Thank you + some context - #NowInfinity + #View

As has been circulated in a number of forums, we are very excited to confirm View’s strategic partnership with NowInfinity.

Thank you for the positive feedback received already.

View has been on a mission to revolutionise access to quality legal advice in a range of highly specialised areas - namely estate planning, structuring, tax, trusts, asset protection, superannuation and succession planning.

Amongst an array of innovations our platform was one of the first to provide 100% upfront fixed pricing with a service guarantee. We have passionately strived to develop products that provide collaborative pathways with other professionals, in the process creating over 90 online and automated legal solutions.

Leveraging technology has been the enabler in us creating a seamless ecosystem in these specialisations.

Indeed, it has allowed us to create an ‘and’, not ‘or’ platform. That is, we have been able to continue to deliver bespoke tailored solutions for high net worth individuals and business owners, while simultaneously using the knowledge we have gained to build a disruptive solution for the majority of the market.

The centrepiece of our success to date has been the support of the adviser network across the country, given that our entire model is founded on advisers facilitating each solution, only involving View where it is clear that we can add value on a wholesale or business to business basis.

Similarly, NowInfinity has been on a mission to profoundly change the way businesses are functioning, workflows are implemented and documents are created, stored, updated and managed across the entire financial services and related industries.

Founded at around the same time as View, NowInfinity already has an impressive track record of launching numerous cutting-edge products.

The opportunity to combine the two businesses and deliver holistic and integrated estate planning solutions we believe is compelling on a range of levels, particularly as it offers accountants, financial advisers and other lawyers a truly differentiated facilitated model.

More context about the combined platform will be provided in our upcoming half and full day Estate Planning Roadshow being held in Sydney, Melbourne, Adelaide and Perth (the Brisbane event was last week).

Download the brochure here.

Watch the promo video below.

Finally, for those who had not otherwise seen the press release confirming details of the combined group, under the heading ‘Powerhouse disruptors join forces: NowInfinity and View Legal’ it is set out in full below.

Two powerhouse disruptors – cloud-based document and entity management platform NowInfinity, headed up by fintech entrepreneur Amreeta Abbott, and groundbreaking law firm View Legal, headed up by innovator and recognised expert in estate planning and tax law, Matthew Burgess, have joined forces, merging the digital business units of each firm and forming a strategic partnership on legal services.

“The partnership and merger provide accountants and bookkeepers, financial advisers, SMSF specialists and adminstrators and legal firms with a whole new level of solutions,” said NowInfinity CEO, Amreeta Abbott. “It enhances the NowInfinity platform, enabling members to efficiently create, collaborate and manage specific governance and life events for their clients.”

Ms Abbott said View Legal is a well-recognised legal firm that truly understands what matters to end clients. “View Legal’s team of lawyers, their processes and their non-traditional approach will also make legal advice more accessible to NowInfinity members and inspire them with the confidence to offer cradle-to-grave advice.”

Over the past four years, NowInfinity has delivered huge cost efficiencies via data automation and systems integration. “This has been magnified by the recent release of the NowInfinity Entity Management Suite, which provides corporate compliance, including ASIC lodgements; trust management and SMSF Compliance.”

Similarly, View Legal has created a disruptive and innovative way to offer legal services, with a particular focus on tax and estate planning by, amongst other things, introducing a fixed pricing model, actively collaborating with other professionals and creating an array of online and automated solutions.

Ms Abbott said that together, NowInfinity and View Legal will continue to innovate with the objective of delivering technology and services that underpin the rapid and required change within the accounting, financial advice and legal industries.

“First cab off the rank will be a new estate planning solution designed to eliminate the traditional barriers that have previously limited end-to-end client advice between accountants, financial advisers and lawyers,” she said.

Director of View Legal, Matthew Burgess said, “Leveraging technology to allow advisers to facilitate client solutions is the centrepiece of the View platform. Our partnership and merger with NowInfinity, the leading provider in this space, is exceptionally exciting and exemplifies the true meaning of synergy.”

About NowInfinity
NowInfinity is a technology company with a progressive and dynamic cloud based documentation and entity management platform solution with features enabling rapid company formation with ASIC, compliance tools and legal document templates for entity establishment and management. The solution is used by accounting, bookkeeping, financial advice, SMSF specialist, super administration and legal firms. It provides users with legal templates, entity registers, corporate compliance administration and fee management, SMSF compliance, trust management, document collaboration and data integrity via its integrations with but not limited to, ASIC, XERO, Microsoft Dynamics, salesforce.com, Class and electronic signatures – DocuSign.

About View Legal
View Legal is built around the disruptive mantra of being a law firm that friends would choose. To achieve this vision, View Legal has fundamentally and radically revolutionised access to quality legal advice, in the highly specialised areas of structuring, tax, trusts, asset protection, business sales, estate and succession planning.
Using technology as an enabler, View Legal has taken each of the tenets of the traditional delivery model – and turned them on their heads, with guaranteed up front fixed pricing replacing timesheets, entirely virtual office space replacing fancy city premises and active collaboration with advisers nationwide replacing the incumbent silo mentality.

They're 18, they’re beautiful and they're no longer ‘yours’

One regularly asked question in estate planning is ‘do my kids need estate planning documents?’.

The one word answer is – absolutely.

The more detailed answer to provide some context is as follows:

1. Assuming a person otherwise has mental capacity, they are entitled to implement estate planning documents on reaching the age of majority (i.e. 18 years). 
2. The main exception to this rule is that a married person may implement estate planning documents, even if they have not reached the age of majority. 
3. If a person has reached the age of majority, but does not have estate planning documents in place, an array of complications can arise. 
4. If the person dies, then their estate will be administered in accordance with the intestacy rules (previous posts have looked at various aspects of these rules, for example see How do the intestacy rules work? and What happens to assets in the estate if a person dies without a will?.
5. Invariably, the intestacy rules trigger a ‘triple whammy’ – significantly more costs, significant time delays and often a distribution that does not reflect the wishes of the deceased. 
6. Where a young adult loses capacity, the adverse consequences for the family can in some cases be even more traumatic than a person dying intestate. 
7. In particular, without an enduring power of attorney, it is essentially a government department that has the default right to make the decisions on behalf of the incapacitated person. 
8. While there is a statutory process that allows interested parties (for example, parents of the young adult) to have themselves appointed, this again invariably causes a ‘triple whammy’ of increased costs, increased delays and the risk that the preferred people are not in fact appointed. 

Unfortunately, we have seen a myriad of horror stories involving young adults without any estate planning arrangements in place, for example:

1. A 21-year-old who died with over $1 million in assets. These assets were as a result of being a member of multiple superannuation funds that she had joined working in a range of casual positions during university. Each fund had automatic insurance, regardless of the member balance, that totalled over $1 million. 50% of these entitlements went to the lady’s estranged father whom she had not even spoken to for over 15 years. 
2. A 19-year-old man who had been gifted over $300,000 by his parents to help acquire his own unit. On his death the unit passed to a lady who claimed to be his de facto, but whom the parents had never in fact met. 
3. An 18-year-old man who was left stranded in an incapacitated state in Spain following an accident at the ‘running of the bulls’. As his parents were not appointed as his enduring attorney, they had no legal authority recognised by the Spanish authorities. 

As a separate comment - the popularity of recent posts leveraging pop references has been used again, with a song, the most popular version arguably recorded by Beatle’s drummer Ringo Starr ‘You’re sixteen, you’re beautiful and you’re mine’ - see https://www.youtube.com/watch?v=8ainB6qnWBI

Finally, many of the themes in this post will be featured in our upcoming half and full day Estate Planning Roadshow being held in Brisbane, Sydney, Melbourne, Adelaide and Perth.

Download the brochure here.

Watch the promo video below.

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Don't believe the hype - trusts do protect assets

Previous posts have considered the true impact of arguably the highest profile decision in relation to trusts and asset protection, being the decision in Richstar (that is - Australian Securities and Investments Commission v Carey (No 6) (2006) 153 FCR 509). The most recent post is available here - Richstar – Another Reminder

More recently the decision in Fordyce v Ryan & Anor; Fordyce v Quinn & Anor [2016] QSC 307 has again reinforced that the reasoning in Richstar, at least as it relates to the ability to attack assets held via a discretionary trust, is at best questionable.

In particular, the case confirms succinctly as follows -

'It is difficult to accept as a principle of reasoning that a beneficiary’s legal or de facto control of the trustee of a discretionary trust alters the character of the interest of the beneficiary so that it will constitute property of the bankrupt if the beneficiary becomes a bankrupt.

To the extent that Richstar might be thought to support such a principle, it has not been followed or applied subsequently and it has been criticised academically.'

As set out in previous posts, there are numerous decisions now that reached a similar conclusion.

A selection of the subsequent cases is summarised below. If you would like access to the full copies of any of the decisions mentioned in this post, please email me:

1. Tibben & Tibben [2013] FamCAFC 145 - The only ‘entitlement’ of the beneficiaries under the Deed of Settlement was a right to consideration and due administration of the trust: Gartside v Inland Revenue Commissioners; 
2. Deputy Commissioner of Taxation v Ekelmans [2013] VSC 346 - The applicant relied on the decision in Richstar to contend that the cumulative effect of the role and entitlement of Leopold Ekelmans under the trust instruments amounted to a contingent interest in all of the assets of the trust, making those assets amenable to a freezing order as if the assets of Leopold Ekelmans. The Court found that the applicant could not in this matter rely on Richstar; 
3. Hja Holdings Pty Ltd and Ors & Act Revenue Office (Administrative Review) [2011] ACAT 91 – notwithstanding that beneficiaries under a ... discretionary trust have some rights, such as the right to have the trust duly and properly administered, generally a beneficiary of a discretionary trust, who is at arm's length from the trustee, only has an expectancy or a mere possibility of a distribution. This is not an equitable interest which constitutes "property" as defined; 
4. Donovan v Sheahan as Trustee of the Bankrupt Estate of Donovan [2013] FCA 437 - a beneficiary of a non-exhaustive discretionary trust has no assignable right to demand payment of the trust fund to them (and nor have all of the beneficiaries acting collectively) and that the essential right of the individual beneficiary of a non-exhaustive discretionary trust is to compel the due administration of the trust; 
5. Simmons and Anor & Simmons [2008] FamCA 1088 – the court and parties referred to Richstar on a number of occasions and confirmed that a beneficiary has nothing more than an expectancy. 

As a separate comment - the popularity of last week's post leveraging a 1980s pop reference has been used again, perhaps with a slightly more obscure song, Public Enemy's 'Don't believe the hype' is linked here - https://www.vevo.com/watch/public-enemy/dont-believe-the-hype/USDJM0400011

Finally, many of the themes in this post will be featured in our upcoming half and full day Estate Planning Roadshow being held in Brisbane, Sydney, Melbourne, Adelaide and Perth.

Download the brochure here.

Watch the promo video below.

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Money for nothing... Succession planning grants for Queensland farming families

The Queensland Government has recently announced the introduction of a new farm management grant which provides financial assistance to Queensland farming families wishing to review or update their succession planning arrangements.

On the basis that every family should in theory ensure they have comprehensive estate and succession planning in place the grant could be viewed through the lense of the iconic 1980's song - that is - money for nothing.

This said, the grant is however only available to Queensland primary producers (and their families) and can only be used to fund professional fees incurred in relation to the family’s estate planning arrangements and related succession planning issues.

The grant will cover 50% of the professional fees incurred by the family, up to a maximum of $2,500 per year. In other words, the total spend in any year will need to be at least $5,000 to maximise the contribution from the Government.

The availability of the grant will hopefully encourage more Queensland farming families to get their succession plans in order.

Ideally it may also encourage other State Governments to adopt similar incentives.

If you or your clients would like more information in relation to the farm management grant, please contact us.

In this regard, we are excited to be presenting our half and full day Estate Planning Roadshow in Brisbane, Sydney, Melbourne, Adelaide and Perth that will explore a range of planning opportunities in this space.

Download the brochure here.

Watch the promo video below.

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We do not give legal advice’- Part I

Following on from a previous post All Care, No Liability, as promised, this week's post provides an example of the type of exclusion wording that most online providers of legal documents provide.

Any adviser looking to facilitate legal solutions for their clients should understand the consequences of this style of exclusion, particularly in relation to their own professional indemnity insurance arrangements.

The example exclusion wording is as follows –

By using our service agree that:

1. we cannot, and do not, give you legal advice;
2. the company that owns and operates this service is not a law firm;
3. our service provides information to help you answer the questions and to order a product and that that information is information only, not advice; 
4. we cannot and do not warrant that a product you decide to order is appropriate or suits your needs; 
5. we cannot and do not warrant that your use of our service is appropriate or suits your needs; 
6. the legal, commercial and taxation effects of a product vary and a product's suitability will, therefore, vary according to particular circumstances; 
7. only you know the purpose for which you intend to apply a product you order and that we are not responsible for the choice you make regarding the same; 
8. you must consult a lawyer for advice concerning the suitability of a product you order using our service; 
9. the documents you buy from us and the material on our website is only general; they are not prepared by us and we do not endorse them, rather we disclaim any responsibility for them; 

As there are so many exclusions generally set out on this type of service, the summary will be continued again next week.

We are excited to be presenting half and full day Estate Planning Roadshow in Brisbane, Sydney, Melbourne, Adelaide and Perth that will explore a range of planning opportunities in this space.

For your limited opportunity to access special early bird pricing for our Roadshow, download the brochure here.

Watch the promo video below.

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The trust beneficiary, there never was

As set out in earlier posts, and with thanks to the Television Education Network, today’s post considers the above mentioned topic in a ‘vidcast’ at the following link - https://youtu.be/_ZcDIESeE5A

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

The case study that we will explore here involved a husband who was breaking up with his spouse.

The husband had been the sole trustee of the relevant trust from day one. We'll call him Mr Y. Mr Y was also the primary beneficiary of the trust.

The wife was trying to argue that Mr Y had received distributions overtime and therefore she was entitled to percentage share of the trust.

So a fairly standard analysis of a family trust in a family law dispute. We were called in because the wife’s lawyer had the hide to actually read the trust deed.

The trust instrument stated that in relation to the definition of primary beneficiary, in no circumstances could a primary beneficiary receive distributions, if at any time the person was a trustee.

So from day one, the provisions of the deed had meant that Mr Y was never in fact a potential beneficiary of the trust and yet he had received significant distributions over an extended period of time. A fundamental issue triggered simply because no one had actually read the trust deed.

Interestingly, this type of exclusion of beneficiary class is in virtually every trust instrument from a New South Wales trust deed provider. More problematically, this type of provision is actually used by countless other deed providers as well, whether they're based in New South Wales exclusively or whether they in fact are based in other parts of the country.

In this regard, we are excited to be presenting half and full day Estate Planning Roadshow in Brisbane, Sydney, Melbourne, Adelaide and Perth that will explore a range of planning opportunities in this space.

For your limited opportunity to access special early bird pricing for our Roadshow, download the brochure here.

Watch the promo video below.

When exactly is a related party debt statute barred?

For those that do not otherwise have access to the Weekly Tax Bulletin, a further recent article is extracted below.

The case of Re Breakwell and FCT [2015] AATA 628 (25 August 2015, reported at 2015 WTB 37 [1393]) highlighted a common trap in relation to the circumstances where a related party debt will be statute barred. The decision, which was upheld on appeal in Breakwell v FCT [2015] FCA 1471 (22 December 2015, reported at 2016 WTB 1 [27]) remains a timely reminder of the critical interplay between various legislative provisions that practitioners must be constantly aware of.

Breakwell

In Breakwell, the taxpayer argued that a $1.1 million debt owed by him to a family trust should not be included in the calculation of the trust's net assets under the maximum net asset value test for the small business CGT concessions under Div 152 of the ITAA 1997. The basis of the argument was that the debt had arisen prior to 1998 and was therefore outside the 6-year period provided for under the Limitation of Actions Act 1936 (SA).

In this regard, as noted by White J in the Federal Court decision, the relevant section in South Australia is not a bar to proceedings, rather, it creates a defence which bars the granting of a remedy. Similar legislation applies in every State and Territory except in New South Wales, where a creditor's right to the debt is effectively extinguished after the expiry of the limitation period.

Specifically, the taxpayer claimed that because no repayments had been made and he had not acknowledged the existence of the debt in writing, the debt had become statute barred meaning the family trust could no longer enforce repayment of the debt.

In finding against the taxpayer, the Administrative Appeals Tribunal noted that the taxpayer had signed the balance sheets for the family trust for the 2003 to 2008 income tax years (in his capacity as trustee). It was held that the signature on the balance sheets was sufficient to constitute an acknowledgement by him (as the borrower) of the existence of the debt.

This meant the debt was not statute barred and was required to be included in the calculation of the trust's maximum net asset value.

The taxpayer was unsuccessful in appealing the decision to the Federal Court, as previously reported by Jack Stuk and Danielle Gorman (see 2016 WTB 7 [181]). In brief, White J also raised a number of alternative methods by which the loan could effectively be recovered, including:

• the taxpayer as trustee of the family trust would face a duty-interest conflict in raising the limitation of actions defence; 
• the South Australian legislation (which differs from other States in this respect) allows for an extension of the limitation period; and 
• through an action by the trustee to recover trust property, which was again due to differences in the South Australian legislation as it has no limitation period in this regard. 

Why are the statute barred rules so important?

Determining whether a debt has become statute barred can be relevant in a number of areas, for example:

• From a commercial perspective, ensuring the lender has the ability to demand the repayment of the debt. 
• As highlighted in Breakwell, for determining whether or not a debt should be included in the maximum net asset value test under Div 152 of the ITAA 1997. 
• Under Div 7A of the ITAA 1936, which treats a debt that has become statute barred as being forgiven (and therefore potentially gives rise to a deemed dividend). 
• For determining whether a bad debt deduction can be claimed (see for instance TR 92/18). 
• Estate planning, particularly (for example) where there are debts owed by a trust to a will maker and certain beneficiaries are intended to control the trust, with others to benefit under the will. 
• Asset protection, particularly if the "gift and loan back" strategy has been implemented (see for example our article reported at 2013 WTB [1821]). 

The key issue – the start date

In this context, it is obviously important to determine the date on which a loan is deemed to begin.

Historically, there has been some support for the argument that the start date for limitation period purposes was the date that a demand was made for repayment of the debt or the last date a formal acknowledgement (including by way of part payment) was made.

This position was at least partially due to the fact that under the relevant limitation legislation, an acknowledgement must generally be made in writing by the debtor to the creditor, and be signed by the debtor.

The "acknowledgment" debate
Although the relevant legislation is slightly different in each State and Territory across Australia, the general test to determine if a debt has become statute barred is whether, within the relevant period (typically 6 years for unsecured debts and 12 years for secured debts) there has been either:

• a partial repayment by the borrower; or 
• a written acknowledgement of the existence of the debt signed by the borrower and addressed to the lender. 

Although these tests would seem fairly straight forward, there is some debate as to whether the written acknowledgement must be intended by the borrower to be an acknowledgement to the lender of the existence of the debt.

In VL Finance Pty Ltd v Legudi [2003] VSC 57 (13 March 2003) (in the context of the Victorian legislation), Justice Nettle (then sitting on the Victorian Supreme Court) held that any acknowledgement must be intended by the borrower to be an acknowledgement to the lender of the existence of the debt.

Therefore, the mere signing of financial statements by the borrower in their capacity as a trustee or director will not be sufficient to "refresh" the debt. Importantly, it was also held that the limitation period (at least for the purposes of Div 7A of the ITAA 1936) begins to run immediately on the date that an at-call loan is made; not from the time when the first call for repayment is made.

By contrast, Lonsdale Sand & Metal v FCT [1998] FCA 155 (5 March 1998) (in relation to the South Australian legislation) and now Breakwell have both concluded that the mere signing of the financial statements by the borrower will be sufficient to "restart the clock" on the recovery period.

Conclusion

The differences between the outcomes in relation to acknowledgments in VL Finance on one hand and Lonsdale and Breakwell on the other are hard to reconcile.

While it could be argued that VL Finance provided a far more robust analysis of the issue and reached a more reasoned conclusion, practitioners should be cautious relying on the decision given the conflicting judgments.

Nonetheless, some common themes can be identified from all 3 cases, including:

• An oral acknowledgement by the borrower by itself will be insufficient to "refresh" a debt, unless accompanied by some written acknowledgement. 
• The inclusion of a debt on the borrower's signed financial statements should be insufficient to "refresh" the debt, unless it can be shown that those financial statements were subsequently provided to the lender with the intention of acknowledging the existence of the debt. 
• Where the debts are owed between entities with common directors, the signing of the lender's financial statements by a director who is also a director of the borrower will likely be seen by the ATO to be sufficient to "refresh" the debt. 

Ultimately, practitioners should be wary of advising clients that debts have been statute barred where the debts are between related parties.

This issue is generally most relevant if a client wishes to rely on PS LA 2006/2 (GA), which provides administrative relief from Div 7A where loans which arose prior to the introduction of those provisions in 1997 become statute barred. In this factual situation, it is critical to review the financial statements for each relevant financial year. The analysis must focus on whether it could be argued that the debt has at any time been "refreshed" by virtue of the borrower signing the financial statements in their capacity as a trustee or director.

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