fitness to perform their job safely, a lawful direction to the worker to attend a medical assessment could be given as it could be argued that there is a genuine and legitimate operational reason for doing so.

    Employers have strict and onerous obligations to ensure the health and safety of their workers while at work.  Because of these obligations, various courts and tribunals have recognised, in some circumstances, an employer has a right to compel or demand a worker attend an independent medical assessment so they can determine the worker’s fitness for their duties.  Any refusal by the worker to do so may expose them to the risk of disciplinary action up to and including dismissal.

    An employer cannot exercise this right arbitrarily; they have an obligation to provide “procedural fairness” in the particular circumstances of the case.  This includes the employer giving the worker adequate notice of the medical appointment that they require them to attend.  Furthermore, procedural fairness also requires that the worker be allowed the opportunity to secure their own medical opinion if they do not agree with the opinion provided by the employer’s doctor.

    The doctor conducting the assessment should be provided with a thorough description of the work duties to enable them to assess appropriately whether or not the worker’s disability, illness or injury will affect their ability to undertake those duties.  The medical assessment will consider whether the worker is medically fit to perform the inherent requirements of their job and if any adjustments could be made to the role to enable the worker to perform their position.  It would be unreasonable for an employer to embark on a “fishing expedition” by asking unnecessarily broad questions of the doctor, such as asking for a complete medical history when the medical issue is more confined.

    Can an employer obtain medical reports on their workers without their knowledge or consent?

    The short answer is NO.

    The federal government’s Merit Protection Commissioner has recently ruled[2] on a “secret medical” on a paper-based assessment from a doctor of a public servant who had not been informed that his mental health was being examined.  The public servant had not worked since 2011 as a result of claimed bullying and harassment suffered whilst employed by the Department of Human Resources.  A doctor’s report was commissioned to assess work fitness and was done without the public servant’s knowledge or consent.  The Commissioner found that the Department breached its legal obligations when it handed the public servant’s medical file to the doctor asking for an assessment.  The Commissioner’s office ordered the Department to discard the “file assessment” on its employee finding that it failed its legislative requirement to act in a fair and reasonable manner.

    Does an employer have the right to attend a medical appointment with a worker?

    The short answer is NO.

    The current advice on the Fair Work Ombudsman’s website is:

    Employers attending medical appointments

    We don’t consider it reasonable for an employer to go to a medical appointment with an employee unless an employee requests this.

    We also don’t consider it reasonable for an employer to contact the employee’s doctor for further information.

    Source reference: Fair Work Act 2009 (Cth) Section 107

    [1] Grant v BHP Coal Pty Ltd [2017] FCAFC 42 (10 March 2017)

    [2] “’Secret medicals’ on public servants unlawful, authority rules”: The Canberra Times 16 March 2017, page 8

    Written by Bill McCarthy, Special Counsel. If you have any questions about this article, or about your rights when it comes to medical appointments, please contact us.

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  • Public servants' right to actually work - Bradley Allen Love Lawyers

    Public servants' right to actually work, versus a Dickensian-era employment law

    An old legal rule allows employers to keep their employees idle at work.

    Imagine you are a cook. You just landed your dream job as a personal chef. You arrive at your employer’s home ready to impress but receive a message saying your employers will dine out. You take the wages left on the kitchen bench and leave disappointed. The same thing happens again every day of your first week of work until, finally, you snap, threatening to resign unless you are given an opportunity to cook. Your employer replies: “Provided I pay my cook her wages regularly, she cannot complain if I choose to take any or all of my meals out.”

    These words, quipped by judge Lord Cyril Asquith, reflect a general rule developed by British courts in the mid-19th century: an employer has no obligation to provide their employees with work. Why, though, you might joke, would an employee ever ask their employer for more work?

    Imagine a month passed and you still haven’t cooked for Asquith. Deciding enough is enough, you interview for a new position and are asked to prepare a steak. You overcook it. When employees are denied the opportunity to perform the job they were hired for, they will lose skills – whether those are the skills of a chef or a capable public servant. This old rule is particularly concerning in the modern era, when the job market is competitive and prospective employers almost always want details of a candidate’s experience.

    Public servants are among those who might feel this most acutely because their employment, promotions and performance reviews depend heavily on meeting performance targets and metrics. It is easy to see how an Australian Public Service career could be derailed when a public servant is denied work. Additionally, given it is difficult to terminate government employment, some managers might be tempted to simply stop giving their employees work instead.

    Fortunately, the courts are sympathetic to employees in this predicament. Numerous exceptions were developed to address the problems arising from this rule, typically taking the form of implied terms in employment contracts.

    First, the courts have held that employment contracts for public performers – including actors, sport stars or even cartoonists – impliedly require the employer to give their employee reasonable opportunities to perform. However, given few people conduct their careers in the public eye, the value of this exception is limited.

    Second, courts have found that contracts for skilled employees contain a limited requirement to provide a reasonable amount of work. This exception applies to apprentices, trainees and professionals with continuing practice obligations (it’s not the first time lawyers carved out an exception for themselves). However, this caveat is not a blanket obligation to provide work – as Arnold Mann, a surgeon in Canberra, discovered in 1981 when the court found his employer was not required to provide him with patients to operate on when no patients needed operations (Mann v ACT Health Commission).

    Third, when an employee receives performance-based pay, courts have found employers must provide a reasonable amount of actual work. This exception most commonly applies to employees who receive a proportion of their pay from commission. The amount of work an employer is required to offer will depend on the circumstances, but, generally, courts have found the obligation is to provide enough work to give them an opportunity to earn a commission.

    Fourth, when an employee is appointed to perform specific duties, courts have found that a failure to provide work of the kind contemplated amounts to a breach of contract. For example, if it is contrary to the contract of a chief executive to undertake general office cleaning, it follows that it is also against their contract to not have work at all. This is highly relevant in the APS, given federal government employees are frequently employed to positions with well-defined duties and obligations.

    There are other reasons why these rules are particularly applicable to public servants. APS employees must adhere to obligations found in the Public Service Act’s code of conduct. It is unclear how these obligations might affect the general rule’s application in this context. The code could be interpreted as a two-way street: if the public servant must perform work effectively, then the public service must provide work to be effectively performed. Alternatively, if a public service manager fails to give an employee work, the manager may breach the code by failing to ensure “effective performance from each employee”. The employee could then lodge a code of conduct report against their manager.

    An extra option open to an employee who finds themselves denied work is to pursue a complaint under workplace bullying and harassment protections. Though legally speaking these protections are not exceptions to the general rule, practically workplace bullying and denials of work can go hand-in-hand. There are several remedies available to bullying victims, including stop bullying orders. If it is accepted that denying an employee work constitutes bullying, it follows that a stop bullying order could take the form of an order to provide them with work.

    It would be fair to question the purpose of this old rule if judges are going to find exceptions at every turn. The High Court itself has expressed similar sentiments. In 2005, justices Ian Callinan and Dyson Heydon queried “the current relevance of judicial pronouncements made more than 60 years ago in the United Kingdom”.

    Given the right case, it is possible Asquith’s quip will be overruled. But, until that time, a little piece of Dickensian England remains part of Australian employment law. Indeed, employees asking for work might feel a little like Oliver Twist asking the master for more gruel.

    John Wilson is the managing legal director at Bradley Allen Love Lawyers and an accredited specialist in industrial relations and employment law. He thanks Robert Allen and Kieran Pender for their help in preparing this article. 

    First published in the Canberra Times.

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  • Preparing to sell your business bw

    Preparing to sell your business

    There will come a point when a business owner wishes to sell their investment. Whether for personal or financial reasons there are steps all owners can take to prepare their business for sale; to minimise tax, transactional costs and stress, and maximise the return.

    Grooming your business for sale can streamline the sale process. Even if the sale doesn’t proceed, you will have a better understanding of the assets that you hold and allow you to consider alternative succession plans. Below are some fundamental matters to ask yourself when selling your business.

    Consider the sale from the buyer’s perspective. If you were going to buy the business what would you want to know?
    First, understand what you are selling. This may seem obvious; you’re selling your café, what more is there? Using the café as the example, there are a number of assets that may be included or excluded from the sale:

    1. The business name;
    2. The premises; the Lease;
    3. Intellectual property rights;
    4. Stock-in-trade;
    5. Plant and Equipment; and
    6. Website and Social Media Accounts.

    Get a clear asset register, have access to your depreciation register, know what is encumbered, leased or hired. Prepare your Landlord.

    Understand these obligations early so you know what “hoops” you need to jump through to sell.

    Second, make yourself redundant – the buyer wants to know that the business can run effectively without you, otherwise the business’ value is likely wrapped up in your ongoing employment.

    Third, take practical steps now (even if you aren’t sure if you want to sell):

    1. understand what value your assets have (asset registers should include licences and intellectual property rights);
    2. document your procedures or policies (manuals about how the business operates will assist the new buyer);
    3. update all maintenance registers;
    4. maintain a list of your suppliers with copies of the relevant contracts or terms;
    5. make sure your accounts and financial statements are up to date (these can provide you and the buyer with a true understanding of the value of the business); and
    6. know where you have given personal guarantees.

    Be clear that any offer or discussions are “subject to contract” so you aren’t bound by an ill-informed handshake deal. Be careful with all representations you make. Before releasing information, consider a Non-Disclosure Agreement. In this path a business broker can be very instructive.

    Finally, seeking financial and legal advice early will assist structure the sale to minimise tax and to create a plan.

    First Published in B2B magazine.

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  • Victoria recognises the rights of de facto children

    Victoria recognises the rights of de facto children

    The Victorian Court of Appeal recognised earlier this month in the case of Scott-Mackenzie v Bail that stepchildren of a de facto couple have the same rights as of married couples for the purposes of Family Provision Applications. The effect of this case is significant (at least in Victoria, for now) as it overturns the common law principal that a stepchild/step-parent relationship is created and recognised only when the parties are married.

    The case concerned a claim brought by a stepchild pursuant to Part IV of the Administration and Probate Act 1958 (Vic). Part IV of the Act allows an “eligible person” to bring a claim for provision (or further provision) from the estate of a deceased person. The definition of eligible person, contained in section 90 of the Act includes the following:

    (c) a stepchild of the deceased who, at the time of the deceased’s death, was—

    (i) under the age of 18 years; or
    (ii) a full-time student aged between 18 years and 25 years; or
    (iii) a stepchild with a disability;

    In this case, the applicant’s mother was in a domestic relationship with the deceased for 40 years until the applicant’s mother died in 2001. Following the death of the applicant’s mother, the deceased commenced a domestic relationship with another woman and when he died, left his entire estate to her. The estate was worth just under $1 million.

    The Court stated the following in relation to the word “stepchild”:

    “In modern life, domestic partnerships are no longer uncommon. They have become considerably more common than they were, say, 30 years ago. Domestic partnerships can, and frequently do, have all of the appearances of partnerships that are marriages and have been recognised by the Parliament as a legitimate alternative to marriage. The fact that the word ‘stepchild’ came into existence at a time before domestic partnerships became more common explains why definitions have previously referred to either an original marriage and a subsequent marriage, or merely a subsequent marriage”.

    It is important to note that the Court found the stepchild/ step-parent relationship of de facto couples is broken by separation of the couple, not by death of one of the partners. Therefore, if the deceased and the applicant’s mother had separated before her death, the stepchild/ step-parent relationship would have been broken.

    It is important to note that this is a Victorian case and therefore, Victorian law. It is uncertain whether the ACT or NSW Supreme Courts will apply this case should a similar situation arise. In Queensland, section 40A of the Succession Act continues to refer to a stepchild/step-parent relationship as one arising only by way of marriage.

    The takeaway from this case is that you may need to carefully consider children from a de facto partner when writing your Will or, if you are the child of such a relationship, to take considered advice in relation to any potential family provision claim.

    To make sure that your will and estate plan takes care of your loved ones, please contact us.

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  • Canberra Employment Obligations

    Your rights and obligations under Australian Employment law

    Whether you are moving to Canberra as an employee or employer, your future employment relationships are likely to be at the forefront of your mind. In 2009, significant changes were made to Australia’s industrial relations law which will affect those relationships. Given strong penalties are awarded for non-compliance, it is important that you are familiar with your rights and obligations under Australian employment law.

    Here are five things you need to know:

    1. National Employment Standards

    With very few exceptions, workplaces in Australia are governed by the Fair Work Act 2009 (Cth). Therefore, it is likely your future employment in Australia will be subject to the National Employment Standards (NES) contained in that Act. Covering areas from maximum working hours to leave, these 10 entitlements represent a minimum standard that no employment contract can fall below.  Failure to comply with these standards can leave contractual terms voidable and result in considerable penalties being awarded against the employer.

    2. Wages

    Pay is central to every employment relationship and Australia has a famously generous national minimum wage – $17.70 per hour in 2017. But this is not the end of the story. Under the 2009 changes, the wages received by many employees are determined by industry awards. These set base pay rates for an industry according to the nature of work undertaken and frequently exceed the national minimum. Award rates are updated regularly (every six months in some industries), so it is essential to regularly check the applicable award.

    3. Unfair Dismissal

    Employers should be cautious of, and employees familiar with, the right of a recently dismissed employee to make an application to the Fair Work Commission arguing that their dismissal was harsh, unjust or unreasonable. If the Commission agrees, employers may be required to reinstate the employee or pay them compensation. What constitutes a harsh, unjust or unreasonable dismissal will depend on the circumstances. Employers can also be found liable under these rules if they handle a dismissal in an improper manner, even if there is a valid underlying reason for the dismissal.

    4. Adverse Action

    In keeping with Australia’s strong stance against discrimination, Australian employees are protected from the “adverse actions” of their employer if those actions were taken due to certain protected attributes possessed by the employee. In other words, an employer is liable for discrimination on the basis of a protected attribute – including gender, sexuality, disability and race – even when those actions would otherwise be legal (for example, terminating employment contracts). As with unfair dismissal, employers may face severe penalties from the Fair Work Commission for breaching these protections.

    5. Jurisdiction

    Due to Australia’s federal structure, many employment relationships attract obligations under Commonwealth (or federal) legislation as well as state/territory statutes. In many instances, these obligations are concurrent. Under Australian industrial law, rights and obligations can even arise for employment contracts executed overseas. Employers (and their employees) should be aware of these jurisdictional traps.

    John Wilson is the managing legal director at Bradley Allen Love Lawyers and an accredited specialist in industrial relations and employment law. He thanks Robert Allen for his help in preparing this article.

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  • superannuation

    Impact of Superannuation Reforms on Estate Planning

    The Federal Government has announced changes to superannuation from 1 July 2017 that will affect many individuals. As we draw closer to 1 July, more and more people are seeking advice on how the changes will affect them and specifically, what the changes mean to their existing wills and estate plans.

    The Federal Government has imposed a $1.6 million balance cap on the total amount that a member can transfer into a tax-free pension phase account from 1 July 2017. This will mean that from 1 July, many members will need to transfer a significant portion of their superannuation benefits into accumulation phase, which will attract the superannuation 15% tax on income generated within the fund, including capital gains.

    How will the member’s family and their estate be impacted when the member dies? Consider the situation where a husband and wife each have $2 million in pension phase. The husband and wife each execute binding death benefit nominations to leave their super to the other. The husband subsequently dies.

    Traditionally, the wife could maintain the benefits within the superannuation environment by commencing a death benefit pension and subsequently commuting the pension (after the relevant period of time, known as the 3 month/6 month rule, and provided the super fund deed permitted this to take place).

    From 1 July however, things will need to change. The following would need to occur:

    • During their lifetimes, the husband and wife would each need to wind back $400,000 from their pension accounts into their accumulation accounts, thereby holding no more than $1.6million within the pension phase
      On the death of the husband:
    • The wife would need to wind back $1.6 million from her own pension account into accumulation, thereby holding $2 million in accumulation phase;
    • The wife could then commence (or receive a reversionary pension) from the deceased husbands pension account to the value of $1.6 million; and
    • The husbands remaining $400,000 held in his accumulation would need to be withdrawn or “cashed out” from the superannuation environment

    Once the funds are out of the superannuation environment, contribution limits and the “work test” may prevent the wife’s ability to recontribute funds back into superannuation.

    Auto-reversionary pensions offer some relief and flexibility by not causing a debit to the recipients transfer balance account until 12 months after the death of the member. As a result, a reversionary pensioner has 12 months decide whether to cash out their pension or retain it.

    The estate planning issue is then where should this lump sum withdrawal be paid. It will be necessary to review and update estate plans including Wills and binding death benefit nominations in light of these changes:

    • if funds are required to be cashed out from the superannuation environment, this might impact a family’s overall distribution of their estate and undo estate planning strategies previously put in place;
    • binding death benefit nominations may need to be reviewed and amended as they may no longer be appropriate in light of the recent changes;
    • binding death benefit nominations may need to be limited to ensure the surviving spouse’s transfer balance cap is not affected. Particular care needs to be taken when drafting binding death benefit nominations in light of recent case law;
    • In the case of second marriages where superannuation may have been used as an estate planning tool to provide for the spouse, this arrangement may need to be unwound and an alternate arrangement considered;
    • Superannuation trust deeds may require review and amendment to ensure there is maximum flexibility including the ability to execute (non-lapsing) binding death benefit nominations, and auto-reversionary pensions.

    Make sure you get your estate affairs in order before the changes arrive on 1 July 2017.

    If you need assistance with superannuation reforms, or Estate Planning, please contact us.

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