July 3

Changes to the Power of Attorney Act 2014

A Powers of Attorney Amendment Bill 2016 has been introduced to parliament. The Bill proposes to make various changes to the principal Act, the most welcome of which is to clarify that multiple alternative attorneys can be appointed for one principal attorney or supportive attorney.

Other notable changes include:

  • removing the option to make a power of attorney for both financial and personal matters
  • specifying that a later power will revoke an earlier power unless the later power specifies otherwise
  • where an attorney appointed as part of a majority power is no longer acting as an attorney and the remaining attorneys cannot act by majority then they must act jointly.

The Act, if passed, will come into operation on a day to be proclaimed or on 1 May 2017.

October 22

Good News for Transport Accident Victims

In 2013 the previous State Government legislated to limit the circumstances in which persons injured in transport accidents could sue for common law damages. The restrictions principally affected those suffering accident-related psychological injuries. The legal profession has been lobbying long and hard to have these changes revoked.

It is pleasing to note that the Andrews Government has just introduced into Parliament legislation which, if passed, will reverse the changes and restore the position as it was pre-2013.

The Transport Accident Act and its attendant procedures for claiming compensation are complex (and increasingly so with regular legislative changes). It is important that ALL persons injured in transport accidents (or for that matter all types of accidents) seek legal advice as soon as possible after the event. In most cases Kelly & Chapman will be happy to provide that advice on a “no obligation, no-win/no fee” basis.

To view more information about our Personal Injury service please click here

September 17

Dependants and Death Benefits

An elderly self-managed superannuation fund (SMSF) trustee was convinced that his adult son, who is not financially dependent on him, would receive all his superannuation savings upon his death totally tax-free. The trustee thought that because his adult son is classified as a “dependant” under the superannuation law, he would receive the benefit tax-free.

He was wrong!

Namely, as his son is not a “death benefit dependant” under the income tax law, he will not receive the taxable component of his father’s superannuation savings tax-free. The way the superannuation and income tax laws interact can be confusing. SMSF members who don’t understand the law could end up leaving their loved ones with a big tax bill. The superannuation law states who can be paid a death benefit upon the death of an SMSF member, while the income tax law states how the death benefit will be taxed, based on who receives it, and whether the benefit is paid as a lump sum or an income stream (i.e. pension). It is important to note the two laws also differ on the definition of a “dependant”.

Under the superannuation law, a “dependant” is a spouse by marriage or a de facto partner (including same-sex partners), and a child of any age. It also includes anyone who had an interdependent relationship with the deceased. An interdependent relationship is where two people (whether related or not) have a close personal relationship and live together and provide financial or domestic support and personal care. The superannuation law also states that a death benefit pension can only be paid to the deceased member’s dependant and in the case of a child it can only be to a child who is less than 18 years of age, or is aged 18 to 24 and was financially dependent on the deceased before their death. A child of any age with a disability is also eligible.

Under the income tax law, a dependant in relation to a death benefit is referred to as a “death benefit dependant”. A death benefit dependant can be the deceased’s spouse by marriage or a de facto partner (including same-sex partners), a child under the age of 18, or a person who is financially dependent on the deceased person before they died. It also includes a person with whom the deceased person had an interdependent relationship with just before their death. Unlike the superannuation law, the definition also includes a former spouse.

A person classified as a dependant under the superannuation law can receive an SMSF member’s death benefit in accordance with the deceased’s SMSF trust deed and/or as per the deceased’s binding death benefit nomination. People who do not meet the definition of a dependant (for example: siblings, grandchildren, parents, friends) under the SISA can only receive the deceased’s superannuation via the deceased’s estate (in accordance with the deceased’s will) through the deceased’s legal personal representative.

To view more information about our Wills and Estates service please click here

August 17

Powers of Attorney – New legislation

The Powers of Attorney Act 2014 (the Act) will commence on 1 September 2015. The purposes of the Act are to:

  1. clarify and consolidate Victoria’s enduring powers of attorney laws
  2. create the role of supportive attorney
  3. improve the protections against abuse of enduring powers of attorney.

Powers of Attorney made under existing legislation will remain valid under the new Act. The Act does not affect enduring powers of attorney (medical treatment), which will continue to be regulated separately under the Medical Treatment Act 1988.

The Act includes only minor amendments to general powers of attorney, which will be called general non-enduring powers of attorney.

The Act consolidates the current enduring power of attorney (financial) and power of guardianship into one enduring power of attorney. The enduring power of attorney will allow people to arrange management of financial and personal matters.

Improved protection

The Act improves protections against abuse of enduring powers of attorney, as follows:

  • Decision-making capacity: The Act introduces a new definition of decision-making capacity and provides guidance about how it should be assessed to protect a person’s right to make their own decisions where possible.  The Act makes a clear statement that a person is presumed to have decision-making capacity unless there is evidence to the contrary.
  • Principles to guide decision-making: Decision-makers acting for a person who lacks decision-making capacity must do so in a way that is least restrictive of that person’s ability to decide. They must ensure the person is given practicable and appropriate support to enable them to participate in decisions affecting them as far as possible. The Act requires an attorney to: give effect to the principal’s wishes; encourage the principal to participate in decision-making; and promote the principal’s social and personal wellbeing.
  • More stringent execution requirements: The Act introduces more stringent requirements for the making and revoking of enduring powers of attorney.
  • Duties of enduring attorneys: The Act clearly sets out duties of enduring attorneys, including to act honestly, diligently and in good faith, and to exercise reasonable skill and care.
  • Prohibition on conflict transactions: The Act introduces new provisions prohibiting conflict of interest transactions, unless authorised or ratified by the principal or VCAT.
  • Gifts: The Act regulates an enduring attorney’s ability to give gifts from the principal’s property.
  • VCAT powers: The Act provides VCAT with additional powers, including the power to order compensation for any loss caused by the enduring attorney in contravening the Act and to provide advice to multiple attorneys on resolution of disputes.
  • Creating new indictable offences: The Act creates new offences for dishonestly obtaining or using an enduring power of attorney, which are punishable by up to five years’ imprisonment.

To view more information about our Powers of Attorney service please click here

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