Wednesday, January 15, 2020

View's Adviser Facilitated Estate Planning Platform 2020

View’s online estate planning platform is in a constant state of beta testing aimed at providing advisers (and their customers) the best possible solution. From 6 January 2020, View accredited advisers have three ways to lodge instructions:
  • via View’s webpage here; or
  • emailing a completed word based instruction form to solutions@viewlegal.com.au, or;
  • submitting a Free Review (yes, it is free) via View’s diagnostic tool here
Here are some of the links regular users have found most useful:
If you are unsure which estate planning package is right for your customer, we recommend you submit a Free Review.

To learn more about how the View Legal platform can help you to seamlessly deliver estate planning solutions for your customers, here is a 10 minute video.

Based on feedback from leading compliance specialists, any adviser wanting to utilise the View Legal Estate Planning platform must be accredited by View Legal as an Estate Planning Specialist Adviser.

There are three steps to achieving accreditation:
  1. Join the AdVIEWser community (in the ‘Friend’, ‘BFF’, or ‘Family’ categories) here, and;
  2. Complete the accreditation exam within 30 days of joining AdVIEWser, and;
  3. Complete at least five hours of self assessed continuing estate planning education with View Legal every 12 months (attending customer online meetings, View webinars and AdVIEWser Facebook lives all count towards the five hours).
Some FAQs are here.

Tuesday, December 10, 2019

Always learning … Latest lesson: ‘Last Christmas’ ** by Wham is a break up song … Final Post for 2019 and Season's Greetings

View Legal blog Always learning … Latest lesson: ‘Last Christmas’ ** by Wham is a break up song … Final Post for 2019 and Season's Greetings

With the annual leave season starting in earnest over the next couple of weeks and many advisers taking either extended leave or alternatively taking the opportunity to catch up on things not progressed during the calendar year, last week’s post will be the final one until early 2020.

Similarly, the social media contributions by both the View and Matthew will also largely take a hiatus until the New Year as from today.

Thank you to all of those advisers who have read, and particularly those that have taken the time to provide feedback in relation to posts.

Additional thanks also to those who have purchased the ‘Inside Stories – the consolidated book of posts’.

The 2019 edition of this book, containing all posts over the last year, edited to ensure every post is current, indexed and organised into chapters for each key area should be available early in 2020.

Very best wishes for Christmas and the New Year period.

** for the trainspotters, ‘Last Christmas’ (riffed for the title of today’s post) is the Wham! hit from 1986, watch the quintessential 1980s video clip.



PS: & recently I learnt why my first ever girlfriend broke up with me in grade 5 at about this time of the year back in 1986 … at the time I had just spent weeks of pocket money on a 7 inch single (you can google what this is …) by her favourite band Wham and the aforementioned single … 

Not stopping to listen to the lyrics focused on the withdrawing of the giving of true love … she broke up with me the very next day … 

When sharing the breakup story with my daughters recently and musing how I never understood why she ‘dropped’ me they quickly pointed out the stupidity of my choice of gift. Samantha Curran of Flynn Primary School Canberra (who I have not seen or spoken with since that day in December 1986) – I am sorry.

Tuesday, December 3, 2019

Division 149 - some genuine examples**

View Legal blog Division 149 - some genuine examples**

Last week's post explored the framework around the application of Division 149 of the 1997 Tax Act to trust owned assets acquired before 20 September 1985.

In addition to Taxation Ruling IT 2340 (profiled last week), there are some examples of factual scenarios where the Tax Office has explained its views about the application of Division 149 in relation to family trusts, the main ones of which are summarised below. As usual, if you would like copies of any of the rulings please contact me.
  1. In Private Ruling Authorisation Number 1012801220820, it is confirmed that the issue of what constitutes 'one family' for the purposes of IT 2340 must be considered based on the facts of the particular case. Generally, what is described as an 'extended' family (that is, including grandparents, children, grandchildren and their spouses) will qualify as a 'family' for these purposes. Furthermore, if distributions are made to post-19 September 1985 additions to a family (for example, the birth of new family members and new persons joining a family through marriage), the 'family' distribution criteria would also ordinarily be satisfied.
  2. In Private Ruling Authorisation Number: 1012191260298, it is confirmed that where a bare trust had made all distributions of income to the same person when the trust vested to that same person, the beneficial interest was not taken to have changed. In other words, the vesting of the trust did not change the majority underlying interests in the company's assets.
  3. The above mentioned Private Ruling also confirmed that pursuant to subsection 149-30(4) of the 1997 Tax Act, if an ultimate owner has acquired an interest in an asset which is transferred to them as a result of the death of a person, the new owner is treated as having held the underlying interest of the former owner over the years. In other words, the new owner will 'stand in the shoes' of the former owner for the purposes of Division 149. 
  4. Finally, in ATO Interpretative Decision 2011/107, the allotment of a discretionary dividend only share in a pre-CGT company to a family trust was held to have triggered Division 149. In particular, the Tax Office argued it could not be satisfied, or find it reasonable to assume, that more than 50% of the beneficial interests in the income of the company (and therefore the majority underlying interests) would be held at all times by the same ultimate owners who held such interests immediately before 20 September 1985. Arguably the decision here is an outlier in that unless there was in fact a change of 50% or more in the underlying interests based on a tracing of distributions paid on the discretionary dividend only share and then distributed via the trust, Division 149 may not in fact have been triggered.
** For the trainspotters, ‘genuine example’ is a line from the Elton John song ‘Social Disease’ from 1973.

Tuesday, November 26, 2019

Losing it** over losing it ... pre capital gains tax assets owned by trusts

View Legal blog Losing it** over losing it ... pre capital gains tax assets owned by trusts

Division 149 of the 1997 Tax Act is an anti-avoidance provision aimed at preventing access to tax free disposals of assets otherwise assumed to have been acquired before 20 September 1985.

Broadly Division 149 applies most commonly where a company has acquired assets prior to 20 September 1985, however at a later date there is a change of 50% or more of the underlying ownership of the assets evidenced by a change of 50% or more of the shares in the company.

One aspect of Division 149 that is often overlooked is the application of the provisions to assets held by trustees of family discretionary trusts.

Arguably the clearest explanation of the way in which the rules operate in this regard is set out in Taxation Ruling IT 2340. As usual, if you would like a copy of the ruling please contact me.

While the IT was issued under the 1936 Tax Act version of Division 149 (namely, section 160ZZS) it continues to apply.

In summary the Tax Office confirms:
  1. As the trustees of discretionary trusts have wide powers as to the distribution of trust income or property to beneficiaries, the question of whether majority underlying interests have been maintained in the assets of the trust will depend on the way in which the discretionary powers of the trustee are in fact exercised.
  2. If a trustee continues to administer a trust for the benefit of members of a particular family, it will not trigger Division 149 merely because (for example) distributions to family members who are beneficiaries are made in such amounts and to such of those beneficiaries as the trustee determines in the exercise of its discretion.
  3. However, if due to the exercise of a trustee's discretionary powers to appoint beneficiaries or by amendment of the trust deed, there is in practical effect a change of 50% or more in the underlying interests in the trust assets Division 149 will be triggered. In other words, if it is the case that the members of a new family are substituted as recipients of distributions from the trust in place of persons who were formerly the object of such distributions then the assets will be deemed to have become post CGT assets. 
** For the trainspotters, ‘losing it’ is the key line from The Alabama Shakes song ‘Dunes’ from 2015.

Tuesday, November 19, 2019

Post death super trusts; a fine time in a time of need **

View Legal blog post Post death super trusts; a fine time in a time of need **

Previous posts have explored the approach to superannuation proceeds trusts (SPT) for infant beneficiaries by the Tax Office (see for examples - Superannuation and skirting the shoals of bankruptcy, Don't Stop Believin' - Tax Office & superannuation proceeds trusts and Just Can't Get Enough tax wins).

As explained in previous posts, the factual matrix for where SPTs are relevant are generally tragic - infant children who lose a parent who had not implemented a competent estate plan that was fully funded and incorporated testamentary trusts.

A regularly posed question in relation to establishing a SPT however is whether the payment of superannuation death benefits to the trust is in fact permitted under the relevant legislation.

In this regard, under section 307-15(2) of the Tax Act a payment can be made 'for the benefit' of the intended beneficiary, including to another person or entity.

Where a death benefit payment is made to the trustee of an SPT, this can satisfy the requirements in section 307 where, for example:
  1. the only beneficiaries of the SPT are infant children of the deceased;
  2. those children have an absolute beneficial entitlement to any amounts held in the SPT;
  3. the trustee of the SPT cannot amend the trust deed to vary or defeat the beneficial interest of any child. 

In this type of situation then, in accordance with section 302-60 of the Tax Act, the death benefits payment made from a superannuation fund to the trustee of the SPT is not assessable income.

The above conclusions are confirmed in Tax Office Private Ruling Authorisation Number 1013007176699. As usual if you would like a copy of the Private Ruling please contact me.

** For the trainspotters, the title of today's post is riffed from New Order's song 'Fine Time'.

Tuesday, November 12, 2019

Automatic** disqualification clauses for trustees and appointors


With thanks to the Television Education Network, today’s post considers the above mentioned topic in a ‘vidcast’.

As usual, an edited transcript of the presentation is below -

Question: How do ‘automatic disqualification’ clauses work and are they effective from a family law perspective?

Answer: This is an interesting question.

Many of the trusts that we (and other law firms) establish contain a provision in them that we call an ‘automatic disqualification’ provision.

The provision is drafted to ensure that anybody in a key role, such as an appointor or trustee, will get automatically removed from that role upon certain events happening to them.

The most common disqualification scenario is death or incapacity.

If you’ve got a trustee who becomes incapacitated or dies, then obviously they need to be removed and someone else needs to step into that role to manage the trust.

However, those triggering events can also include a family law breakdown. We can have a clause in our trust deed or our will saying that if the appointor or the trustee separates from their spouse, then they are automatically disqualified from that role and somebody else steps in in their place.

I’m not aware of any instances where the effectiveness of that type of clause has been tested before a Court, but I think it has reasonable grounds of being successful if it is tested.

As a general rule we include this type of provision in all of our documents on the basis it gives our client a fighting chance of retaining the trust if anything goes wrong for them personally, since they didn’t actually make that change to the control of the structure themselves.

** For the trainspotters, ‘Automatic’ is a song by The Pointer Sisters from 1983.

Tuesday, November 5, 2019

Seems like all that is ever wanted is (no) markings on wills**

View Legal blog Seems like all that is ever wanted is (no) markings on wills**

Following last week’s post concerning codicils, an adviser contacted me about why we were so pedantic concerning wills, for example, wanting to ensure that no paperclips or other markings are made on an original will.

This question follows neatly from the codicil discussion.

In particular, where there are markings on a will, that might indicate something else has been attached to the will, then the law creates a number of obligations to investigate this potential issue.

For example, it could be assumed that a paperclip may have attached a codicil to a will.

Obviously, in many instances, the paperclip will in fact have only attached, say, a 'with compliments' slip.

This therefore can create a significant amount of wasted resources, hence our very strong recommendation that nothing be attached in any way, shape or form to a will (or codicil).

** For the trainspotters, the title of the post today is riffed from a line from The Foo Fighters song ‘This is a call’ from 1995.