Latest View Legal Apple and Android app launched

Following the successful launch last year of 5 View legal apps (in areas such as estate planning, business succession and SMSFs), we have now developed and launched another Apple and Android app.

The new app is in relation to creating a template Memorandum of Directions (MoD) and can be downloaded via the following links –

1. Apple – https://appsto.re/au/7ayT6.i
2. Android – https://play.google.com/store/apps/details?id=view.legal.mod 

A MoD can be an essential estate planning tool.

Importantly however, MoDs are generally only morally (not legally) binding and therefore do not change the provisions of a will.

The View Legal MoD app is designed to allow the user to narrow down some of the broad areas that might be relevant in relation to implementing, or updating, their MoD.

Depending on the answers provided, the app generates a free template memorandum of directions in PDF and word, allowing the user to then use this as a framework to complete the document as they wish. 

All 6 of the View apps can be downloaded via our website – see - http://viewlegal.com.au/download-our-latest-apps/

Until next week.

Trust distributions – is the recipient a beneficiary?

Numerous previous posts have raised that the trustee of a discretionary trust must ensure that the intended recipient is in fact a potential beneficiary of the trust when making a trust distributive

http://blog.viewlegal.com.au/2014/06/trust-distributions-3-reminders-for-30.html

http://blog.viewlegal.com.au/2013/09/read-deed-another-reminder-re-invalid.html

http://blog.viewlegal.com.au/2013/07/trust-distributions-and-30-june.html

As mentioned in last week’s post, one of the most famous cases in this regard is BRK (Bris) Pty Ltd v FCT [2001] FCA 164 (see - http://blog.viewlegal.com.au/2015/05/trust-distributions-three-reminders.html).

In relation to the aspect of the decision in BRK that concerned the initial failure to make a valid distribution, the circumstances were as follows:

1. The trustee had the power to make distributions amongst potential beneficiaries.
2. The beneficiaries were listed in a schedule to the deed.
3. The trustee believed it had the power to nominate additional beneficiaries, and indeed, prepared resolutions quoting particular clauses in the deed that gave it the requisite power.
4. Unfortunately the trustee must have been referring to some other trust instrument, as the purported power to nominate additional beneficiaries did not in fact exist in the trust deed for the relevant trust.
5. As the trustee did not have the relevant power to make the nomination resolution, the subsequent distribution resolution purporting to pass benefits to the invalidly nominated beneficiaries also failed.

Although it was unnecessary given the above conclusions, the court also noted that even if the trustee had the power that they purported to exercise in nominating the additional beneficiaries, the attempted resolution of income distribution would have failed in any event because:

• one of the beneficiaries nominated did not exist at the date of the distribution;
• the other beneficiary nominated was mis-defined (in particular, a company was noted as a trustee of a particular trust, however that company was not in fact acting as trustee for the trust at the date of nomination).

Image credit: Matthias Ripp cc

Trust distributions – three reminders

Previous posts have focused on the various key aspects in relation to trust distributions (see for example -

http://blog.viewlegal.com.au/2013/10/one-remedy-where-trust-distributions.html

http://blog.viewlegal.com.au/2013/08/a-further-reminder-read-deed.html

http://blog.viewlegal.com.au/2013/07/trust-distributions-and-30-june.html)

As another 30 June looms, it is useful to note that one of the key aspects in this regard relates to the manner in which section 99 of the Tax Act causes the trustee of a discretionary trust to be taxed at the top marginal rate whenever an income year passes where no beneficiary is made presently entitled to the trust income for that year.

In this type of situation, it is critical to consider the way in which the relevant trust deed is crafted, and in particular:

1. understanding if there is a default distribution provision in relation to income;
2. if there is a default provision, ensuring that the potential default beneficiaries reflect the intentions of those ultimately in control of the trust;
3. ensuring that the default provisions do in fact work.

Arguably, the leading case in this area is BRK (Bris) Pty Ltd v FCT [2001] FCA 164.

As usual, a full copy of the case is available at the following link http://www.austlii.edu.au/au/cases/cth/FCA/2001/164.html.

While there was a purported default distribution, it was crafted to only apply if the trustee had not otherwise made a decision 'within a reasonable time after the end of a financial year'.

While the provision was likely valid for trust law purposes, it was ineffective for tax law purposes because section 99 imposes the top marginal tax rate for any undistributed income as at midnight on 30 June each financial year.

Image credit: Ken Teegardin cc

The Art of Value

Many would be aware of our passion for up front, guaranteed fixed pricing rather than the traditional time-billing model of most law firms.  

A summary of our approach in this regard has received wide spread interest – see the ‘Old View v New View’ table on our website at - http://viewlegal.com.au/a-new-view/

Much of our inspiration in this regard comes from the VeraSage Institute, a revolutionary international think tank which, for many years, 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 was founded by LinkedIn Influencer Ron Baker and we are proud to be listed as a VeraSage ‘Trailblazer’ (see - http://www.verasage.com/thelist/).

Another of the Trailblazers listed is the business from the United States founded by Kirk Bowman known as ‘The Art of Value'.

Kirk hosts a podcast on iTunes and recently I was fortunate enough to be featured on it.

A link to the podcast is as follows - https://itunes.apple.com/au/podcast/art-value-show-discover-value/id924824616?mt=2#episodeGuid=http%3A%2F%2Fartofvalue.com%2F%3Fp%3D4849.  Alternatively it can be viewed via the Art of Value blog, that also provides session notes at - http://artofvalue.com/journey-from-time-to-value-matthew-burgess/

The interview touches on many aspects of our experience, including:

1.  That value pricing is a journey, not a destination;
2. Case study examples of fixed pricing by professional services;
3. The importance of agreeing with a client a defined scope before commencing work;
4. That while fixed pricing may change your business, offering customers choices can change your life;
5. Exploring the cultural issues behind converting from a time billing firm (where the key focus is on what is ‘chargeable') to a timeless firm (where the key focus is on what is valuable).

Image credit: Nicki Mannix cc

Lessons from decisions since Spry

As set out in earlier posts, and with thanks to the Television Education Network, today’s post addresses the issue of ‘Lessons from decisions since Spry’ at the following link - https://youtu.be/IWsmKqpgwbs

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

Immediately following Spry, the feeling of many observers was that there would never be any outcome in a family law matter other than to say that the assets of trusts were entirely exposed. 

What actually happened, however, is that despite the decision in Spry and a number of subsequent decisions have reinforced this, that trusts potentially remain a very robust asset protection vehicle.

Having said that, it is also clearly the case that the court will not be in any way restricted in terms of what they can and cannot do with the assets of a trust, if they have a legitimate reason to believe that there are grounds for doing so. 

Some examples might be if:

• the trust is actually the ‘alter ego’ of one of the parties to the relationship;
• it can be seen that the assets of the trust have really been created because of the joint effort of the relationship; and
• the assets of the trust have traditionally always been used for the benefit of not just the two spouses, but also wider family members.

In each of those types of scenarios, the court will rely on, if not Spry itself, certainly principles adjacent to Spry, to look beyond the trust structure and deal with the underlying assets of the structure.

Impact of the Spry decision on trusts

As set out in earlier posts, and with thanks to the Television Education Network, today’s post addresses the issue of ‘Impact of the Spry decision on trusts’ at the following link - https://youtu.be/mFkCvyZaqZs

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

There is no doubt that immediately following Spry, basically everyone was assuming that the position moving forward would be that no matter how you set up a trust, and no matter if it was a family trust or a testamentary trust, it would never provide any level of asset protection at all. 

However, the reality in relation to Spry is that a lot of the reasons for it having such a radical impact in that particular scenario were really driven by the factual circumstances of the case.

For example, there were allegations, though not proven, neither were they disproven, regarding mismanagement of trust assets, deliberate threats to actually destroy trust property, and deliberate attempts to mislead the judges through the various stages of the court process. 

If you look at Spry in the context of these allegations, in terms of the wider factual scenario, and some of the subsequent cases, it's probably fair to say that you can distinguish a lot of the general trust structuring planning is in this area, away from the decision of Spry itself.

Until next week.

Using discretionary trusts to protect inheritances

As set out in earlier posts, and with thanks to the Television Education Network, today’s post addresses the issue of ‘Using discretionary trusts to protect inheritances’ at the following link - https://youtu.be/lkkevmdo4MU

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

Historically, the reality has been that no matter if it’s a normal family trust or some form of testamentary trust, there's been a general acceptance that the Family Court could attack the assets of that trust in particular circumstances.

However, if it was structured appropriately, and care was taken in terms of how the trust structure was setup, then the assets of a trust would generally be quarantined.  The concern in recent times has been the decision of Spry, which received a lot of media attention. 

That decision seemed to create the impression, on the face of it, that no matter what form of structure was setup - family trust or testamentary trust - and no matter how that was crafted in terms of the control structure of the arrangement, the assets of the trust would always be completely exposed. So, obviously a decision that created a radical change in terms of the way people approach setting up trust structures.

Until next week.