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Many people use discretionary or family trusts in their asset holding, for perceived asset protection and income distribution advantages. Often, these trust deeds are bought “off the shelf” by providing basic information to the supplier which then issues the trust deeds in a standard form. For the purposes of estate planning, there are a number of issues which are critical where assets are held by a party as trustee for a discretionary trust.  One aspect is that – if it is intended to pass over the trust benefits to a particular person – the will maker might want to ensure that the beneficiary is given the “power of appointment” which is the power under the trust deed to appoint a new trustee (this role is most often called “appointor” or “principal”).  Otherwise the trust could be operated for the benefit of other beneficiaries. When reviewing trust deeds for the purposes of estate planning, we often find – in widely used trust deeds – difficulties with the provisions relating to the power of appointment.  Some do not allow the named appointor to appoint a person as their replacement in their will.  In one that we reviewed recently, the clause provided that on the death of the appointor, the power could be exercised by their  “legal representative” (i.e. their lawyer) which is likely to be an error because it was probably intended to have the power exercised by the appointor’s “personal representative” (meaning the executor of their will or administrator of their estate), which expression many trust deeds mangle by calling it “legal personal representative” which is actually an expression used in superannuation law where it is defined by sec 10 of the Superannuation Industry (Supervision) Act 1993, and which really should not be used in non-superannuation trust deeds unless it is properly defined, which it rarely if ever is. In the same trust deed, the appointor would be automatically removed if they lost capacity or were bankrupted, which then led to the trustee being required to call a meeting of all beneficiaries, notwithstanding that there are potentially hundreds of possible beneficiaries given the wide nature of the scope of beneficiaries in discretionary trust deed, with then provisions for beneficiaries of certain classes having to “unanimously” agree on the new principal.  As a result, this particular trust deed – in a standard form and in wide use – contains areas of potential uncertainty and inconvenience. Reviewing trust deeds is critical for effective estate planning, so that deficiencies or inconsistencies can be corrected.  Those issues could be avoided to some extend if the trust deeds were drawn at the outset having regard to the need for an easy transition in the event of the death of the appointor. For advice relating to estate planning and trust deeds, contact Peter Muller at peterm@qbmlaw.com.au

The QBCC was recently given guidance by a member of QCAT who considered that this guidance would be useful to “assist the Commission” when dealing with claims under the Statutory Insurance Scheme. Member McVeigh, in King & McDonald v Queensland Building and Construction Commission [2024] QCAT 138 observed that the Statutory Insurance Scheme was to provide assistance to consumers, by Schedule 6 of the Queensland Building and Construction Commission Regulation 2018. To obtain assistance, Member McVeigh noted that the consumer must make the claim: For a structural defect, within three months after the day they first become aware (or ought to have reasonably become aware) of the defect; orFor a non-structural defect, within seven months after the day they first became aware (or ought reasonably to have become aware) of the defect. Member McVeigh also noted that (relevantly for this matter) a structural defect is defined to include a defect in the work which allows water penetration of the residence. In the dispute, the consumers had noticed that certain skylights had not been installed in accordance with recommendations on 5 May 2020, and noticed water marks in cornice on 10 August 2020 before lodging a complaint with the QBCC on 13 August 2020. While the QBCC issued a direction to rectify in December 2020, and decided in April 2021 that the rectification work was not of a satisfactory standard, in May 2021, the Commission decided that the consumers were not entitled to assistance under the Statutory Insurance Scheme on the basis that they knew of the defect on 5 May 2020 – 3 months and 8 days before the claim was made, about 8 days after the time limit of 3 months (for structural defects) had expired. So the issue was whether or not the 3 month time limit applied from the May date. In the Member’s reasons which noted that the Commission’s interpretation of a certain section of the QBCC regulation “was, and always had been, untenable”, the Member observed that until the morning of the hearing, the QBCC maintained that a reasonable person would have known that – as the skylights had not been installed in accordance with the manufacturer’s recommendations – they were structurally defective, despite the fact that there was not at the time any evidence that there was or might be water penetration. The Member found that it was the noticing of the water marks that constituted the consumers becoming aware of the structural defect, and they made their claim to the QBCC three days afterwards. The Member’s decision was critical of the approach of the QBCC to the claim, and the QBCC’s continued reliance upon a decision which the Member considered had limited application, dealing with a policy in different terms to the current policy, and also omitting a qualifying sentence in the decision. The effect of the Member’s decision was that – in the Member’s view – it took more than the knowledge that there was a defect (which later provide to be a structural defect) to trigger the shorter time period for making a claim in respect of a structural defect. What was needed was for the consumers to be objectively aware that there was a structural defect. This however does not mean that the consumers have to know that there is a defect, and that it is a structural defect under Schedule 6 to the QBCC Regulation 2018. It is sufficient that they know that the defect has one of the characteristics of a structural defect as are set out in the Regulation, which are (as at April 2024): (a) if the work is for a residence or related roofed building—(i) a defect in the work that causes or contributes to deflection or movement of the footing or slab of the residence or building so the residence or building no longer complies with the building assessment provisions under the Building Act 1975 ; or(ii) the work does not comply with a performance requirement under the Building Code of Australia, part B1 or part 2.1 for the residence or building; or(iii) a defect in the work that causes the residence or building to be uninhabitable or not reasonably accessible; or(b) if the work is for a swimming pool—a defect in the work that allows water to escape through the shell of the swimming pool; or(c) if the work is on or for a residence, related roofed building or swimming pool—a defect in the work that adversely affects the health or safety of persons who occupy or use the residence, building or swimming pool; or(d) if the work is on or for a residence or related roofed building—a defect in the work that allows water penetration of the residence or building. For enquiries in relation to building matters, including claims on the Statutory Insurance Scheme, please contact Justin Mathews at justinm@qbmlaw.com.au

In this context, it is not so much that the Will itself is being challenged, but rather applicants make application for provision to be made for them out of an estate where they believe that they are entitled to a share, or a bigger share than the Will provides. If successful, the share of some or all of the named beneficiaries would be reduced. Currently, these applications (called Family Provision applications) are made by spouses, children (including stepchildren even if their parent has already passed) or dependants who are disappointed by what is given to them through a Will, or where there is no Will, and they believe that they should have a greater share than what they might receive under the rules of intestacy. The family provision claims are quite undesirable in estate administration because they lead to the estate being put to significant uncertainty, cost and delay. Furthermore, where (say) one of the Will maker’s children is left out, the litigation involved in the family provision claim will generally pit the other children against the claimant, leading to the fracturing of any relationship between them. Family provision claims can also be made by step children, and will sometimes be made by children against the interest of their surviving parent, as an example, by a child where their mother was the named beneficiary in the Will. The proposed changes (relevantly) include requiring the executor of the estate to notice all people who might be eligible to make a family provision application (eg children, step children, or dependants of any kind including potentially mistresses or…errr…misters) that they might be eligible to make a family provision application against the estate, giving a copy of the Will (if there is one) and a current statement of assets and liabilities including a reasonable estimate of the value of each asset and liability. Where this is likely to result in further claims being made is that currently, there is no obligation to give any such notice to the various parties. Provided that no notice of any potential claim is made, then (currently) the executor has a degree of protection if it distributes the estate in accordance with the terms of the Will after certain time periods have elapsed (currently, six months from the date of death is the minimum time period). With notices going out to potential claimants – which many people would be likely to interpret as them having a legitimate right to claim – and including details of the wealth available in the estate, then it would be fair to consider it likely that people such as estranged children or step children might be excited into making claims that they otherwise might not have – in other words, the letter might be taken as an invitation to make a claim that otherwise wouldn’t be made. Anecdotally, insurers complained when personal injury claim numbers increased after lawyers were allowed to advertise, and one might expect that a similar situation arises here, and perhaps more targeted advertising by lawyers for family provision claims. For will makers, this would bring about risks in particular in respect of estranged children or stepchildren, who might not have even known that their parent had passed away until well after the time periods had elapsed, or who might not have been inclined to claim. These proposed changes make estate planning and proper structuring even more important, in particular where there are disputes within the family, or blended families. QBM Lawyers provide comprehensive estate planning and administration services, if you would like to discuss your situation, please contact Peter Muller at peterm@qbmlaw.com.au

If a person is bankrupted, many of their assets are available to the trustee in bankruptcy to be realised and applied for the benefit of the trustee’s fees and creditors.  But does this include amounts in a superannuation fund? The answer is generally no, however as is typical, there are exceptions.  While each matter depends upon its own particular circumstances, generally: For advice in respect of these matters and dealing with superannuation funds generally, please contact Peter Muller at peterm@qbmlaw.com.au