Busting the Four Most Common Myths
In all my years dealing with clients and urging them to make a Will, I have heard every excuse for not making one. But of all the unfounded excuses, these four are probably the biggest myths I have come across.
“I Don’t Need a Will Because my Wife / Husband Will Get the Lot Anyway”
This is simply not true. Who will get what is determined by a strict formula set out in the Queensland Succession Act, and your partner does not automatically “get the lot”.
“I Don’t Need a Will Because My Children Get Along Well”
There is an old saying, “say you know not a man until you have shared an estate with him”. Ugly scenes often come about from the influence of those outside the family. There are far too many people giving incorrect and poor guidance based on “folklore” and not what is actually the law. I have seen families torn apart fighting over the estate of a parent. Do not bring this upon your family. Make a Will so your wishes are clearly set out.
“It Costs Too Much”
Trust me when I say the cost of preparing a Will is nothing compared to the costs, both financially and emotionally, that your family will have to pay if you die intestate (ie. without having made a Will).
“I am Not Old Enough to Have a Will”
Unfortunately age does not protect you from accidents and tragedies. The rule is simple, everybody over the age of 18 should have a Will.
Hopefully this article has laid to rest those myths and cleared up any doubts and uncertainties you may have. If you love and care for your family then you owe it to them to ensure that they are protected.
The easiest way to address these matters is to speak to us at McLaughlin and Associates Lawyers. We will tailor a Will to suit your specific needs.
Book a consultation by calling us on 07 3808 7777 or email us at askus@mclaughlinlawyers.com.au
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By John McLaughlin
Principal, McLaughlin & Associates Lawyers.
The new first home loan deposit scheme (FHLDS) aims to give first home buyers a leg up in the property market by reducing the deposit amount required to purchase a property.
First homebuyers were previously slugged with lenders mortgage insurance (LMI) if they did not come up with at least 20% deposit.
The First home loan deposit scheme works by providing a guarantee to first home buyers to purchase a property with as little as 5% deposit opposed to the onerous 20% required by most lenders. On a $500,000.00 property, that’s a whopping $75,000.00 difference!
The catch
Places are limited! The Australian Government has reported nearly 3,000 potential first homebuyers have registered with the banks since the 1st of January for the scheme. The remaining 7,000 places will open from the 1st February 2020. It is important that you have your finances in order, have spoken to a financier (i.e bank) and have started looking at potential properties.
Can you apply?
If you are a first time homebuyer then you are most likely eligible for the scheme. The Australian Government website has a handy eligibility tool to see if buyers qualify for the scheme. In a nutshell, you will need to be a first home buyer and:
· Pass the income test;
· A prior property ownership test;
· A deposit requirement; and
· Pass the owner occupier requirement.
Next steps
Before you sign a contract of make an offer on a property, make sure you get legal advice to protect your interests. At McLaughlin & Associates Lawyers we have a team dedicated to residential conveyancing. We can assist you with pre-purchase contract conditions and also make sure the contract you sign protects your interests. See our page on Conveyancing for more info and guides for buyers and sellers.
Written by Dominic Doan, Commercial and Property Solicitor
For further information or to book in a consultation please contact us at business@mclaughlinlawyers.com.au or phone us on 07 3808 7777.
Have any questions? Send us an email:
Read some of our other residential conveyancing articles:
· Buying a home and claiming PPR
Intern to Associate: Life After Law Boot Camp
What outcomes you can expect at McLaughlin & Associates
At McLaughlin & Associates, we’ve been operating a very successful internship program for many years and we’re especially proud of the outcomes we have achieved, especially for our interns.
Much of this success we attribute to the formal, standardised format of our program which we have developed with the fundamental underlying theme – to get interns to start thinking and acting like a valuable contributing member of a team.
We want to get them ready for their working life and to give them a competitive edge over other graduates when vying for a job in what is a very tough market. We like to think of it as a boot camp for law students.
Life as an Intern
The first premise of our program is the fact that most law students have never set foot inside a legal office and have no idea how an office functions and how they are supposed to act and operate within it.
So the first things we teach them are, the:
- responsibilities and obligations of being part of a team
- need for punctuality
- need for courtesy and respect to others
- need for honesty and ensuring every task assigned to them is done correctly and to the best of their ability.
They are made well aware that others in the team will rely on them to play their part and to do their job to the best of their ability and by failing to do this, they are letting down the other members of the team.
They are taught to be responsible for their actions and how to interact with others. They learn the shattering truth that getting a Law Degree is only a very, very small part of actually being a lawyer.
Armed with the skills acquired during their internship program, interns leave us and go forth to grab with both hands the opportunities which await them.
One of the great things about our internship program at McLaughlin & Associates Lawyers is that interns tend to stay in touch and remain friends of the firm forever and we are always very interested in their progress and achievements.
By John McLaughlin
Principal, McLaughlin & Associates Lawyers
Employers do you have employees or contractors?
It can be time consuming and confusing for clients to try and understand the exact type of arrangement and obligations that go with it. Also there have been many cases where a business owner thinks that a person has been engaged as a Contractor only to subsequently discover that they are deemed to be an employee and hence entitled to certain benefits and entitlements.
The Australian Taxation Office has set up a couple of online decision tools which are a series of questions and answers and resulting explanations. The good thing is there is no requirement to enter the TFN so the results are confidential.
Are you ready for the PPSA?
New legislation called the Personal Property Securities Act (“PPSA”) came into effect recently. It will dramatically alter the way we deal with personal property and the way in which security over personal property can be protected.
“Personal property” is any property (except real estate and fixtures to land) such as machinery and equipment, motor vehicles, book debts, stock, trademarks and patents etc.
The PPSA will regulate any “security interest” in personal property. If you do not protect your rights you risk losing your interests in that property.
For example you could lose:
- priority to another creditor; or
- title to your property if it is left in the possession of someone else (eg. if they sell it or if they go into liquidation etc ).
How does the PPSA affect you?
If you answer yes to any of the questions below, you should contact us to discuss how the PPSA may affect you and what steps you should take to protect your interests.
- Do you own personal property that could be in someone else’s possession for longer than 90 days ?
- Do you consign goods to other people to sell ?
- Do you manufacture and sell goods ?
- Do your conditions of sale state that you retain ownership until you are paid (i.e.
retention of title clause) - Have you granted “fixed and floating” charges or have they been granted to you ?
- Do you include charging clauses in your standard documents to give you security for an obligation ?
Registration
A single national online register of Personal Property Securities interests called the PPS Register (“PPSR”) has been established.
It is essential to register your security interests in order to obtain priority. By registering your security interest you can prevent another person taking ownership of your goods.
Any delay in registering your security interest or inaccuracy in the registration could be disastrous. New security interests created must be registered quickly and in some cases may be registered before the transaction is completed.
Questions?
If you have any questions about this blog post, do not hesitate to contact McLaughlin & Associate Lawyers via call or email.
Alternatively, you may visit our office in Springwood.
At some stage in your life you may be approached to go Guarantor either for one of your children or for a relative or friend. I tell my client’s that there are three groups of people for whom you should never go Guarantor.
1. Family;
2. Friends; and
3. Strangers.
I repeat never go Guarantor for family, friends or strangers. If you rule out those three groups you will be safe (because there are not too many others left). The reason I advise this is that unfortunately we see case after case where client’s, who did not wish to offend, or did not understand what they were really getting into, find themselves in a plethora of trouble.
I appreciate that sometimes it is hard to say “no” to a child or a sibling or best friend who comes to you with a request to go Guarantor because at the time there doesn’t seem to be too much harm done by simply signing a piece of paper. But it is what happens down the track when things go wrong which can have devastating effects.
If you think about it for a second the reason why a bank wants somebody else to guarantee the loan is because they, after careful consideration and analysis of the borrower’s financial position, ability to repay etc have not go the confidence to lend the money to that person without someone else guaranteeing repayment of the loan. If the banks, with all their billions of dollars, aren’t prepared to take the risk, why should you?
Another factor that a lot of people don’t understand is that if you go Guarantor for say a $300,000.00 loan then as far as your bank is concerned that is a debt on your balance sheet. Therefore, if you then later decide that you wish to borrow money, the amount of your guarantee will be taken into consideration along with your other existing debts in determining how much you can borrow.
I appreciate that sometimes parents want to give their child “a helping hand” in buying their first property and will agree to go Guarantor. If you must, then there are some steps you can take to try and protect yourself.
- Always go for the minimum amount the bank will accept. The bank may only need you to go guarantor for $80,000.00 on a $350,000.00 loan. In which case you must make sure that is all you guarantee.
- Always ensure that the Guarantee is limited to a maximum amount. That way, in a worst case scenario where your guarantee is called upon you know exactly how much you are up for.
- Make sure that you only guarantee the specific loan for which you have been asked to Guarantee. The fine print of some guarantees actually provides that the Guarantor is responsible for all loans of the Borrower both existing and future.
- Request that you be provided with bank statements of the loan so that you can ensure that it is being kept up to date and has not fallen into arrears.
- Terminate the Guarantee as soon as you can, don’t let it continue in perpetuity.
I can recount dozen’s of cases where I have seen parents who have had to sell their home or lose their nest egg because they had gone Guarantor for a child in a failed business venture. Invariably, the first notice that the Guarantor has of there being a problem is when they are notified by the bank. Most borrower’s are too embarrassed (or thoughtless) to approach the Guarantor to let them know that there may be a problem.
So remember my advice DO NOT go Guarantor for family, friends or strangers.
Do You Require Window Coverings?
Landlords who supply corded window furnishings in rental properties, and Property Managers who offer services in relation to those properties, must now comply with national Mandatory Product Standards designed to reduce the risk of strangulation of infants and young children.
The legislation is part of The Australian Consumer Law which came into effect on 1 January 2011 and incorporates The Trade Practices Act. It prescribes standards for child safety devices, mandatory warning labels and safety installation instructions.
Any corded window covering supplied by the Landlord such as Vertical Blinds, Venetian Blinds, Holland Blinds, Roman Blinds and Curtains must comply, even if they are second hand or already installed.
As a breach of the Mandatory Standards carries a potential fine of up to $220,000 for individuals and $1.1 Million for companies, Landlords and Property Managers need to take their obligations seriously.
I recommend to you the services of Safer Property Solutions Pty Ltd, “SPS” who offer a specialist compliance inspection and retrofit installation service tailor made for Property Managers. SPS provides free advice on how to identify non-compliance and template letters that you can use to inform your landlords of their obligations.
Enduring Power of Attorney
When people think of estate planning they usually think of the need for superannuation, life insurance and income protection but equally important is the need for a Will and an Enduring Power of Attorney. I have spoken at length over the last month about the need for a Will now I wish to turn to the equally important aspect of having an Enduring Power of Attorney.
What is an Enduring Power of Attorney?
It is a document given by one person (the Donor) to another person (the Attorney) which enables the Attorney to act on behalf of the Donor and to do all things which the Donor could himself do. The Attorney in effect steps into the shoes of the Donor and can sign documents, access bank accounts etc.
Why do I need one?
Everybody should have an Enduring Power of Attorney appointing either their spouse, relative or close friend to act on their behalf in the event that they are either absent or mentally incapable of handling their affairs e.g. if you are out of town and need documents signed or access to monies or something to be done on your behalf which only an authorised person can do for you.
But the real benefit of an Enduring Power of Attorney is that the power to act on your behalf continues after you become mentally or physically incapable of doing things on your own behalf. For example, we have had cases where the husband and wife may, for tax purposes, have an investment property, shares or money invested in one persons name only. That person has suffered a stroke, heart attack or been in a motor car accident such that they are either physically or mentally incapable of handling their own affairs. The spouse may need to sell some of the assets or access some of the money in order to provide ongoing medical care for the injured party but because they don’t have an Enduring Power of Attorney that cannot easily be done. Instead, a Government appointed Trustee is nominated and as you can imagine, the process becomes very expensive and bogged down with red tape. That could all have been avoided by the making of an Enduring Power of Attorney.
Who should have one?
The simple answer is: Everybody! Spouses should each have one appointing the other their Attorney, the same applies for people in defacto relationships. But also think of the need for the elderly to appoint a child or children Attorney for them and also single children appointing a parent or parents as their Attorney.
It is especially important for adult children to think about their parents as they get older. By having an Enduring Power of Attorney a son or daughter can help their parents as they get on in life with accessing bank accounts, handling documents etc and in the event of mum or dad suffering a stroke or heart attack being able to handle their affairs.
For example, we had a case where an elderly woman suffered a stroke and was physically and mentally incapable of handling her affairs. The family home was in her name only and the children had to place her in a nursing home. The problem was that the home had to be maintained, the rates and insurance paid as well as meeting the costs of nursing care. There was no Enduring Power of Attorney. If there had been, the children could have sold the family home, placed the proceeds on trust for mum and met her ongoing care from the sale proceeds.
So think about it, if you have parents (it doesn’t matter how old they are now) seriously consider the benefit to them and you of having an Enduring Power of Attorney so that one day you will not face the same problems as the family mentioned above.
Video
Prefer the video format? Our principal, John McLaughlin, provides an informative Law Talk episode about the Enduring Powers of Attorney
It never ceases to amaze me the number of people who don’t have a Will or if they do have one it is grossly outdated and does not reflect their current circumstances.
The bottom line is that everybody from the age of eighteen (18) should have a Will and that Will should be reviewed regularly to ensure that it keeps up with your changing circumstances.
But first, lets go back to basics. What is a Will? A Will is a legal document that enables a specified person or persons (your Executors) to distribute your assets according to your wishes when you die. Your assets include your house, land, car, bank accounts, insurance/superannuation policies and any other goods that you may own at the time of your death.
Your Will sets out which asset goes to which “beneficiary”. Beneficiaries can be family members, friends, charities or other organisations. If you have a young family, your Will can also state who is to be the legal guardian of your children in the event that they are left without a parent.
For the time being, keep this in mind, if you don’t have a Will then you don’t have a say in how your assets will be distributed or who will administer your estate for you. That will be done by the Government adhering to a rigid formula.
If you don’t have a Will or you need to review your existing one, please don’t hesitate to contact us.
The Office of Fair Trading has warned consumers to beware of discrepancies between what they are promised by salespeople and what is stipulated in the contract.
A story was reported by a man who decided to buy a second-hand car at a dealership and was told by the salesman that a new car stereo would be installed at no extra cost.
The buyer signed the contract, which did not list the stereo as an extra, but was assured by the salesman that the stereo would be added to the contract later.
When he went to collect the car a few days later, he found that the stereo had not been installed as promised. He was told that the salesman he had dealt with was unavailable and the dealership manager told him, that there were no extras listed in the contract and so he was not entitled to the free installation of the car stereo.
Verbal agreements can form part of a contract but are often impossible to prove. There are also other considerations to take into account when signing a contract to buy a motor vehicle.
If you buy a car privately, you are not entitled to the normal protection of:
the cooling-off period,
you will not get a statutory warranty,
the seller is not obliged to give you a REVS certificate or Vcheck nor are they bound by the same laws and code of Conduct as licensed dealers, and
you cannot access the compensation claim fund if anything goes wrong.
Buying from a licensed motor dealer can be more expensive than a private sale, but it is often safer. All motor dealers selling used cars in Queensland must be licensed. Licensed motor dealers who sell cars privately may actually be breaking the law, and they must disclose to all intending buyers that they are licensed and provide a cooling-off period and statutory warranty.
When you buy a used car from a licensed dealer, you are entitled to:
A one business day cooling-off period,
A statutory warranty;
A guarantee of clear title on the vehicle;
Protection by the motor dealer’s Code of Conduct;
Access to a claim fund which may compensate you if you have suffered a financial loss because of the motor dealer’s actions.
As of the 1st July, 2000 first home buyers may qualify to receive a one off $7,000.00 grant from the Federal Government. Maybe you, your children or someone you know can take advantage of the grant!
There appears to be a lot of confusion and misinformation about who is eligible for the grant. For example, I had a client who was informed by her Bank Manager that she was not eligible for the grant because she was not buying a “new” home. Wrong!
Lets have a look at some of the requirements for eligibility.
- For a person to be eligible for the grant they must:-
- Be buying or building their first home.
- Enter into a Contract to buy an existing home or build a new home on or after 1 July, 2000.
- Be an Australian Citizen or permanent resident.
- Intend to reside in the home as their principle place of residence.
- Start living in the home within a reasonable time.
Other points to know are:-
- The payment is not means tested.
- Trusts and Company’s are not eligible for the grant.
- The payment will be made regardless of where the person buys or the value of the home they are buying/building.
- It applies to both new and established homes.
- It does not apply to holiday houses or investment properties.
There are some catches to eligibility so it is vitally important you speak with a person who knows what they are talking about.
When times are tough (and for 90% of businesses its tough right now) then you have to get tough yourself. When times are good businesses have a tendancy to get fat and lazy. Just like a person who has been living the highlife businesses can become unhealthy. The wake up call (and the first and most worrying sign for a business) is cash flow problems.
It’s not rocket science. When revenues/sales fall below what your monthly overheads are you are deemed to have a cash flow problem. When that occurs, you as a business owner have to get tough. Sometimes that means being tough on yourself, your suppliers, your customers, your business.
Businesses that successfully practice good cash management generally survive and prosper during downturns; those that don’t are likely to be undone by the weight of increasing debt and the inability to pay employees and suppliers.
Here are 11 tips that you can action immediately:
1. Take the maximum time to pay your suppliers whilst remaining within their normal payment terms. Essentially this amounts to an interest-free line of credit, and gives you more time to use your working capital.
2. Check to see if your suppliers offer payment incentives. Some businesses offer a discount for paying early. Even if your business regularly purchases a substantial amount from another company, you’re in a good position to negotiate favourable payment terms. In addition to early payment incentives, ask for special terms that accommodate your cash flow requirements. For example, negotiate to make payments after your busiest time of the month.
Many suppliers are willing to offer incentives in order to speed up their own receivables and cement long-term relationships with good customers.
3. On your end, consider offering customer discounts to early payers. Consider providing a small discount when bills are paid within ten days of delivery. It may cost you a little, but it can also light a fire under slow payers – and have a positive effect on your cash flow. However, before taking this step, consider whether you could borrow money you need at a lower cost.
4. Examine payment terms and your billing schedule. If possible, send an invoice with your shipments, not after delivery is made. Waiting until the end of the month can add as many as 30 extra days to your cash flow conversion period. If your business provides a service and it is appropriate, ask customers for a deposit before work begins.
Remind customers of your credit terms. Check your invoices or statements to ensure there is a clear indication of when payment is due. Encourage customers to pay with fund transfers or Internet payments.
5. Closely track and collect overdue accounts. Have your accounting department prepare fast, accurate reports on overdue payments. Monitoring accounts can reveal early warning signs. Act immediately on past-due accounts and use a collection agency if necessary. Telephone tardy customers and obtain a payment commitment by a specific date.
Don’t keep delivering services or shipping goods when payments are far behind. Put problem customers on a COD system or stop shipments altogether.
6. Consider establishing an interest penalty for late payments. Once a bill becomes seriously overdue, you may have to resort to penalties. While you can, and should, sympathise with hard-pressed customers for a reasonable amount of time, don’t let their problems become your problem by dragging your cash flow down.
7. Don’t extend credit without taking the proper precautions. Require all new customers to fill out credit applications. Request and check credit references.
A written agreement at the onset of a business relationship can help avoid misunderstandings later on. Spell out the terms of the arrangement on your credit application. You might want to go one step further and have customers sign a separate statement or contract identifying not only when payments are due but also that the other party is liable for any legal or arbitration costs if a bill is not paid.
If your business is extending credit to a financially troubled business, insist on securing personal guarantees from the owners, as well as their spouses.
8. Trim expenses and cut unnecessary spending. Look for ways to reduce waste in office supplies, business-owned vehicles, mobile phones and land lines, utilities, business travel, overtime pay, insurance, and more. Ask your employees for cost-cutting suggestions. They are likely to come up with ideas management hasn’t even considered.
Dispose of unused vehicles, vacant real estate, and machinery you don’t need. You could be paying insurance, maintenance and storage costs on them. Selling idle assets can result in a cash flow boost, while donating to a qualified charity can be smart tax move.
9. Keep your inventory lean. As a rule of thumb, the expense of maintaining stock in inventory averages about two percent of the cost of those goods for each month not sold. If your business carries an item for a year, you’re down 24 percent. It’s hard to overcome this kind of cost handicap – especially in hard times.
Don’t fall into the trap of hanging onto slow-moving inventory in order to avoid admitting you made a mistake. Cut your losses on old and outdated inventory items. Or donate them and claim a charitable tax deduction.
10. Free up cash by leasing rather than buying. Leasing computer equipment, cars, facilities, tools and other equipment generally costs more than buying, but you avoid tying up cash. You can also limit your exposure with short-term leases.
11. Examine prices. Many business owners and executives won’t consider increasing prices in a tough economy because they’re afraid customers will head to the competition. But it may be necessary if your prices aren’t keeping pace with expenses. If you do raise prices, explain the reasons to your customers, and if possible, give them notice.
Emphasise the value of your products or services.
Should you wish to discuss any matters regarding the matters raised in this article please contact Mr John McLaughlin McLaughlin & Associates on 3808 7777.
Who or what is an executor of an estate?
An executor of an estate is responsible for carrying out the wishes of the deceased person. Essentially, they manage the estate according to the outline of the Will. For example, the executor of estate can organise the funeral, locate and identify the Will, apply to the Supreme Court for probate, determine the beneficiaries, inventory, value and collect all assets, pay insurances on assets, pay any outstanding debts, manage accounts, prepare and lodge tax forms, defend the estate against claimants and distribute the assets according to the Will.
If there are any mistakes made by the executor of an estate in administering the estate, they can actually be liable for the financial losses to the estate, for example, where insurances have not been paid and fire burns down a building (which is an asset of the deceased). You can however, refuse to be named as an executor of an estate and ask the Public Trustee to administer the estate. Once you accept the responsibility however, it is often difficult to remove yourself from the role, but it can be done.
Preparing your Will
Here are a few ways that we at McLaughlin & Associates can help you in preparing your Will:-
- Make sure your Will is valid – that is, properly drawn up, correctly signed and witnessed.
- Make sure your wishes are clearly set out.
- Make sure that you have made adequate provision for your spouse and children, including who should be legal guardian of your children.
- Advise you on choosing an Executor, Trustee and Guardian.
- Discuss relevant Tax Laws.
- Advise on the possibility of claims against your estate and avoid or limit disputes between remaining family members.
- Avoid the problems with intestacy – the imposition of a State appointed Administrator applying pre-determined rules to the disposition of your assets.
- Keep you Will in safe custody free of charge.
Generally the question of whether or not a de facto relationship existed will occur and one of them seeks to divide up the property. When this happens, the dynamics of the relationship is reviewed to establish whether or not the couple have/has lived together in a ‘genuine domestic basis’.
The term ‘genuine domestic basis’ contains a number of factors and is the foundation of what forms a de facto relationship.
These factors are contained in the Family Law Act and include:-
• Length of the relationship;
• Did the parties live together, and if not why not;
• Whether a sexual relationship existed between them;
• The degree of financial dependence or interdependence and any arrangements for financial support;
• Ownership, use and acquisition of property;
• Whether the relationship is or was registered under a State law as a prescribed kind of relationship*;
• The degree of commitment to a shared life together;
• The care and support of children;
• The reputation and public aspects of the relationship.
This is not an exhaustive list and the particular circumstances of each couple are taken into account. No one factor is more important than the other nor is the genders of the couple.
There is a common misconception that couples need to live together for two (2) years before they are classified as de facto partners. This is not correct. Living together in a ‘genuine domestic relationship’ does not have a specific time period associated with it.
However, there are time factors which may apply when a party wishes to commence court proceedings for division of property.
Generally, the question of whether a de facto relationship exists is relatively simple to answer and most parties agree when separation occurred. However this can become a complex issue. For example, what happens in a situation where a couple continues to live in the same house to raise their children, but in all other respects are living separately? In this instance one party may believe that they have separated (they may no longer be sharing a bedroom or they may be keeping monies separate), but the other party may believe they are still together.
The key question which needs to be answered is – did one party form the intention to separate and did s/he act on that intention? A secondary matter is – was that intention to separate communicated to the other party?
If this is disputed, then the couple’s actions and their finances will be relevant. For example:-
• has a party been excluded from the other party’s family events;
• did they go out together as a ‘couple’,
• has the other party been removed as a spouse/partner from tax returns, or
• have they severed their financial connection to such an extent to demonstrate the lack of mutual commitment to a shared life?
If separated couples are unable to agree whether a de facto relationship existed or not, or about the date of separation, then the Family Court has the power to make a declaration on this matter.
Recognised By
