News ISSUE 12, SUMMER 2014Wills, Probate, Estates & Trusts

Families are complex socialconstructions. Today the concept of"family" is far more fluid than whatwas previously accepted, even onlya few decades ago. In the area ofWills and Estates, clients oftencontact us to assist them indetermining whether they have avalid claim for further provisionagainst a deceased estate.

What has changed?

Under the new law, the Justice LegislationAmendment (Succession and Surrogacy)Act 2014, which comes into effect on1 January 2015, only an "eligible person"may make a claim for further provision.

Can you claim for further provisionfrom a deceased estate?

The short answer is yes. Under theexisting law, a person is not required tobe related by blood or family relationshipto a deceased person to make a challengeagainst the deceased’s estate.

Part IV of the Administration and ProbateAct 1958 (Vic) ("APA") provides that a

Court may order provision to be madeout of the estate of a deceased personfor the proper maintenance and supportof a person for whom the deceased hada responsibility.

Who will be deemed under the new lawto be an "eligible person"?

In broad terms, an eligible person includes:l a spouse or domestic partnerl a former spouse or domestic partner,

who would have been able to commence proceedings under the Family Law Act 1975 (Cth)

l a child, adopted child, step child or a person who believes he or she is a child of the deceased providedthat person:- is under 18 years; or- is a full time student between18 and 25 years; or

- has a disability.

Can anyone else be an eligible person?

Other eligible people include a child,stepchild, or person who believes he orshe is a child who are not included in theabove definition. A grandchild, a registeredcaring partner, a spouse or domestic partner

of a child of the deceased, and a memberof the deceased's household may alsobe eligible.

A valid claim must show:l that the claimant was wholly or partly

dependant on the deceased for his or her proper maintenance and support atthe time of the deceased's death; and

l the deceased had a moral obligationto provide for his or her proper maintenance and support; and

l distribution of the deceased's estate fails to make adequate provision for him or her.

What should you do?

It is important that you promptly seekour professional advice if you believe youhave a claim for further provision againsta deceased estate. We will work with youto determine your claim, ensuring it ispursued with appropriate vigour throughthe Courts.

Claiming against an estate - who is eligible?

For further information on this topic, please contact Annette Esposito at AEsposito@tde.com.au

Property Law 2

of millions of dollars in additional stampduty will be paid to the government.

The industry takes action

Earlier this year, a delegation of propertysector officials and leading tax advisersmade a formal deputation to Treasury.This resulted in senior Treasury officialsreviewing the proposal. It is now hopedthat changes to GST collection will nothave any adverse effects for the propertysector. However, this may not be resolveduntil 2015.

What should you do?

If implemented, the proposal will havesignificant financial ramifications for ourclients who purchase going concerns orfarming land - or who are propertydevelopers.

Until the situation is resolved, purchasersshould seek our advice. We look forwardto keeping you informed about furtherdevelopments in this area.

For the past 12 months there hasbeen some uncertainty arisingfrom a proposed change to theGST exemption for "going concerns"(i.e. commercial property) andfarming land.

The current situation

Under current legislation, the majorityof commercial and farming land salesenjoy a GST-free status. Late last year, theAustralian Treasury raised the possibilityof a change to the GST treatment of thesetypes of land sales. Under the proposed"reverse charging" mechanism thepurchaser, and not the vendor, wouldbe liable to pay the GST.

The proposed changes

If the proposed changes are implemented,the GST will be treated as part of thepurchase price. This will increase theamount of stamp duty to be paid on themajority of commercial and rural propertysales. Purchasers will then pay more instamp duty - and in turn, many hundreds

For further information on this topic,please contact Paul Webster onPWebster@tde.com.au

GST and thesale of “goingconcerns” &farming land

Case Study A

Under the current legislation, a purchaserbuys a commercial property subject to alease for $1 million. The transactionqualifies for the GST "going concerns"exemption and no GST is payable. Thestamp duty payable is $55,000.

Case Study B

Under the floated "reverse charging"arrangements for the same transaction,the obligation to pay the GST would bepassed on to the purchaser. Although thepurchaser would be able to claim a creditfor the GST paid in his or her next BASstatement, the GST would be added tothe amount on which the stamp duty ispayable. This would increase the chargefor stamp duty to $60,500.

Litigation & dispute resolution 3

l Assurance - someone is given an assurance that they will acquirea right over property.

l Reliance - they reasonably rely onthe assurance.

l Detriment - on the basis of the assurance they act in a way which causes financial detriment.

What can be legally achieved?

The legal remedies can include injunctionsor declarations being made. This may impact adversely upon the sale of theproperty by the registered owner.Compensation may also be awarded bythe Court, depending upon the extentof reliance and the financial detrimentsuffered.

Proprietary Estoppel -What should you do?

If you consider that you have a claimbased upon proprietary estoppel, it isessential that you seek legal advice assoon as possible. Delay or equivocationin taking action could adversely affectyour legal rights.

Proprietary Estoppel - a case study

Retired school teachers, Les and Loispurchased a small hobby farm in Bendigo.Located on the 15 hectare property wasa cosy one bedroom dwelling and anestablished vineyard. Their adult daughterMaria and her husband Mark enjoyedvisiting on weekends and assisted withtending the vines.

It soon became apparent that the houserequired another bedroom to accommodatethe regular visits from Maria and Mark.Encouraged by Les and Lois, Maria and Markfunded an extension, building a secondbedroom and bathroom. This was in theexpectation that they would receive theproperty in the future. As a result of therenovation, Maria and Mark also madecertain professional and financial sacrifices.

As they got older, Les and Lois decidedto return to Melbourne. To fund themove, Les and Lois began to think aboutselling the hobby farm. Maria and Markobjected to the proposed sale. They obtained legal advice that they hadacquired a right or interest in the propertybased upon proprietary estoppel. Thelegal advice also recommended that theylodge a caveat over the property toprotect their rights and give notice to anyother party or purchaser of such right orinterest claimed by them.

For further information on this topic,please contact Faten Awad onFAwad@tde.com.au

We are sometimes contacted by clientswho believe that they have a claim onproperty which is registered in the nameof someone else. This legal situationcan sometimes be characterised as aclaim based upon proprietary estoppel.

Proprietary estoppel may arise whena property owner induces or encouragesanother person to expect that they willacquire an interest in their property. Inthose circumstances there can arise a beliefby the claimant that the interest will beconferred on them at some future time.If in relying on that inducement theclaimant may suffer financial detrimentgiving rise to the claim.

What is required for a ProprietaryEstoppel to exist?

For proprietary estoppel to exist thefollowing elements must be established.

ProprietaryEstoppel -How to protect a claim onproperty which you havebeen induced or encouragedinto believing you will receive

Practitioner Profile Our Services 4

TDE welcomesnew Partner -David PhelanOn July 1, David Phelan was admittedto the TDE partnership. Known to manyof our clients, David practices in theLitigation & Dispute Resolutiondepartment of the firm.

David assists clients with their contentiouscommercial and business-related mattersthrough to litigation, if necessary. Davidunderstands the needs of his clients andbalances this against the commercialrealities and costs associated withlegal proceedings.

David also practices in estate litigation,where he assists clients with a broadrange of estate-related issues with acombination of skill and sensitivity.

He conducts litigation in all statejurisdictions, including VCAT and theFederal Court of Australia.

We are delighted to announce thisexciting development in the life of ourfirm and warmly welcome David to thepartnership.

Tolhurst Druce & Emmerson isa city-based law firm with a proudhistory of working withindividuals, families and business.

In business for over 100 years, we arelarge enough to offer you the depth ofexpertise you desire – but small enoughto ensure that you experience thepersonalised service that is the hallmarkof our firm.

Our partners offer many decades ofexperience. Our team includes lawyerswho are Accredited Specialists in theirfield of expertise. All our lawyers areappointed for their ability to work withour clients, offering a combination ofexcellent legal expertise, high-levelinterpersonal skills and a professional yetcaring manner. Our professional supportstaff assist in the provision of high levelservice to our clients.

Our aim is to build long-term relationshipswith our clients. We take the time to listen

to your needs. We then work with you todevelop a legal strategy for today with aneye to an outcome that will serve youinto the future.

Our range of services includes:

l Conveyancing and property law

l Wills, probate and the administrationof estates and trusts

l Family law

l Commercial and business law

l Litigation and dispute resolution

l Not for profit law

l Notary and taxation services

Pictured above from left: David Phelan,Eilish Cooke, Peter Weller & Faten Awad.

Tolhurst Druce & Emmerson -Working with individuals, familiesand business

Family Law 5

Whenever a relationship breaks down -one of the most important first actionsis to make immediate contact with yourfamily lawyer. In fact, it is best to seekadvice before you undertake to separate.

As the following scenarios illustrate, it isimportant to seek early advice. In only amatter of weeks or months, any of thefollowing situations can occur. These canhave major consequences for the value ofyour future property settlement.

Scenario1 - Death of a spouse

If one party dies, this can leave thesurviving party to seek a settlement withthe executors of the deceased's estate.This can be further complicated if there isa dispute between beneficiaries over thedeceased's will. This can result in SupremeCourt proceedings. If this occurs, legalcosts for the estranged spouse willincrease significantly.

Scenario2 - Re-partnering of a spouse

If one party quickly re-partners, it ispossible that a child may result. If aproperty settlement includes provisionfor child maintenance, the fact that oneparty now has to support another childwill be taken into account. This willsignificantly impact the amount of childmaintenance provided to the children ofthe first relationship.

Scenario 3 - Breakdown of a secondrelationship

A party may have a breakdown of a secondrelationship before finalising propertymatters with a previous spouse. In thissituation, the "first wife" could intervenein proceedings between the husband andthe "second wife". Should this occur, theasset pool available for distributionbetween the husband and the secondwife would be reduced. Legal costs wouldalso be increased as the Court attemptsto reconstruct and divide the matrimonialpool between the "first wife" and herformer husband.

Scenario 4 - Fluctuating financialfortunes

The value of asset pools can alter quicklythrough a range of unforeseen circum-stances. There are many ways that thiscan occur, but may include suddenchanges to the share market, a compulsoryacquisition or re-zoning of land or even abush or house fire destroying assets thatmay not be fully insured.

Scenario 5 - Take care of thehousekeeping

In some relationships one party takescontrol of the finance and business affairs.If separation is imminent the other partyshould:

l Check that all insurances are paid andup to date. If not, you should pay thecosts and include the expenses as adebt of the marriage at the finalsettlement.

l Check that mortgage payments are upto date to avoid a default. If not, askthe bank to either suspend paymentsfor a period of time or reduce payments to "interest only." This isimportant for the party living in the mortgaged property.

l Check that car payments are up to dateto avoid re-possession.

l If the children attend private schools,the parent with the care of the childrenshould advise the school of theseparation and ask to be advised ifthe fees are not paid on time.

These are only a few of the issues thatcan arise following separation. We adviseour clients to preferably contact usbefore or immediately after relationshipbreakdown. Knowing that you have takenmeasures to safeguard your legal andfinancial affairs can provide comfort ina time of great emotional turmoil.

Seek early adviceupon relationshipbreakdown

Christmas and the holidayseason are often times whenrelationship breakdownsoccur. For many couples,the stress of spending timetogether outside of normalday to day routines createsan opportunity for simmeringtensions to come to a head.

For further information on this topic,please contact Eilish Cooke onECooke@tde.com.au

News 6

Paul Webster answers your legal questions.Q I have been invited to join the Board of a commercial organisation.

What should I do?

A Directors must be active in the life of their organisation. This means attending meetings,asking questions and scrutinising commercial, financial and legal issues. If you are not surethat you are able to take an active and informed role, you should think twice beforecommitting to a directorship. It is now a fact that if a problem arises, you as a Directorcould be held personally responsible.

Tolhurst Druce & Emmerson Working with individuals, families & business.

Tolhurst Druce & Emmerson incorporates the firms of Gavan Duffy & King, Doyle & Kerr,Puglisi, Heffey & Pavlidi, Louis S Lazarus, and D Condon & Co. If you wish to changeyour contact details or no longer wish to receive this publication, please contact our office

on (03) 9670 0700.

The information in this newsletter is not intended to be a complete statement of the lawrelating to the issues raised. Accordingly, no person should rely on this information without

obtaining specific advice from lawyers. Liability limited by a scheme approved under Professional Standards Legislation.

Tolhurst Druce & Emmerson

Level 3, 520 Bourke StreetMelbourne VIC 3000Telephone 03 9670 0700Facsimile 03 9670 8503www.tde.com.au

Tolhurst Druce & Emmerson Level 3, 520 Bourke Street, Melbourne T 9670 0700 www.tde.com.au

Business & Commercial Law

Tolhurst Druce & Emmerson was proudto field a team in the LIV Legal Fun Run& Walk on Monday November 10.

The Tan Track at the Royal Botanic Gardenshosted nearly 1,000 entrants from theVictorian legal community. Participantshad the choice of an 8km run (2 laps ofthe Tan) or a 4 km walk (1 lap of the Tan.)

Christmas wishesfrom us to youThe Partners and staff of Tolhurst Druce& Emmerson extend our very best wishesto all our clients for a happy Christmasand a safe and relaxing holiday season.

Christmas andNew Year office hoursOur office will close for the Christmasholidays on Tuesday December 23rd,2014 at 5pm. We will reopen again forbusiness on Monday January 12th, 2015at 9am.

We look forward to assisting you withyour legal needs in 2015.

Our running team comprised John Henry,Faten Awad, Emily O’Bree and JanetteVlahovich. Our walkers included MoiraRyan and Rebecca Hutchinson. Congratulations all!

Pictured above from left: John Henry,Rebecca Hutchinson, Janette Vlahovich,Emily O’Bree, Faten Awad and Moira Ryan.

LIV Legal Fun Run & Walk