Collection of Inside Stories 2017

By Matthew Burgess

Matthew Burgess specialises in tax, structuring, asset protection, and estate and succession planning. Through the support of advisers right around Australia, he has built a successful practice helping advisers help their clients achieve their goals. One of the ways that he has historically ‘given back’ to the adviser network has been through seminar presentations and the practical tips that can be shared in that environment are often invaluable. In 2010, he also committed to sharing on a weekly basis practical tips and ‘war stories’ of issues that advisers and clients had raised with him via blog posts. All posts are available via the following site – http://blog.viewlegal.com.au/, however this book collects every 2017 post in one place under the half a dozen or so main headings. All posts focus on View Legal’s key areas of specialisation – tax, estate planning, trusts asset protection, superannuation and structuring. As is the case with the posts themselves, any feedback in relation to this book would be gratefully received.

• Language: English
• Publisher: Matthew Burgess
• Release date: Jan 19, 2018
• ISBN: 9781925181487

Matthew Burgess

Matthew Burgess is an assistant professor at Brooklyn College and a poet-in-residence in NYC schools through Teachers & Writers Collaborative. His award-winning first children's book, Enormous Smallness: A Story of E. E. Cummings, was a Junior Library Guild selection and an ALA Notable Children's Book. He lives in Brooklyn, New York.

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Chapter 1(a)

ASSET PROTECTION – PERSONAL

Gift and Loan Back Arrangements – A Practical Example

Posted 20 February 2017

Earlier posts have looked at various aspects of ‘gift and loan back’ arrangements – see -

http://blog.viewlegal.com.au/2014/03/leading-gift-and-loan-back-case.html

http://blog.viewlegal.com.au/2014/04/how-gift-and-loan-back-arrangements-work.html

http://blog.viewlegal.com.au/2014/04/gift-and-loan-back-arrangements-some.html

As set out in earlier posts, and with thanks to the Television Education Network, today’s post considers some related practical issues in relation to gift and loan back arrangements in a ‘vidcast’ at the following link –

https://www.youtube.com/watch?v=hJy0OyOuLfE&t=33s

As usual, an edited transcript of the presentation for those that cannot (or choose not) to view it is below –

Having done the trust split, what you might look at doing is a gift and loan back. That is to say the trustee that sits over a split trust will arrange for assets that are equal to the underlying interest in the asset to be gifted into a brand new trust.

The new trust will generally be a stock standard family trust that’s controlled by the relevant beneficiary.

If the split trust makes a capital gift of the underlying capital value, not the interest in the asset itself, then what is being gifted is the dollar value of the asset as a cash gift. It can be a promissory note, round robin of cheques or whatever it needs to be.

The funds are gifted into a trust that’s controlled by the relevant beneficiary. What the beneficiary then does is lends that money back into the split trust.

That is step 1 is the gift.

Step 2 is the loan.

But at the same time as that new trust is making that loan, it will also take a mortgage out over the underlying assets in the split trust.

Thus you have effectively synthetically moved all of the equity out of the split trust into a brand new trust, which is absolutely controlled by the relevant beneficiary.

Furthermore, there’s no mortgage duty on a gift and loan back arrangement. In other words, you can do all of the gift and loan back arrangement without any transaction costs.

The beauty of the strategy is that it still maintains the integrity of the initial trust split, but gives each of the ultimate family members, no matter what might go wrong between the family at that split trust level, the ultimate ability to call in that debt. While they might actually have to sell the underlying asset at that point, they will still ultimately have the underlying equity where it needs to be (that is in their sole control).

1%

Posted 26 September 2017

Last week we were assisting with an asset protection and structuring re-arrangement & the referring adviser asked – why would an at-risk spouse retain a 1% interest in a property? As explained by an earlier post, the reasons can include:

(1) Protection against spouse or relationship difficulties.

(2) Protection against the majority owner seeking to encumber the property – no mortgage may be taken out over the property without the consent of the 1% spouse

(3) For ease of security arrangements – a financier may prefer to see the at-risk spouse’s name on title documentation.

(4) Stamp duty savings. It should be noted that in most states there are concessional provisions which apply where one spouse who owns 100% of a family home and transfers 50% (but no more or less) to their spouse. Indeed, some states, such as Victoria, allow the transfer of more than 50% of a home without any duty costs.*

*for the trainspotters, the title of this week’s post may remind some of legendary/notorious early nineties band Jane’s Addiction – see – https://vimeo.com/3867179

Chapter 1(b)

ASSET PROTECTION – FAMILY LAW

Pre-nups, pole dancers and PI insurance

Posted 14 February 2017

The saga involving swimmer Grant Hackett suing two law firms for negligence is a high profile reminder of the difficulties in relation to ‘pre-nups’.

Broadly the Hackett matter centred on allegations that the relevant law firms failed to properly advise him to create a binding financial agreement.

In particular, Hackett argued that the original agreement entered into before marriage failed to comply with the strict legal requirements under the Family Law Act. When the agreement was later updated after the birth of the couple’s twin children the alleged difficulties with the agreement were not remedied.

In many respects the issues here are analogous to the relatively well known ‘pole dancer’ case of Wallace v Stelzer [2014] HCATrans 135 – so named because the husband met the wife at what was described as ‘an adult entertainment venue’ where the wife was working as a dancer. As usual, if you would like copies of the relevant decisions please email me.

At the heart of the pole dancer case was the husband’s desire to avoid the terms of the binding financial agreement that saw him liable to pay $3million dollars to his former wife when their marriage ended after only 18 months.

Some of the arguments raised included that the lawyers failed to discharge their duty to properly explain the terms of the agreement – an allegation that would have seen the lawyers potentially liable in negligence if it had been held to be correct.

It was also argued that the agreement was void in relation to some technical aspects required to be complied with under the Family Law Act and that attempted legislative fixes to the rules were also invalid, in part because the changes purported to be retrospective.

While it was ultimately held that the agreement was effective and the legislative changes were valid the extent of the litigation has seen many law firms, even those that specialise solely in family law, choose to no longer prepare binding financial agreements.

Murphy’s Lew

Posted 9 May 2017

As set out in earlier posts, and with thanks to the Television Education Network, today’s post considers the above mentioned topic in a ‘vidcast’ at the following link – https://youtu.be/SSpp06IM5j4

As usual, an edited transcript of the presentation for those that