The 7^th edition of Bernie O’Sullivan’s Estate & Business Succession Planning has just been released.

The book is recommended by universities and professional bodies across Australia including Deakin University, The College of Law, and Kaplan.

At a cost of only $220 it is great value to help individuals, families and business owners get started in their succession planning.

Key features include:

• easy to follow case studies, strategies and diagrams
• discusses pitfalls to be aware of and troubleshooting techniques
• provides a thorough overview of succession planning laws in every jurisdiction
• covers all succession planning topics, including:
  • wills and powers of attorney
  • testamentary trusts
  • blended families
  • protecting vulnerable beneficiaries
  • claims against estates
  • superannuation and superannuation death benefits
  • family trusts
  • international estate planning
  • tax consequences of death
  • family law and death
  • business succession planning
  • charitable trusts
  • special disability trusts
  • aged care

To order a copy click here

© Bernie O’Sullivan Lawyers

Wooster v Morris

The case of Wooster v Morris concerned Mr and Mrs Morris who were individual trustees of an SMSF.  Mr Morris made a binding death benefit nomination (BDBN) nominating his two adult daughters from a previous marriage.  On Mr Morris’ death, his widow took control of the fund and appointed her son from a previous marriage as the co-trustee.  The widow and her son then sought advice from a law firm about the validity of Mr Morris’ BDBN.  On instructions that the BDBN was never delivered by Mr Morris to the widow as the then co-trustee (as required by the deed governing the fund), the firm advised that the nomination was ineffective.  The trustee of the fund was later changed to a company and the widow as the sole director of the corporate trustee resolved to pay Mr Morris’ death benefits to herself.  Mr Morris’ two daughters commenced legal proceedings seeking declarations that the nomination was valid and binding.

The matter was referred to a Special Referee with the consent of the parties.  The Referee found that the BDBN was valid (unfortunately the reasons why it was found to be valid are not mentioned in the judgement) and that the widow had already formed a view on the validity of the BDBN prior to receiving legal advice.  Amongst other things, the Referee recommended that the widow should pay the whole of the daughters’ costs of legal proceedings.  The Court adopted the Referee’s report and held that the BDBN was valid and binding on the then current trustees (the widow and her son) and thereafter on the current corporate trustee.

Consequently, the Court held that the corporate trustee and the widow personally, were jointly and severally liable to pay the daughters Mr Morris’ death benefits plus statutory interest plus the daughters’ costs of (and incidental to) the proceedings.

Lessons to be learned

This case demonstrates that:

• the separate corporate identity of the current trustee did not protect Mrs Morris from personal liability;
• while trustees/trustee directors will generally have a right of indemnity from the trust fund under the terms of the trust deed and the general law, that right can be lost if they act in a manner designed to benefit themselves;
• it is important that trustee directors of SMSFs recognise when they have a conflict of interest (which may be often) and understand their duty of impartiality; and
• trustees should remember they have a right to approach the court for directions, in certain circumstances.

This case is also a reminder that the executor of a deceased member’s Will (the legal personal representative) does not automatically become a trustee (or trustee director) of an SMSF following the member’s death.

Contact us

There are many complexities associated with SMSFs especially when family dynamics come into play.

Our lawyers have extensive experience within this area. If you require advice related to this please contact us.

Contact:

Thalia Dardamanis
Bernie O’Sullivan
© Bernie O’Sullivan Lawyers

What are they?

A Mutual Will is an arrangement whereby two people, typically a couple, agree to make identical Wills and to not change their respective Will without the consent of the other.  After the death of the first of them, the survivor is unable to change their Will.

Why have mutual wills?

Mutual Wills are popular for couples in second marriages and/or blended families.

For example, a couple each have two children from previous marriages.  Both parties have assets in their own name.  On the death of the first of them they want the survivor to inherit the whole estate, because the survivor might live for many years and need the inheritance. On the survivor’s death, the parties agree that the survivor’s estate is to be divided equally between all four children.

Mutual Wills are usually accompanied by agreement or deed that confirms the intention of the parties to be bound by their mutual Will contract.

Potential problems

There are problems with mutual Wills.  For instance, the existence of a mutual will contract does not prevent a person from making a claim for greater provision from the deceased’s estate under family provision legislation.

Also, the surviving party might dispose of, or grant interests in relation to, the property that was the subject of the agreement.

Are there any alternatives?

Clients considering making mutual wills should obtain specialist advice to understand fully the advantages and disadvantages of such arrangements and any alternatives that may be more suitable, such as life interest trust arrangements.

Thinking of mutual wills?

If you are contemplating a mutual will or require advice as to alternatives please contact one of our experienced estate planning team members.

Contact:

Bernie O’Sullivan

Stephen Hardy

Thalia Dardamanis