Dispute Resolution

What does a Bankruptcy Notice do?

A Bankruptcy Notice is a document that, once served, requires the person served to either pay a debt (or enter into an arrangement for payment of a debt) within a specified period of time, usually 21 days.

If the Bankruptcy Notice is not complied with within that time, the person has committed an “act of bankruptcy” entitling the person owed the money (creditor) to commence bankruptcy proceedings.

It is usually a good idea not to try to do this yourself but rather to engage a lawyer to assist, including obtaining an AFSA Bankruptcy Register search (formerly a National Personal Insolvency Index search) beforehand.

How is a Bankruptcy Notice issued?

Bankruptcy Notices are issued by the Australian Financial Security Authority (AFSA) (formerly the Insolvency & Trustee Service Australia (ITSA)) at the request of a creditor.

In order to apply for a Bankruptcy Notice, you must hold a final judgment for at least $10,000* that is no more than 6 years old. *Note that this threshold increased from the original $5,000 (at the time this article was originally published) to $20,000 on 31 December 2020 as a result of the Coronavirus Economic Response Package Omnibus Act 2020, but reduced to the new permanent threshold of $10,000 from 01 January 2021.

Once issued, the Bankruptcy Notice needs to be served on the debtor. There are various ways to achieve this (including by post in some circumstances).

If the debtor does not dispute the validity of the Bankruptcy Notice or pay the judgment debt or come to a satisfactory arrangement for payment of the debt within the 21 day period, then the debtor will have committed an “act of bankruptcy” as defined in the Bankruptcy Act 1966 (Cth) and the law will presume the debtor to be insolvent, entitling the creditor to commence bankruptcy proceedings. The order declaring someone a bankrupt is called a “sequestration order“.

What is the effect of bankrupting someone?

Most people do not wish to be made bankrupt due for various reasons including:

  • the stigma associated with being declared bankrupt (and the effect this can have on obtaining certain employment etc);
  • the fact that all of the bankrupt’s property (subject to some exceptions) vests in the appointed trustee;
  • because of the adverse effect of bankruptcy on a person’s credit rating (and therefore their ability to get a loan later in life);
  • its affect on being a company director.

This is why issuing a Bankruptcy Notice and, if necessary, commencing bankruptcy proceedings can be an effective way of obtaining payment if you are a creditor.

What does the court look at before bankrupting someone?

Bankruptcy proceedings are commenced by filing a Creditor’s Petition in the Federal Court of Australia or the Federal Circuit Court of Australia.

Before a person is declared bankrupt, the Court must be satisfied that the person has committed an “act of bankruptcy” in the 6 months before the commencement of the bankruptcy proceedings. The most common act of bankruptcy is failing to comply with a Bankruptcy Notice.

Effect of bankruptcy on company directors

For those in business for themselves, one of the effects of being declared bankrupt, in addition to losing control of the majority of your assets, is that s.206B of the Corporations Act 2001 (Cth) provides that undischarged bankrupts or those who have entered into personal insolvency agreements cannot act as a director or take part in the management of a company.

AFSA and ASIC have a Data Matching Protocol such that ASIC will receive notification of a director’s bankruptcy. Although a bankrupt automatically ceases to be a director, the director must notify ASIC by lodging a Form 296 – Notice of Disqualification from Managing a Corporation and further, the Company also has an obligation to notify ASIC of the cessation of an officeholder by lodging a Form 484 – Change to Company Details within 28 days of the change taking effect.

The Court has the power to grant leave to an undischarged bankrupt to take part in management of a company, subject to ASIC being notified of the application. Such leave, which can be granted both with or without conditions, is not available however, where the disqualification was imposed by ASIC (as opposed to an automatic disqualification due to the operation of the Corporations Act).

The court will not easily be convinced that the usual prohibition should not apply and will exercise its discretion with a view to balancing the considerations relevant to the bankrupt and the public policy behind the prohibition. In such an application, the applicant bears the onus of establishing that the Court should make an exception to the legislative policy underlying the prohibition. The policy behind the law is protect the public and among other things, to seek to ensure that investors, shareholders and others dealing with a company are not disadvantaged.

Hardship to the proposed director is not of itself a persuasive ground for the granting of leave although it is one of many factors which may be considered by the court in exercising its discretion. The court will have regard to the reason for the disqualification, the nature of his or her involvement, the general character of the applicant including the applicant’s conduct in the intervening period since being removed from office or prevented from being in office, the structure of the company, its business and the interests of shareholders, creditors and employees.

Although such applications are not commonplace, an undischarged bankrupt may be granted leave to take part in the management of companies generally or, more frequently, in the management of a particular company. The disqualification imposed by the Corporations Act continues despite the Court granting leave and care must be taken to ensure that any conditions on the leave are complied with as failure to do so can result in the leave being revoked and the commission of an offence.

FURTHER INFORMATION

Craig Pryor is principal solicitor at McKillop Legal. For further information in relation to bankruptcy, insolvency, debt recovery, commercial law or business disputes, contact Craig Pryor on (02) 9521 2455 or email craig@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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in Business / Commercial Law / Dispute Resolution / General / Insolvency & Bankruptcy / Risk management  by 30 May 2017 0 comments

What is the PPSR?

The Personal Property Securities Register (PPSR) is a single national online register where details of security interests in personal property can be registered and searched. The PPSR is administered by the Australian Financial Security Authority (AFSA) and was established under the under the Personal Property Securities Act 2009 (Cth).

The PPSR is an amalgamation of registrations that were recorded in registers including the Australian Security and Investments Commission (ASIC) Register of Company Charges, the Australian Register of Ships, the Fisheries Register, state and territory bills of sale registers, and the state and territory Registers of Encumbered Vehicles (REVS).

All charges and other security interests in personal property (such as cars, boats, intellectual property etc) have been recorded on the PPSR since 30 January 2012.

It does not include real property (land or buildings) as these are covered by the various land title registers in the States and Territories, such as Land and Property Information in NSW.

On the PPSR:

• you can register a notice to show that you have rights over personal property which secure a debt or obligation that someone owes you

• you can check to see if someone has registered an interest over personal property you want to buy or lease.

If you are buying a business or an asset of significant value, it can pay to have the PPSR properly searched because if you buy property subject to a security interest, it is possible that the person or entity with the security interest will repossess it.

FURTHER INFORMATION

Craig Pryor is principal solicitor at McKillop Legal. For further information in relation to the PPSR, buying or selling a business, business succession or any other commercial law matter, contact Craig Pryor on (02) 9521 2455 or email craig@mckilloplegal.com.au.

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

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in Business / Commercial Law / Dispute Resolution / General / Risk management  by 16 May 2017 0 comments

Minimizing risk in your business

Running a business is risky and small businesses can be especially so. Minimizing risk in your business is crucial.

Often, SME owners put their own personal assets on the line, whether to borrow funds from a lender to start up or buy stock or equipment or by signing a guarantee in relation to suppliers and others for the debts of the business.

There are several methods of protecting personal assets from creditors, but it is a process that many don’t follow. Some are quite simple and easy to put in place. They include…

Placing assets in a spouses’ name or in a family trust

In most circumstances, creditors will not be able to make a claim upon assets owned by your spouse or held by a discretionary trust, provided that you are not the trustee. If your spouse is the trustee, then he or she is the person who will usually decide how to divide up the income or capital of a trust (or not to).

Of course, stamp duty and capital gains tax issues must also be considered before acquiring or transferring assets as well as the potential operation of claw back provisions. The loss of the principal place of residence CGT exemption or the land tax issues may be a factor weighing against doing this.

In the end, it is weighing up risk vs benefits and making an informed decision regarding any asset protection measures.

Encumbering assets if you cannot transfer them

An asset that is mortgaged to its value is not attractive to a creditor. The mortgagee in such a case is the only entity that will benefit from the subsequent sale of the asset.

A guarantee form a person without assets is effectively valueless. Often businesses don’t check to see what a guarantor actually owns.

If you seek a guarantee from a director of another business, you could make some inquiries about their credit/financial position before creating an account,

Correctly structuring your business

Sometimes it is not feasible to establish an asset-holding entity and a trading entity (as many small business start-ups are strapped for cash) but it can be a great way to protect the business assets from day to day trading risks. Even getting the type of business structure right from the beginning (sole trader, partnership, company, trust or combination etc) can have a massive impact on your business.

It is possible to establish a company with a single director  and/or single shareholder. The company dealing with third parties, supplies, customers and the like is the entity that may be liable to them, not the shareholders.

The shareholders are only liable to the company for the unpaid amounts (if any) on any issued share capital. This liability is usually a nominal amount such as a dollar. Shareholders have no liability to third parties unless they agree to it, such as by giving a guarantee.

Company directors may have some liability but only in limited circumstances can the corporate veil be lifted. Courts may be prepared to lift the veil in limited circumstances, such as in the case of insolvent trading, fraud or misrepresentation, inappropriate transactions or where public policy requires it.

Charging assets (and properly recording the charge)

Before lending money to your business, a charge should be created in the correct form and that form recorded as against assets such as real property (by way of mortgage recorded at Land and Property Information or another State’s land titles registry) or against non-real estate assets (by way of a Specific or General Security Deed and making a registration on the Personal Property Securities Register (PPSR)) to secure repayment of that money in preference to other creditors should the business fail.

Having proper terms of trade

Most businesses, if they have them at all, have terribly inadequate terms and conditions of trade. Often they are just copied and pasted from other documents and not tailored, leaving businesses thinking they are adequately protected when they really are not covered at all.

T&Cs should be built to protect your particular business and should be a work in progress, tweaked to solve or prevent problems that have arisen in your business from occurring again,

Avoiding personal guarantees altogether

A guarantee is a contract by which a guarantor promises that another person or entity will comply with his, her or its obligations to a third party and if they don’t, the guarantor will. The most common example involves bank loans where a guarantor such as a parent promises to repay the loan of their child if the child defaults.

Becoming a guarantor can be extremely risky, particularly when large liabilities are involved. Under most guarantees, the guarantor becomes immediately and primarily liable to repay the debt (and the lender does not have to wait for attempt to recover from the borrower before calling on the guarantee).

As a practical matter, many businesses cannot obtain finance unless a personal guarantee is provided. If this is the case however, whenever the loan is actually repaid or if the business can prove it is financial stable and secure, the guarantee should be discharged so that the guarantor cannot continue to rely on it at a later date concerning subsequent transactions.

Managing staff

One of the biggest risks to your business is that of staff leaving, and worse still, taking valuable information and assets with them.

Having appropriately drafted Employment Contracts with restraints of trade in them is a must.

Superannuation contributions

In many circumstances, superannuation entitlements can be protected from bankruptcy trustees. There may be no protection for example where the payments are made for the primary purpose of defeating creditors.

Making contributions to super is getting harder and harder with the Federal Government’s recent changes to the superannuation laws however, this can be an effective long term tool for wealth creation and asset protection. This will also usually involve the assistance of your financial planner.

Business succession planning

If you are in business with another person, what happens to your business if you or your business partner gets seriously injured or dies?

Do you have an appropriate and valid Will, Enduring Power of Attorney and Appointment of Enduring Guardians in place?

Usually having these estate planning documents is not enough. Presumably your business partner would give all of his or her assets to their spouse on their death through their Will. What if you don’t want to me in business with your business partner’s partner?

You should have in place business succession documents to deal with this such as a Buy/Sell Deed with appropriate insurances, a Shareholders Agreement (for companies), Unitholders Agreement (for unit trusts) or a Partnership Agreement (for businesses operating through a partnership structure).

FURTHER INFORMATION

Craig Pryor is principal solicitor at McKillop Legal. For further information in relation to starting a new business, commercial law, business disputes or estate planning/business succession issues generally, contact Craig Pryor on (02) 9521 2455 or email craig@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.

Stay up to date – LinkedIn | Facebook | Twitter | McKillop Legal Blog

in Business / Commercial Law / Dispute Resolution / Employment / Estate Planning / General / Insolvency & Bankruptcy / Online Issues / Risk management / Superannuation / Tax Planning / Trusts  by 03 Apr 2017 0 comments

What is a restraint of trade?

Post engagement restrictions

Often, employment contracts and contractor agreements contain restrictive covenants or ‘restraints of trade’ to protect businesses when an employee or service provider / contractor leaves.

So, what is a restraint of trade? A restraint of trade is effectively a restriction on the employee or contractor as to where they may work and who they may work for during, and for an agreed period after the termination of, their engagement. Restraints often restrict an employee’s ability to work for competing businesses and within a certain geographical area for a specified period of time.

How far can they go?

A valid restraint should only restrict activities reasonably necessary to protect the legitimate interests of the business that has the benefit of it. Those legitimate interests may include clients, referral relationships, trade secrets, confidential information and the like.

A restraint clause that is too wide, and therefore too restrictive, is generally unenforceable. A restraint should be tailored to accurately reflect the nature of the business activities being protected and only go so far as to protect them, when looked at reasonably. Where restraints seek to protect more than is reasonably necessary to protect the business, they can be struck down. There are public policy considerations in not preventing competition. Restraints are read strictly against the business that seeks to impose it.

Where there are no restraints in the employment or services agreement, there is no restraint and the business will only be able to rely upon their common law rights, which are often inadequate.

How are they enforced?

To enforce a restraint, the court requires that the party seeking to enforce it show that the restraint is reasonable – this will depend on the nature of the business, the restraint period, the restraint area and the nature of the work undertaken by the person or entity affected by it.

Often, enforcement takes the form of an injunction, seeking damages or an accounting for profits.

Further information

If you would like any more information in relation to employment law, disputes or business issues generally, please contact Craig Pryor on (02) 9521 2455 or email craig@mckilloplegal.com.au

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

in Business / Commercial Law / Dispute Resolution / Employment / General  by 16 Mar 2017 0 comments

Trusts – who is who in the zoo?

TYPES OF TRUSTS

There are many different types of trust including those created by wills (testamentary trusts) or by the operation of law, but for the purpose of this article, we are referring to the usual types of trust structures that accountants and lawyers prepare for their clients to operate businesses, own assets and the like, including:
  • unit trusts,
  • family/discretionary trusts,
  • hybrid trusts.

Trusts are often used to ensure that the person or entity with the legal ownership of assets is different to the persons or entities that enjoy the benefit of those assets.

WHAT IS A TRUST DEED?

The Trust Deed is a document that governs the terms of the Trust and sets out the rights and obligations of the Trustee, the Appointor and the Beneficiaries.

SETTLOR

The Settlor is often a person who has started the Trust (often an accountant or lawyer that obtained or drafted the Trust Deed at the request of a client) by paying a nominal amount such as $10 to the Trustee. This amount is known as the ‘settled sum’. The Trust Fund is then added to over time.

WHAT DOES THE TRUSTEE DO?

The Trustee of a Trust is responsible for administering the Trust and managing its assets for the benefit of the Beneficiaries. The Trust can only operate through its Trustee (one or more people or a company)

There are many duties that affect how Trustees can fulfill their role. Many of them are set out in the Trust Deed but there are also legislative provisions that apply, such as those set out in the Trustee Act.
Some of the duties include keeping accurate records, acting in a prudent manner as regards decisions, not mixing Trust assets with the Trustee’s own assets (which is why a often a company is set up to be the Trustee and do nothing but be the Trustee) and not using trust assets for the trustee’s own benefit. This is often one of the reasons a special purpose trustee company is used.

WHAT IS AN APPOINTOR?

The Appointor is the person with the power under the Trust Deed to remove a Trustee and appoint a new Trustee. They, therefore, ultimately control the trust.

Usually, changing the Trustee can be effected at any time by the Appointor executing a deed to remove and appoint a Trustee. Often the Trust Deed allows for the change to be effected by a person’s Will.

It is common for the Appointor of a discretionary family trust to be a parent or sibling and is often 2 people (or in the alternative, there is a Primary or First Appointor and a Second or Alternate Appointor that can act if something prevents the First Appointor from acting).

WHO ARE THE BENEFICIARIES?

In the types of Trusts we are talking about in this article, the Beneficiaries are those that are ultimately entitled to the benefit of the Trust. For Family/Discretionary Trusts, the Beneficiaries are not stated specifically but rather, for asset protection reasons, they are expressed as a class of potential beneficiaries that the Trustee can choose from (but is not obliged to – the protection arises as there is no specific share they are entitled to – it is in the Trustee’s discretion).

Often, the class of potential beneficiaries is very wide and includes children, grandchildren, grandparents, siblings and other trusts and companies which those people may have an interest in.

In the case of a Unit Trust, the Beneficiaries are the unitholders -the unitholders are entitled to a defined/fixed share of the Trust’s assets and income.

For asset protection and income splitting/tax minimisation reasons, often the units in a Unit Trust are owned by a Discretionary Trust.

FURTHER INFORMATION

Trust law is an extremely complex area and it is important to ensure that you understand your rights and responsibilities in relation to any Trust you are involved with or may have an interest in.

Craig Pryor is principal solicitor at McKillop Legal. For further information in relation to trusts, structuring or any other commercial law matter, contact Craig Pryor on (02) 9521 2455 or email craig@mckilloplegal.com.au.

in Business / Commercial Law / Dispute Resolution / General / Trusts  by 01 Mar 2017 0 comments

Deceased estate litigation

Succession Act claims

We are often called upon to advise clients in relation to claims on estates in relation to such things as challenging the validity of the Will (such as due to lack of mental capacity when the deceased person made the will or duress) or what is known as a Succession Act claim or a family provision claim (where a person says that adequate provision was not made for them in a Will). We discuss the latter here.

The purpose of the Succession Act is to seek to ensure that “adequate” provision is provided from a deceased’s estate to the family members of a deceased person (and others). Claims under the Act are based on needs.

Important facts

  • Claims must be made within 12 months of the date of death of the deceased (although in limited circumstanced, this time limit can be extended).
  • To make a claim, you must first establish that you are an “eligible person”.
  • Assuming you are an “eligible person”, you must demonstrate needs beyond the provision that was made for you in the Will (if any) for your proper maintenance, education or advancement in life.
Who is an eligible person?

Those who are eligible to make a claim for a provision out of deceased estate include:
  • A spouse of the deceased at the time of the deceased’s death;
  • A person in a de facto relationship with the deceased at the time of death
  • Children (including adopted children) of the deceased;
  • Former spouses of the deceased;
  • Someone with whom the deceased was in a close personal relationship* at the time of their death;
  • Those who have, at any time, been wholly or partly dependent upon the deceased:

– were either a grandchild of the deceased; or

– were, at any time, member of a household of which the deceased a member.

* A “close personal relationship” is a relationship other than a marriage or a de facto relationship between two adult persons, whether or not related by family, who are living together, one or each of whom provides the other with domestic support and personal care but not for reward or on behalf of another person or organisation.

What is involved?

To make a claim, the proceedings are usually commenced in the Supreme Court by way of Summons and evidence will be required in an affidavit setting out the nature and history of the relationship, contributions made to the deceased’s property and wellbeing, details of your financial need and any other relevant factors.

Simply having financial needs and showing some level of dependence on the deceased is not the end of it. The Court will have to weigh up many other factors, such as the size of the estate, the deceased’s wishes (such as those stated in a statement of testamentary intention or other similar document), competing claims from others, circumstances and events that may tend to dis-entitle a person from a benefit and so on.

Time and costs involved

Litigation is a lengthy and time-consuming process and it is an emotional one with family relationships being strained by what may be contained in affidavits or said in the witness box at a hearing. That said, often the estate pays the costs (or a large proportion of them) involved in such cases so it may not be a financial burden to enforce your rights.

Most cases settle prior hearing and usually at a mediation that can be arranged by the Court or by private agreement between the parties. Settlement is often advised to avoid the risks, costs (and emotional cost) of litigation and to help preserve any family relationships.

Often we act for the executors of an estate, but we also act for beneficiaries and those that are not mentioned in Wills at all.
Further information

If you would like any more information in relation to Wills, deceased estate litigation or estate planning/business succession issues generally, please contact Craig Pryor on (02) 9521 2455 or email craig@mckilloplegal.com.au
in Dispute Resolution / Estate Planning / General / Litigation / Probate / Trusts  by 15 Feb 2017 0 comments

What is legal tender in Australia?

As you would expect, Australian banknotes are legal tender throughout Australia.

Similarly, a payment of coins is a legal tender in Australia however, there are restrictions, such as those in the Currency Act 1965, about how much can be paid in coins.

Coins are not legal tender if they exceed:
  • 20c where 1c and/or 2c coins are offered (these coins have been withdrawn from circulation, but are still legal tender);
  • $5 if any combination of 5c, 10c, 20c and/or 50c coins are offered; and
  • 10 times the face value of the coin if $1 or $2 coins are offered.

For example, if someone wants to pay a merchant with 5c coins, they can only pay up to $5 worth of 5c coins and any more than that will not be considered legal tender.

The above is of course subject to any agreement between parties – a provider of goods or services is at liberty to set the commercial terms upon which payment will take place before an agreement for the supply of the goods or services is entered into.

For example, vending machines may not accept small denomination coins or payment may be agreed to be made in foreign currency such as USD.

If you would like any more information in relation to any commercial law or contractual issue, please contact Craig Pryor on (02) 9521 2455 or email craig@mckilloplegal.com.au

Source: Reserve Bank of Australia 
in Business / Commercial Law / Dispute Resolution / General / Online Issues  by 07 Feb 2017 0 comments

Trust & Superannuation Deed Amendments

Do you or any of your clients have a family/discretionary trust, unit trust or self-managed superannuation fund and want to change the deed?

Often the change is to remove and replace a trustee with a new one. In other situations, it may be changing a class of potential beneficiaries, dealing with the power of appointment, bringing forward the termination date or changing the trustee’s rights and/or obligations.

Care needs to be taken not to vest the trust or to cause a resettlement, which can give rise to unintended consequences, including:

  • CGT and
  • stamp duty.

There is no real “one size fits all” solution. Deeds can vary greatly as to the process and requirements.

McKillop Legal can assist in reviewing the relevant Deed/Rules and drafting an appropriate document to give effect to the required change.

FURTHER INFORMATION

Craig Pryor is principal solicitor at McKillop Legal. For further information in relation to trusts, estate planning, business succession or any other commercial law matter, contact Craig Pryor on (02) 9521 2455 or email craig@mckilloplegal.com.au.

in Business / Dispute Resolution / Estate Planning / General / Tax Planning  by 01 Feb 2017 0 comments

Avoiding dramas at the office Christmas party

Now is the time of year for many businesses to have their annual Christmas parties. Before dusting off your Santa hat, consider your responsibilities in protecting your staff and your business.

Businesses should be aware of the risks that can arise when holding an office party, whether at Christmas or for any other event. Employers can be responsible for the actions of their employees at such events (such as for sexual harassment and the like) and for injuries that arise as a result of such celebrations.

Employees should be made aware that a Christmas party is a work event and that, although it is a time to relax and enjoy themselves, they need to remain responsible and respectful.

HOW TO MINIMISE THE RISKS

To minimise the risks to your business, there are many things you can do, including:

  • Making those members of staff attending aware of their responsibilities and that inappropriate behaviour cannot be allowed;
  • Ensuring responsible service of alcohol – by using a third party venue or hiring suitably trained waitstaff;
  • Having correctly worded Employment Contracts for all employees;
  • Putting in place appropriate Workplace Policies – not just for harassment, intimidation and discrimination, but for social media, taking photographs of others, texting and the like;
  • Reviewing your insurance coverage;

Considering transport arrangements for staff to and from the venue, using a buddy system or inviting partners.

FURTHER INFORMATION

For further information in relation to employment issues or any business or commercial law matter, contact McKillop Legal on (02) 9521 2455 or email help@mckilloplegal.com.au.

in Business / Dispute Resolution / General  by 01 Dec 2016 0 comments

What is a Power of Attorney?

GRANTING A POWER OF ATTORNEY

The Powers of Attorney Act 2003 (NSW) provides for a person to appoint another person as their attorney to make financial and contractual decisions on their behalf. The document granting a power of attorney is a prescribed form under the Act.

A general power of attorney does not require a solicitor’s certificate however, it ceases to be of effect if you lose mental capacity (like where you are in a coma or suffer from dementia).

An enduring power of attorney on the other hand continues to be effective if you were to suffer such an incapacity. For this reason, an enduring power of attorney must be explained to you and witnessed by a lawyer who will provide a certificate in the prescribed form. We usually recommend an enduring power of attorney so that if some event happened to you that affected your capacity, your attorney would still be able to assist you.

If you are suffering from any illness, have deteriorating health, are going overseas or interstate or just want peace of mind, appointing an attorney to assist you to manage your affairs is generally a good idea.

HOW DOES IT OPERATE?

The nominated attorney has the ability to decide whether or not to accept that role by signing it.

You can choose when your power of attorney is to take effect. It can be restricted to only take effect if a registered medical practitioner certifies that you are of unsound mind, upon some other event (such as whilst you are overseas), from a date you choose or, it can operate immediately (for convenience).

You can give the power of attorney for specific purpose (for example to assist with the sale or purchase of a specific property or to attend an auction and bid on your behalf), for a specified time (for example, between 2 dates) and you can give directions on how powers are to be exercised (such as not to bid above a certain level or to only sell for a certain reserve price).

You can have a power of attorney for situations of necessity, like where you are ill or absent, or simply for convenience, but you have to appoint someone you trust without reservation.

An attorney may not use the principal’s monies or assets for gifts or benefits to the attorney or third parties unless this is specifically authorised in the document granting the power of attorney

ENDING AN APPOINTMENT

Provided you remain of sound mind, you can revoke a power of attorney at any time by signing a form of revocation and providing the attorney with that revocation.

The New South Wales Civil & Administrative Tribunal can review or revoke a person’s appointment as a power of attorney and can make a financial management order appointing a new attorney (or attorneys) or by appoint a representative of the NSW Trustee & Guardian if it is considered that your attorney not making appropriate decisions on your behalf.

DO I HAVE TO REGISTER THE POWER OF ATTORNEY?

A power of attorney must be registered at the Land & Property Information Division of the New South Wales Department of Lands if it is being used for dealing with land in NSW, such as selling, transferring, mortgaging property and the like.

FURTHER INFORMATION

Craig Pryor is principal solicitor at McKillop Legal. For further information in relation to estate planning, business succession or any other commercial law matter, contact Craig Pryor on (02) 9521 2455 or email craig@mckilloplegal.com.au.

in Dispute Resolution / Estate Planning / General  by 22 Nov 2016 0 comments