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The Supreme Court of Queensland has twice recently considered the implications of the “gift and loan back strategy” which is a common device whereby a person makes a gift of a substantial amount of money to a trust, which gift is made through a loan from the trust, and secured against the assets of the gift maker.  The transaction sets out to achieve the reduction of the equity that the gift maker has in their own assets, with the corresponding increase in the equity owned by the trustee of the trust, for the trust.  Generally, this device is used in asset protection strategies, but also it has been used to reduce the equity of a person in their own assets as part of estate planning, with a view to reducing the overall size of an estate capable of being fought over in family provision claims which are made under the Succession Act – for example, when the Will maker wants to give all of their assets to one child and not another. The underlying intention is to reduce the amount of the estate available for claims to be made. Such a strategy was considered in the matter of re: Permewan, first in May 2021 and second in June 2022.  The first decision related to an application to remove the executor so that an independent person could be appointed to investigate whether the gift and loan back strategy was a sham and should be set aside as not being binding on the estate (which would have the result that the estate would be larger, and then the disappointed potential beneficiaries would potentially share in the larger estate when making claims for further provision).  Orders were made in that application for the removal of the executor and the appointment of an independent person as administrator to the estate to allow for the investigation of the dealings. Subsequently, there was litigation over the validity of the documents comprising the gift and loan back strategy.  Ultimately, the parties agreed that due to a deficiency in the way in which the transaction was carried out, it should be set aside.  That said, the question of the merits of the strategy itself was considered in relation to an argument over costs and His Honour Cooper J gave a detailed judgment delivered on 10 June 2022 considering the merits of the transaction in the context of whether or not costs should be ordered.  His Honour found that – As a consequence of these matters, there is potential that attempts to manage family provision claims by reducing the size of the estate through the use of a gift and loan back strategy will be attacked and potentially set aside, with significant cost risks to any party seeking to enforce it.  For advice regarding estate planning, please contact Peter Muller at peterm@qbmlaw.com.au or Jessica Murray jessicam@qbmlaw.com.au

The short answer is no, a person can prepare their own Will, but it is not always a good thing to try to do it yourself.  There are many things which can go wrong if the Will is not properly drawn up, for example, by not satisfying the formal requirements for Wills or leaving partial intestacies (ie where part of the estate is not dealt with).  Another common mistake is to include in Wills things that are not capable of being given by a Will (for example, assets owned by a company or held in a trust).  Some of those things were considered in the recent decision of Re: Jacob Albert Omerod (deceased) [2022] QSC 98.  This matter involved a “home made” Will which was not properly executed and which left a partial intestacy.  As a result, an application was needed to be made to the Supreme Court for orders dispensing with the execution requirements for the Will, under section 18 of the Succession Act 1981.  Briefly, the formal parts for execution of a Will are set out in section 10 of the Succession Act, providing that the Will must be: In writing; Signed by the Will maker or someone else in the presence of and at the direction of the Will maker; Signed in the presence of two or more witnesses present at the same time; Signed by the Will maker with the intention of executing the Will. Commonly with home made Wills, there are deficiencies in some shape or form with the execution of the document.  In the matter referred to, the deficiency was that the Will maker had not signed the Will, even though it had been witnessed.  Section 18 allows the court – if it is satisfied that the person intended it to be their Will (or an alternation) to dispense with one or more of the formal requirements.  In the matter referred to, the court was satisfied that the Will maker intended the Will to take effect as his last Will based on the evidence of its creation and its signing by the witnesses. While it is good that these things can often be cured, the costs involved in rectifying these matters are quite significant.  The evidence to be put before the court can be quite extensive depending on the circumstances, and it is possible that the costs involved would be well in excess of $10,000 in even a relatively simply matter, and potentially many times that amount if it is contested.  As a result, while it is possible for a person to draw and have properly signed their own Will, attempting to do so can lead to serious defects not only in the terms of the Will putting into effect their wishes, but also in respect of its execution. For all enquiries in relation to Wills and estate planning, please contact Peter Muller at peterm@qbmlaw.com.au or Jessica Murray jessicam@qbmlaw.com.au

Often people will see a builder or architect, go through various revisions of plans, then end up with another builder or architect. This can result in claims for compensation for breach of copyright. The Queensland District Court recently considered those matters in claims against a builder and home owner. Worth a read if you are thinking of doing it https://archive.sclqld.org.au/qjudgment/2022/QDC22-116.pdf

It is not uncommon for a loan to be made (eg from a parent to a child, to buy a home or improve it) which is repayable when the borrower sells their home. It is also not uncommon for this loans to come into dispute because the borrower does not sell their home for various reasons. Recently the Queensland District Court considered that kind of arrangement, finding that the loan contract itself was not enforceable given that the repayment was at the discretion of the borrower. The result was that the borrower’s agreement to repay was “illusory”, resulting in the failure of the loan as a binding contract. Given that failure, the loaned amount was immediately repayable in restitution. It is interesting (to some of us with not much going on in our lives) to draw a distinction between this situation – where the repayment date is certain but in the absolute discretion of the borrower – and concepts of uncertainty, where the repayment date cannot be determined because of uncertainty (eg by a formula which does not work). If the repayment date was uncertain, then the loan may be treated as being repayable on demand, and that might have consequential issues with limitation periods. As this issue does pop up frequently, it is worth reading that part of the decision that deals with the legal issues – pages 13 – 17. https://www.sclqld.org.au/caselaw/QDC/2022/110 Please contact our lawyers for advice in relation to debts and loans.