McKillop Legal Blog

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What is the role of an executor?

An executor is the person appointed by a Will to administer a person’s estate when they die.

The role of an executor is basically to ensure the deceased person’s debts are paid and that their assets are dealt with as is stated in the Will.

The first task for an executor, after tending to any funeral arrangements, is to secure the assets of the estate such as cash and jewellery. The next task is to obtain a grant of Probate.

To apply for Probate, the executor needs to determine what the assets of the estate are (so that your lawyer can prepare an Inventory of the estate property) and what liabilities the deceased person may have. This often involves searching the deceased’s person’s records and liaising with their accountant and financial advisors.

Following that, steps such as making life insurance claims, notifying banks, superannuation funds and checking the insurance status of large assets are taken. Some assets may need to be sold and tax returns may also need to be lodged.

The specific steps that need to be taken will to a large extent depend on the terms of the Will and the deceased person’s assets and liabilities.

Usually an estate is administered within 12 or so months of the date of death however things such as claims for family provision orders under the Succession Act and other matters adding complexity can delay this.

What if the named executor has passed away?

If a named executor has passed away, then depending on whether they obtained probate before their death, either that executor’s executor or any substitute executor named in the Will takes over.

If there is a Will but there is no person named as executor or no named executor or alternate executor that is alive, then Letters of Administration with the Will annexed can be applied for and the Court appoints an administrator (in place of an executor) to administer the estate as set out in the Will.

What if there is no Will?

If a person dies without leaving a Will, they have died intestate and the relevant legislation details how their estate is distributed.

FURTHER INFORMATION

For further information, please contact McKillop Legal on (02) 9521 2455 or email help@mckilloplegal.com.au 

This information is general only and is not a substitute for proper legal advice. Please contact McKillop Legal to discuss your needs.

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Serving documents on companies

Section 109X of the Corporations Act 2001 (Cth) provides that a document may be served on a company by means including:

(a)  leaving it at, or posting it to, the company’s registered office; or

(b)  delivering a copy of the document personally to a director of the company.

Documents that may need to be served may be a Summons, Statement of Claim or even a Creditor’s Statutory Demand.

Companies are obliged to register a change of registered address within 28 days of at changing. Directors are also required to ensure their address details on the register are maintained.

Where service of a document not properly effected or there is a dispute about its, there is a risk that the Court may determine that service wasn’t effected, set it aside altogether and there could be consequences such as costs orders.

Service by post

Service by post is cheap and easy.

If posted to a company’s registered address, a document is presumed under s.160 of the Evidence Act 1995 (Cth) to have been received at that address on the 7th working day after being posted.

A problem with service by post however, is that the recipient could argue that it was never received or a dispute could arise as to timing of service.

Personal service

Arguably, personal service by a process server of a document on a director of a corporation is the best way to effect service.

These professionals are in the business of doing this and provide an Affidavit of service which can be used in evidence to prove service to a Court and as they are a third party service provider, there is often no dispute raised as to service and when so there is no “he said”/”she said” type argument as there may be if the parties themselves effected service.

Leaving it

An alternative to posting it or serving it on an officer of a company is leaving it at the company’s registered office.

Again, this is best done by a licensed process server who can swear or affirm what they did and when.

Informal service

The Courts are increasingly allowing alternative methods of service where parties are evading service or any of the above methods do not result in effective service such as through third parties, email, text messages, social media accounts etc.

FURTHER INFORMATION

For further information in relation to Corporations Act issue, legal proceedings, serving documents on companies or any business or commercial law matter, contact McKillop Legal on (02) 9521 2455 or email help@mckilloplegal.com.au

This information is general only and is not a substitute for proper legal advice. Please contact McKillop Legal to discuss your needs.

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Why use an IP License Deed?

Any forms of intellectual property (IP), whether they be trade marks, copyright or others, can be licensed for use by third parties. It is effectively renting them out, like an asset hire arrangement for physical assets. So why use an IP License Deed?

A licensing arrangement is advantageous to the holder of the IP as royalties, licensing fees or other forms of payment can generate revenue for the benefit of the holder of the IP, in addition to confirming that the IP remains held by the holder even though it may be used by the licensee.

Another common reason for the use of an IP License Deed is to aid in asset protection, such as where one entity may hold assets (such as IP) and another entity may trade (and hence incur liabilities and hold risk). The licensing arrangement means that the “at risk” entity that is using the IP can do so without putting the IP itself at risk. If the trading entity finds itself in financial difficulty or ends up in external administration or liquidation, then the license can be terminated and the IP returns to the control of the asset holding entity.

Licenses do not have to be written, but it is strongly recommended as it can prevent arguments and uncertainty.

License Agreements can cover things including:

  • term and territory
  • whether the use is exclusive or not
  • obligations when using the IP (eg, not to adversely affect the IP)
  • matters that result in termination
  • obligations on termination (such as return of all forms of IP and stop all further use)

FURTHER INFORMATION

For further information, please contact McKillop Legal on (02) 9521 2455 or email help@mckilloplegal.com.au 

This information is general only and is not a substitute for proper legal advice. Please contact McKillop Legal to discuss your needs.

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Renouncing probate

Once a person has died, the executors named in their Will generally need to apply for Probate

Often the person making a Will has appointed all of their children as executors however, as many people relocate interstate or overseas for work, it may not be practical for one or more of them to act in the role of an executor of an estate.

Being out of the jurisdiction is not a problem in relation to being an executor, but it can slow down matters as getting documents signed and in dealing with institutions and things like verification of identity can be cumbersome. There is no requirement for a named executor to act as such.

There is a process that allows one or more of the named executors to leave it to  the other/s to deal with the estate – this is known as “renunciation“. So what is renouncing probate?

Renouncing probate simply means that you are renouncing the rights, powers and responsibilities of being an executor of a Will. Once you have renounced your role as executor, you may not later seek to be, or act as, executor of the estate unless the Supreme Court allows it.

To renounce your role, you must not have intermeddled (dealt with estate property) or undertaken any significant steps in relation to the estate.

FURTHER INFORMATION

For further information, please contact McKillop Legal on (02) 9521 2455 or email help@mckilloplegal.com.au 

This information is general only and is not a substitute for proper legal advice. Please contact McKillop Legal to discuss your needs.

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Companies signing contracts

In prior blogposts, we explained the differences between Deeds and Agreements and what Deed Polls are and we also explained how to properly execute a legal document depending on the type of entity entering into it.

This article relates to execution by or on behalf of an Australian corporation – a Pty Ltd (but not a public company) – that is, what are the requirements for companies signing contracts?

Part 2B of the Corporations Act 2001 (Cth) (Corporations Act) sets out how companies can execute legal document and the assumptions those dealing with companies may make about the execution of documents by or on behalf of a company.

Section 127 describes the ways in which a document may be executed by a company, namely by:

  • 2 directors; or
  • a director and a company secretary; or
  • for a company that has a sole director – that director, if:
    • the director is also the sole company secretary; or
    •  the company does not have a company secretary.

This applies regardless of any other requirements in the company’s constitution.

Companies can also sign via an employee, officer or an agent under s.126 acting with the company’s express or implied authority.

If a company executes a document in accordance with the those sections, then any person dealing with that company is entitled to assume under ss.128 & 129 that:

  • those persons shown as directors/company secretaries on ASIC’s register; and
  • anyone held out by the company as being an officer or agent of the company
  • are:
    • validly appointed;
    • have the authority to exercise the powers of the company; and
    • are properly performing their duties

This assumption applies even if an officer or agent of the company acts fraudulently or forges a document but not if that person knew or suspected that the assumption was incorrect.

Business should be wary of the authority of persons signing and query the person’s authority if they aren’t listed at ASIC formally as a director or company secretary.

Many businesses give higher level employees titles like “Director”,Sales Director” and the like so, often so as to minimize pay rises or for other reasons, but they run the risk that those persons can bind the company due to the statutory assumptions identified above as they are potentially being held out by their titles as having authority to bind the company.

Separately, those employees also run the risk that they are considered ‘shadow directors‘ if the company runs into financial trouble, particularly where any director duties haven’t been followed.

FURTHER INFORMATION

For further information, please contact McKillop Legal on (02) 9521 2455 or email help@mckilloplegal.com.au 

This information is general only and is not a substitute for proper legal advice. Please contact McKillop Legal to discuss your needs.

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What is copyright?

There are various types of intellectual property (the general name given to the laws covering trade marks, patents, designs, circuit layouts, plant breeder’s rights and copyright), but the simplest (at least in terms of how and when it is created at least) is copyright.

What is copyright?

Copyright exists in a ‘work’ as soon as that work is created.

People spend time, money and talent in creating ‘original’ works and their efforts are protected by copyright.

Works include:

  • literary works - texts, books, poems, screenplays, song lyrics, letters, computer programs etc
  • artistic works - drawings, paintings, maps, plans, sculptures, photographs etc
  • dramatic works - plays, screenplays and choreography etc
  • musical works – musical scores (but not the recording of the music itself)

Protection is also given to ‘subject matter other than works‘, being sound recordings/broadcasts, films/movies, published editions of works etc.

Unlike a patent for example, copyright does not protect ideas or information as such but only the original expression of ideas or information. If it is not original, there is no copyright.

Two people could independently come up with a similar work at the same time. Both would hold copyright on their own works.

Copyright is free and automatic in Australia – there is no need (and indeed no place in which) to register it.

What rights does copyright give?

The Copyright Act 1968 (Cth) and the Regulations made under that Act set out the law in Australia regarding copyright.

Copyright protects the original expression of ideas or information – the work itself. The owner of the copyright owns copyright in the text in a book even though the owner of (an authorised) physical copy of a book owns the physical book itself.

Copyright entitles the holder the exclusive right to publish, reproduce (copy) and otherwise use that work (and to make money from doing so). Using a substantial part of a work without the copyright holder’s permission is an infringement upon that right and the holder can commence a legal action for an injunction to restrain such use, damages or accounting for any profits made from such use etc.

There are exceptions to copyright including ‘personal use’ and use (known as fair dealing) including:

  • research or study
  • reporting of news
  • giving of professional advice
  • satire/parody

as well as certain ‘special purposes‘ such as making accessible format copies for persons with disabilities, for educational instruction etc

Overseas copyright is enforced in Australia and reciprocal arrangements exist overseas to protect Australian copyright abroad due to various international conventions. There are treaties in place in some countries only however.

How long does copyright last?

Copyright generally lasts for as long as the person that owns it is alive, plus 70 years (but some shorter timeframes apply to certain works).

Once copyright ends, the work is said to be in the ‘public domain’ – and can be used by anyone.

How to help enforce copyright in a work

If your work is written or able to be viewed such as online or on a screen, you can use the copyright symbol © or (c) on the work, with the author’s name and the date it was created. This symbol serves as notice to the world that you assert copyright in that work and from when.

Using the © symbol is not a requirement to establish or assert copyright however, just a good practice.

Songwriters can register their works through licensing agencies, so fees can be collected and paid for using their songs.

Contractual arrangements regarding copyright and its use can also impose rights and obligations on the parties to it. Copyright can be assigned, licensed or even borrowed against.

Titles, business names and slogans are not protected by copyright (as they are usually too small/unoriginal to be protected by copyright), but they can in some cased be protected by trade mark.

What are moral rights?

Moral rights are the right of integrity of authorship, the right of attribution of authorship and the right against false attribution of authorship. They are non-economic rights that are personal to the creator of a work, so if a work is commissioned by a business, the business would require the person creating the work (and getting paid for it, whether as an employee or a contractor) to assign their moral rights or permanently consent to alterations to it that may otherwise infringe them.

FURTHER INFORMATION

For further information, please contact McKillop Legal on (02) 9521 2455 or email help@mckilloplegal.com.au 

This information is general only and is not a substitute for proper legal advice. Please contact McKillop Legal to discuss your needs.

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What is a trade mark?

Trade marks are a form of intellectual property right. A  trade mark can be used to protect a business name, tag line/phrase or word  (a word mark) and/or logo (a figurative mark), but less commonly, it can also be used to protect a letter, colour, sound, scent, picture, movement, aspect of packaging or any combination of these.

Protecting a brand can add to its value as an asset so it is a very important business consideration, particularly if you ever intend to sell your business in the future.

Why have a trade mark?

A registered trade mark provides the holder the exclusive right to use that trade mark in Australia in respect of specified goods and/or services. This means that the holder of such an intellectual property can legally prevent others from using the trade mark for similar goods and services.

The holder of a trade mark can sell the mark to a third party or allow others to use that mark, for example for a fee, such as through a licensing arrangement. Often a franchise agreement also includes a license to use the trade mark of the franchised business.

Many business owners mistakenly believe that registering a business name or domain name gives them some sort of ownership of that name - this is not the case.

What requirements are there to register a trade mark?

The Trade Marks Act 1995 (Cth) and the Regulations under that Act govern trade marks in Australia.

In order to be registered, a trade mark must be able to distinguish the goods and services of the holder from other traders. It can’t be an everyday word or phrase, a geographical name or be descriptive of the goods or services (as other traders may need to use those words to describe their wares). Further, some signs and names are prohibited from registration.

When seeking registration, certain categories of goods and/or services must be chosen. The protection of the trademark is only in that category (or categories) chosen and only for the types of goods/services described in the application.

A trademark lasts for 10 years but can be renewed for successive periods.

How to help protect your trade mark

Having a registered trade mark gives the owner the right to place the ® symbol next to the trade mark so as to let others know it is registered and to help deter them from using it (without permission).

When a trade mark is not yet registered but an application is pending, the TM symbol can be applied to the mark. There is no requirement to use the ® or TM symbols however. use of the ® symbol in connection with a mark that is unregistered in Australia is an offence under the Act.

Trade marks must be used as registered. Failing to use a trade mark can render it liable to being removed from the register for non-use.

Registration of a logo that includes a trading name does not necessarily protect the trading name, just the logo. This is why the name often needs to be separately registered. Care needs to be taken to consider what is to be registered and how it will be used. Separate registrations are often advised for a name and for a logo.

If you have a trade mark and become aware of someone infringing it (such as by using a very similar name or logo without your consent or indicating they have some association with your business or products when they do not), you should get advice from a lawyer on sending an appropriately worded cease and desist letter asking them to stop using it.

What if your trade mark isn’t registered?

Registration of a trade mark is not essential. Unregistered trade marks can possibly be protected under the common law, such as through the tort of ‘passing off‘ and claiming misrepresentation such as under the Australian Consumer Law however, registration if recommended.

FURTHER INFORMATION

For further information, please contact McKillop Legal on (02) 9521 2455 or email help@mckilloplegal.com.au 

This information is general only and is not a substitute for proper legal advice. Please contact McKillop Legal to discuss your needs.

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What is a Deed Poll?

In a previous article, we explained the difference between Deeds and Agreements however, there is a special type of Deed that does not require more than one party to sign it to make it legally binding (although it can also be made by more than one party, jointly).

That document is the Deed Poll. As soon as it is signed by the party that executes it, it becomes immediately operative and binding.

Deed Polls are solemn declarations, so they are commonly witnessed by lawyers, Justices of the Peace and notaries (but they requirements as to who can be witnesses and whether you need one can differ between States and Territories).

Deed Polls are used for various purposes such as:

  • part of the process of changing your name or gender
  • affirming your identity (such as where you may use more than one name)
  • declaring:
    • a promise to do not not to do something (including keeping information confidential)
    • the validity of a document or right
    • a fact or intention
  • releasing rights

The unilateral obligation/s created by a Deed Poll can be enforced by any person with whom the covenant in the document was made as against the party making it, so they ought not to be entered into lightly.

FURTHER INFORMATION

For further information, please contact McKillop Legal on (02) 9521 2455 or email help@mckilloplegal.com.au 

This information is general only and is not a substitute for proper legal advice. Please contact McKillop Legal to discuss your needs.

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Non-contestable Will

We often get asked “can you draft a non-contestable Will ?

You can draft a Will to state who you want to be your executor and how to divide and distribute your assets once you pass away. Even with a valid Will stating your wishes and even if it has been admitted to Probate (or even if you die intestate), the distribution of your estate can be altered by the Court order under the Succession Act 2006 (NSW) (Act).

Put simply, there is no way to draft a Will prevent such a claim on your estate (and no, you can’t make a gift dependent on not making a claim), but there are things that can be done to help prevent (or minimise) a claim, including:

  • not having an estate at all
  • carefully drafting your Will and drafting evidence to help oppose a likely claim
  • obtaining a release under the Act

A Will can only deal with assets that you have as at the date of your death. One of the best ways of preventing a claim on your estate is therefore to not have any estate in the first place!  This is easier said than done and often means that benefits such as the principal place of residence exemption for capital gains tax (CGT) may not be available and other benefits cannot be accessed, but with the use of trusts and other structures, you can avoid having any personal assets to be distributed on your death. This is an extreme option that not many opt for given the many downsides and potential benefits that need to be forgone.

Where people have not set up their affairs so as to have no actual estate, but later seek to do so (such as by gifting assets, severing a joint tenancy or selling assets to others for less than full valuable consideration), they need to be aware of the provisions in the Act relating to “notional estate“. Notional estate rules in NSW effectively operate such that any assets disposed of in the period of 3 years prior to your death may be notionally brought back into your estate and available for division by the making of a family provision order in favour of an eligible person under the Act. As with most decisions, there are also potential negative consequences such as stamp duty, CGT and loss of social security entitlements from gifting rules.

Most people do not consider it advantageous to them during their life or their intended beneficiaries to have no estate at all for reasons such as those relating to CGT etc. For those, one way to help prevent or minimise the risk of a claim for a family provision order is to ensure that they have a carefully prepared Will and accompany that Will by a (usually contemporaneous) Statement explaining why a person did not get a benefit in the Will or is to receive less than they may have expected. This is known as a Statement of Wishes or a Statement of Testamentary Intention and is often prepared in for formal form of an Affidavit so it can be use in evidence. Such documents may be updated as required and care must be taken to ensure that they are factually correct as defects can undermine their force, particularly as you won’t be around to give evidence to correct any errors.

One way to prevent a claim for a family provision order is to apply to the Court for an order under s.95 of the Act releasing an estate from claims under the Act. This can be done either before or after your death, such as part of a family settlement of another dispute or claim on an estate and aims at achieving finality regarding family disputes. The Court may only approve such a release and make an order after considering all of the relevant circumstances, so this will involve preparation of appropriate initialing proceedings and affidavit evidence.

As with any estate, each person’s circumstances, assets and relationships with potential beneficiaries and claimants are different and care needs to be taken to consider all information available so as to make the right decisions regarding your estate. This will involve weighing up the pros and the cons of each decision and bearing the consequences and risks of doing so.

FURTHER INFORMATION

For further information please contact McKillop Legal on (02) 9521 2455 or email help@mckilloplegal.com.au.

This information is general only and is not a substitute for proper legal advice. Please contact McKillop Legal to discuss your needs.

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Leasing business premises from a SMSF

Many business owners own the commercial or industrial premises that they use to operate their business from.  Often that property is owned by a Self-Managed Superannuation Fund (SMSF).

Leasing business premises from a SMSF is becoming commonplace. SMSFs can be a tax-effective way to create wealth and provide for your retirement, in addition to providing some asset protection benefits however, they come with a requirement to comply with the Superannuation Investments (Supervision) Act 1993 (Cth) (SIS Act) and its Regulations.

Additional obligations apply when the SMSF is using a limited recourse borrowing arrangement and bare trust when borrowing to acquire the premises and consideration ought to be given to who the members of the fund are and what happens if they were to pass away.

One of the leasing obligations on SMSF trustees in the SIS Act is that there be a written Lease in place. Not only does there need to be a Lease in place, but it must be at ‘arms length‘ and on commercial terms.  This effectively means that it must have all of the usual or typical terms that would be expected to be in place if the property was being rented to a third party, for example with market rent being required to be paid in full and on time, with no discounts.

Practically, there are other benefits of having a proper Lease in place and one of them is that on the sale of the business, the Lease can be assigned to the purchaser so that the SMSF continues to get the benefit of the Lease and its protections after you cease to run the business. It also can assist your SMSF to maintain the value of the premises as any purchaser of the land is bound by it, so having a good yield is important.

FURTHER INFORMATION

For further information, please contact McKillop Legal on (02) 9521 2455 or email help@mckilloplegal.com.au 

This information is general only and is not a substitute for proper legal advice. Please contact McKillop Legal to discuss your needs.

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