Richstar – Another Reminder

Earlier posts have looked at various aspects of the leading trust case of Richstar – see -

Impact of Richstar on discretionary trusts

Scope of the Richstar decision

As set out in earlier posts, and with thanks to the Television Education Network, today’s post considers some related practical issues in relation to this case in a ‘vidcast’ at the following link - https://youtu.be/pk9xWWtLPgE

As usual, an edited transcript of the presentation for those that cannot (or choose not) to view it is below –

The Richstar case is out of Western Australia from 2006.

It was a decision that appeared to potentially open up the floodgates in terms of how trusts would be considered from a bankruptcy perspective, and potentially see the assets inside a trust would be treated in the same way as they are under the family law regime and therefore, potentially be exposed on bankruptcy.

The Richstar decision was driven by an ASIC court case, effectively seeking a freezing order across all of the assets of the trust.

The argument being that there was such a high level of control available to the person that had gone bankrupt because they were the appointor or principal of the trust, they owned all the shares in the trustee company, they were director of the trustee company and they historically received distributions to themselves personally. The combination of all these things was enough for the court to hold that the trust was just a shell.

In other words the court held the trust was actually just a brilliant disguise for what was actually going on.

There's been at least another three or four cases after Richstar that say the conclusion in Richstar is not good law. That is – the court can't take the family law principles and put them into the Bankruptcy Act. They're completely different regimes and it's not appropriate.

So what is the reason we're still speaking about Richstar when it was a decision of a sole judge in Western Australia in 2006?

The reason is that the sole judge is now the Chief Justice of the High Court. Therefore as much as there are a number of the cases, particularly in New South Wales, that say Richstar is bad law and something to ignore, there's still that heritage or residual issue that the Chief Justice of the High Court made that decision. There is thus a risk that the courts might revisit that in another context at some point in the future.

Pricing on a page (or 3)

Many would be aware of our passion for up front, guaranteed fixed pricing, rather than the traditional time-billing model of most law firms – previous posts explore this in more detail

The firm of the future is in fact the firm of now

Fixed Pricing and Change Orders

Insights on the Journey to Value Pricing

Much of our inspiration in this regard comes from the VeraSage Institute, a revolutionary international think tank which.

For many years VeraSage has been challenging professional services firms to price their services other than with reference to the Marxist derived labour theory of value that is time billing.

The VeraSage Institute founder (and LinkedIn Influencer) Ron Baker was recently in Australia.

View were very fortunate to host Ron present both a webinar and in person workshop. For those who missed the events and would like to access streamed versions of the recordings click here.

For those interested, leading Australian based VeraSage fellow John Chisholm (see - https://www.linkedin.com/in/chisholmjohn) also profiled a sketch note of the workshop or as he described it ‘pricing on a whiteboard’ in one of his recent posts – see - http://www.chisconsult.com/pricing-on-a-whiteboard/

Image credit: Dyan Burgess

A gift for you, some prizes for some and a reminder of the intersection between law and IT

Most will be aware of our passion for being ‘for friends’ – our ‘why’ that ensures we create solutions that we would be proud to offer to our closest friends.

A significant part of where we invest our skills to achieve this 'why' is in the ‘uberification’ of estate planning law, which means we heavily focus on technology enabled solutions.

This also means we have become used to ‘failing fast’.

Most of our fails are private and do not hit your inbox. Sometimes, like yesterday, our fails are public and involve dumb things like promoting an upcoming webinar AFTER the webinar has been held …. That is, our promotion of the webinar we held earlier this week - ‘Adviser Facilitated Estate Planning – Everything you need to know to deliver exceptional value’.

In seeking your forgiveness, we (as those who attended the webinar were promised) offer anyone who sees this email the following:
- a full copy of the slides
- an electronic copy of our 2015 edition of consolidated blog posts (you are free to use any of this content however you wish – with or without acknowledging source)
- the weblink for free access to the webinar recording, under the heading ‘Free recorded webinars’

For the 5 most interesting (as unilaterally determined by our team) one liners about our fail (or lawyers generally) shared on our LinkedIn page over the next week we will send you a proof of one of most popular book releases yet – ‘40 Forms of Trusts’ and free access to the 90 minute webinar that View presented recently which explains each of the 40 trusts – seehttps://viewlegal.com.au/product/recorded-webinar-package/

For those who attended the webinar (or view the recording), attached are our solutions in relation to estate planning, business owners solutions, trust succession and superannuation benefits.

You can view a summary of our wholesale solutions at https://viewlegal.com.au/pricing/(please note that you will need to be logged in to the website to view this page).

If you would like us to consider the appropriate package for your client’s circumstances, you can submit a free review on our website under https://viewlegal.com.au/estate-planning-free-review/

Finally, some useful flyers and videos are available in our estate planning toolkit to assist the clients with their estate planning and can be viewed at https://viewlegal.com.au/resources/

We confirm CPD/CE points for most professional bodies are self-assessed and this email can be produced as evidence of attendance at the webinar which ran for 60 minutes of technical content. If any other particular requirements are needed other than this email please let us know.

A final disclaimer – one liners and lawyer jokes submitted may form part of the next edition of our book ‘101 best lawyer jokes ever’ – see https://viewlegal.com.au/product/101-lawyer-jokes/

Harris and the Missing Beneficiary

Earlier posts have looked at various aspects of the leading family law and trust case of Harris – see -

A Practical Analysis of Harris

Read the deed - another reminder re invalid distributions

As set out in earlier posts, and with thanks to the Television Education Network, today’s post considers some related practical issues in relation to this case in a ‘vidcast’ at the following link - https://youtu.be/xO0rrLqGSkU

As usual, an edited transcript of the presentation for those that cannot (or choose not) to view it is below –

A further very interesting aspect in the case of Harris, is that over many years, there'd been distributions made to a bucket company by the relevant family trust.

The 100% shareholder in that bucket company was the husband. So the wife had a legitimate expectation in relation to that company that she would be absolutely entitled to at least 50% of that under the property settlement.

There was over $1 million worth of distributions that had been made to that bucket company over time out of the family trust that owned the business.

What the court did was that they actually read the trust instrument.

The trust instrument was quite particular on who the beneficiaries were, including saying that any bucket company must be expressly listed as a beneficiary. Here the relevant company wasn’t listed as a beneficiary.

This meant there had about eight or nine years’ worth of distributions that had been purportedly made to the bucket company which were in fact all void.

The family court said we don’t need to get our hands dirty on what the Tax Office might think about that, but we suspect they will be interested. For the purposes of the family law case, the husband was ‘fine’ because the bucket company was in fact valued at nothing.

A Practical Analysis of Harris

A previous post has looked at various aspects of the leading family law and trust case of Harris – see - Read the deed - another reminder re invalid distributions

As set out in earlier posts, and with thanks to the Television Education Network, today’s post considers some related practical issues in relation to this case and trust splitting in a ‘vidcast’ at the following link - https://vimeo.com/154687783/

As usual, an edited transcript of the presentation for those that cannot (or choose not) to view it is below –

Harris is an example of the interplay between using a bespoke constitution, but not doing a trust splitting exercise.

In this situation, under an estate planning arrangement, the dad was the original shareholder and director of the corporate trustee. He died and under his estate plan, he gave shares in the company to the adviser, he gave shares to the husband (his son) and then mum (the wife) retained her shares in the trustee company.

These shareholders also acted as the board of the trustee company.

Inside that family trust was a family business that had been running for many years. The husband was, on all the evidence, important to that business and had a really key role. At no stage did the family attempt to split the trust though.

The husband had siblings, it was clearly still the ‘family’s trust’ and there were still all of the normal rules and obligations you'd expect. The husband had not otherwise been given any significant control. Thus, on his argument, the trust was not an asset of his in the family court scenario.

The wife said the opposite. The wife said even though the family hadn't gone through a trust splitting exercise in a formal sense, there were significant assets that were the husband’s, and therefore, they're things she was entitled to 50% of.

The court held that family law cases will turn on the facts.

Here, they were satisfied that the husband has no control.

There was no de facto splitting.

The terms of the corporate trustee constitution meant that the trustee directors must act jointly and in concert.

There was no evidence to allow the court to assume that the mum was somehow under the manipulation or control or acting as the mere puppet of the husband.

This meant the court essentially ignored the trust.

The reality however is that if the family had gone down the trust splitting path, you can almost guarantee that the earlier family law case of Pittman (email me if you would like a copy of that decision) would have been followed. In that case the court held that assets of a family trust, being a business, were exposed to a family law settlement.