When it comes to estate planning, the smallest details can make a huge financial difference. A recent case handled by our boutique firm of wills and probate lawyers in Melbourne highlights how careful planning, timely action, and expert guidance can protect your loved ones from unnecessary taxes and maximise inheritance.

The Client’s Situation

Our client was 93 years old, with his wife pre-deceased, three adult daughters, and a significant asset portfolio. Having already transferred a substantial public company share portfolio out of his Self-Managed Superannuation Fund (SMSF) into his own name, the remaining major asset was an inner suburban warehouse valued at approximately $3 million.

At this stage, he was in palliative care following a heart attack and had expressed that he felt it was “time” to go. With such circumstances, there was an urgency to ensure his assets were structured efficiently to protect his family.

The Challenge

The warehouse property had not been transferred into his personal name because he had lost the title. He had been informed that replacing the title and transferring the property could be a lengthy process. Without timely action, the property could have remained “inside” the SMSF, which would have created significant tax consequences for his daughters upon his passing.

Had the property stayed in the SMSF, the Victorian Government Stamp Duty alone would have exceeded $300,000.

The Solution

We stepped in as his estate planning lawyers, replacing the title and transferring the property into his name efficiently and without delay. This proactive action saved the family $450,000 in taxes at just the 15% rate.

Shortly after the transfer, the client passed away. Thanks to the estate planning structures we had established, his daughters had multiple options for handling the warehouse:

• Retain the property as an asset within the discretionary testamentary trusts created in his Will.
• Sell the property capital gains tax-free and either take all or part of the sale proceeds or reinvest and distribute income to their children in a tax-efficient manner.

By comparison, if the funds had been invested through a standard discretionary “family” trust instead of one established via the Will, each child would have only a $500 tax-free threshold, with marginal rates up to 47% applied thereafter.

Key Takeaways

This case highlights why engaging an estate planning lawyer early is critical, particularly for clients with complex assets such as:

• Self-Managed Super Funds (SMSFs)
• Commercial or high-value property
• Public company share portfolios

Proactive estate planning allows families to:

• Avoid unnecessary tax liabilities
• Protect wealth for future generations
• Ensure assets are distributed according to the client’s wishes

Working with will and estate lawyers ensures your estate plan is carefully structured, legally sound, and tailored to your family’s needs.

Why Work With Our Wills and Probate Lawyers in Melbourne

Navigating the legal and tax implications of an estate can be complex. Our boutique firm provides guidance on:

• Estate planning and succession strategies
• SMSF asset transfers and tax minimisation
• Establishing testamentary discretionary trusts
• Updating Wills and binding death benefit nominations

By planning ahead, you can protect your assets, minimise tax exposure, and ensure your loved ones benefit exactly as you intend.

Take Action Today

Estate planning is about more than documents — it’s about safeguarding your family’s financial future. If you want personalised and bespoke guidance on how to structure your estate, speak to our estate planning lawyers today.

Contact Tony Kelly Lawyer now.

The post How Estate Planning Lawyers in Melbourne Saved a Family $450,000 appeared first on Tony Kelly Lawyer & Estate Planner.

What are chattels?

To put it simply, ‘chattels’ refer to personal property or movable assets that are not land or real estate. In legal terms, chattels are tangible items that can be physically moved and transferred from one person to another, such as goods, furniture, or possessions. They are different from real property, which includes fixed assets, like land or buildings. Chattels also consist of items like jewellery, vehicles, art pieces, or family heirlooms.

The Administration and Probate Act 1958 (Vic) defines “personal chattels” as including:

“carriages horses stable furniture and effects (not used for business purposes) motor cars and accessories (not used for business purposes) garden effects domestic animals plate plated articles linen china glass books pictures prints furniture jewellery articles of household or personal use or ornament musical and scientific instruments and apparatus wines liquors and consumable stores but does not include any chattels used at the death of the intestate for business purposes nor money or securities for money”.

The main feature of chattels is how easily they can be transported, along with their clear difference from real property. The above definition also distinguishes chattels from items used in the conduct of a business. When a person passes away, the chattels they owned become part of their estate and must then be distributed in accordance to the terms of their Will or, in cases of intestacy, in accordance with the laws of succession.

Why is it essential to know the relevance of chattels?

Chattels possess great significance when an estate is being distributed after death, as they can have a substantial effect on the deceased person’s family and loved ones. An individual may normally leave directions as to how certain items are to be distributed, often to safeguard personal belongings, sentimental items, family heirlooms, or the like.

In situations of intestacy, Victorian law gives directions for distributing chattels to guarantee that personal property is justly dispensed according to the family relationships. Usually, chattels are given to the surviving spouse or children. This approach is taken to make sure that the personal items of the deceased person are passed on to those that were closest to them, or those who were most likely meant to inherit the items if there were a Will.

Cases addressing chattels

Numerous courts have had to identify whether specific items would constitute chattels. In the case of Smith v Smith (2012), a dispute arose over a family heirloom which held significant sentimental value. The heirloom, a painting, was categorised as a chattel but such characterisation was contested by the heirs. The Court held that despite its value and significance to the family, the painting was a chattel due to its mobility. A chattel is a moveable item that is not fixed to the property.

Other items that are much larger and less mobile may be more challenging to distinguish. McCauley v McCauley (2007) addresses this issue. This case concerned a dispute over whether certain fixtures and improvements on a property, being a pool and decking, should be considered as chattels or part of the real property. The court held that these items were not considered as chattels due to their permanent attachment to the land. It was highlighted that an item that is permanently fixed to the land or a building revokes itself from being considered a chattel. The pool and decking in this case were intended to stay in place as part of the property and therefore were considered as real property.

Bequeathing chattels to beneficiaries

It is essential to note that a testator (Willmaker) possesses the choice to bequeath specific chattels in their Will, such as the examples mentioned previously. Alternatively, the testator has the option to refer to a non-binding list that is kept separate to their Will, outlining the distribution of the items. Granted that the list is not legally binding, it does supply direction and guidance to the executor to aid in ensuring that chattels are distributed in accordance with the testator’s intentions.

In many cases, clients would bequeath chattels to a group of beneficiaries, like their children, in order for them to divide between themselves. While this approach works well when the beneficiaries can easily come to an agreement on how to divide them, it is still best for the testator to provide some general guidance in order to lessen the chance of possible disputes down the line. We recommend that testators include a specific procedure as to how chattels are to be divided in the instance that beneficiaries cannot come to an agreement, such as ‘drawing straws’ to determine the order in which beneficiaries can select chattels.

Testators may also consider whether a beneficiary’s portion of the residuary estate should be modified according to the value of the chattels they have inherited. To give an example, if one beneficiary receives an item more valuable than the other, the testator might choose to reduce their share of the residual estate to ensure the distribution among all the beneficiaries avoids any unintended inequalities.

Conclusion

The classification of property as chattels is crucial for determining how items will be distributed after someone’s death. Courts look into the nature of the property and the circumstances in question. Various aspects would be considered by the Court such as the item’s use, value, and relationship to the real estate. By understanding the importance of chattels and addressing them appropriately, legal practitioners can prevent potential disputes between family members.

The post What are ‘chattels’ and why are they important? appeared first on Tony Kelly Lawyer & Estate Planner.

At law, pets are considered a ‘chattel’, or an item of personal property. We know that pets are so much more than just an item, however. In this blog post, we set out your options for deciding what happens to your pets when you die.

Bequest in a Will

As a pet is a ‘chattel’ for the purposes of your Will, you can bequeath them to family or friends as you see fit. For beloved family pets, this could mean bequeathing your dog or cat to one of your children when you and your spouse have died.  You may also have a close friend or neighbour who is familiar with your pet and would be happy to take on their care if something happened to you. We recommend discussing such a bequest with the intended beneficiary first, to ensure they are willing to take on the responsibility. A beneficiary can always say no to a gift in a Will, and it is important to ensure that your pet is not left ‘high and dry’ in such circumstances.

A Trust for your pets?

You may have seen sensational headlines in the media, such as “Woman leaves $4.3 million fortune to her cats and dogs”. In Victoria, you cannot leave assets to an animal under your Will, as they are not a legal person who can inherit the property. You can, however, set up a Trust for the purposes of caring for your pets.

You would need to appoint a trusted person to be the Trustee of the Trust, such as a friend or relative. You may leave an amount on Trust for your pet based on your estimate of their expenses over their lifetime, such as food and vet bills. If you are intending to leave a large sum in Trust for your pet, it is important to think about who will receive any excess funds on their death. You may, for example, wish for any excess Trust funds to be donated to an animal charity.

If you have bequeathed your pet to a friend or relative, you may wish to consider making a bequest to such person elsewhere in your Will as a token of your appreciation. Such funds would not be directly for the use and benefit of your pet, but instead would be a gesture of thanks to the person who will care for them.

Memorandum of Wishes

We often recommend that clients make a Memorandum of Wishes to cover non-binding instructions or guidance which they wish to leave with their Will. This document can also include non-binding instructions as to the care of pets, for example:

• If my husband and I both die while our children are still under eighteen, we have appointed my sister as their Guardian. We would like our family cat Coco to stay with our children for emotional support.
• It is my wish that my dog Ringo is rehomed with a loving family. I would like my Executors to first ask if any of my children would like to take him, but if not, I would like him to go to a young family with a backyard.

Rehoming your pet

You may not have a suitable person in your life to help care for your pets on your death, but you still wish for them to be looked after. Several organisations offer programs where you can register your pet during your lifetime to be taken in by such organisation on your death.

One example is the RSPCA Home Ever After program. In this program, you register each of your pets with the RSPCA, including details of their medical conditions, likes and dislikes. You also make a direction in your Will that you give your pets to the RSPCA to rehome using the service. The RSPCA will then provide you with resources to ensure your Executors know what to do on your death. There is no cost for the service, but the RSPCA asks that you consider making a donation to the organisation in your Will as thanks.

Our furry friends (and feathered friends, and scaly friends) can be as much a part of our families as our human relatives. Even though they may be treated differently at law, you can still ensure that your Estate Plan provides the best possible future for your pets. Our team is on hand to update your Will, create a Memorandum of Wishes for you, or assist you in any way to give you peace of mind. Contact us today for a no-obligation discussion.

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A new case has expanded upon this decision. Re Rentis Pty Ltd [2023] QSC 252 focused on a deceased, Robert, who had appointed his wife and his brother as attorneys under a valid Enduring Power of Attorney. Importantly, his Enduring Power of Attorney gave his attorneys the express power to “renew any binding death benefit nomination” that he had made.

Robert lost decision-making capacity in 2020. His wife died in the following year.

Robert had previously made a BDBN allocating a portion of his superannuation death benefits to his wife. Following her death, Robert’s brother (acting as his attorney) updated Robert’s BDBN to divide his member death benefits between Robert’s children and Robert’s Estate.

The Court in Re Rentis considered whether such nomination was valid under the Attorney’s power to ‘renew’ a BDBN. On a strict interpretation of the word ‘renew’, such power could allow the attorney only to re-confirm an existing nomination in the same percentages, for example where a previous nomination had lapsed after three years.

The Court decided, however, that a narrow interpretation “would produce capricious, unreasonable and certainly inconvenient results”, and that such a power in an Enduring Power of Attorney should allow the Attorney to update the principal’s nomination when circumstances had changed (e.g. on the death of a beneficiary).

While such decision has not yet been tested in Victoria, we at Tony Kelly Lawyer & Estate Planner are pleased with this update. One issue of concern for us when assisting clients with their BDBNs is that many funds do not allow a ‘default’ or ‘two-tier’ nomination; that is, clients cannot dictate what should happen to their death benefits if their first choice of beneficiary predeceases them, and the client is unable to update their nomination due to incapacity or otherwise. Such a ‘default’ nomination is usually possible with a self-managed superannuation fund (SMSF) but our efforts to convince industry funds to adopt a two-tiered nomination form have so far been unfruitful.

Allowing a principal’s attorney to update the principal’s BDBN circumvents this issue, as the attorney can ensure a valid BDBN is still in place if the principal’s first choice of beneficiary has died and the principal no longer has capacity to update their own nomination. Above all, this decision underscores the need to have a robust and comprehensive Estate and Succession Plan in place that includes not only a Will and Binding Death Benefit Nomination but also Powers of Attorney.

If your Estate and Succession Plan does not include all of the above, we recommend that you contact us today to set up a no-obligation consultation.

The post Update – Superannuation Binding Death Benefit Nominations appeared first on Tony Kelly Lawyer & Estate Planner.

1. Who can receive my superannuation when I die?

Superannuation death benefits can only be paid to an individual if they are your dependant. For the purposes of the Superannuation Industry (Supervision) Act 1993 (‘SIS Act’), a ‘dependant’ in relation to a person is:

• Their spouse;
• Their child (regardless of age); or
• A person with whom they have an ‘interdependency relationship’. Whether two people have an ‘interdependency relationship’ depends on the following factors:
  • They have a close personal relationship;
  • They live together;
  • One or each of them provides the other with financial support; and
  • One or each of them provides the other with domestic support and personal care.

Often, clients instruct us that they would like their sibling or parent to receive their superannuation when they die. Unless they have an ‘interdependency relationship’ with such family member, such relative cannot receive their superannuation directly. Clients can, however, make a nomination directing that their superannuation death benefits are paid to their Estate (i.e. to their Legal Personal Representative). Such death benefits will as a consequence of such nomination be distributed in accordance with the Deceased’s Will, with no restrictions as to who can receive them.

2. How do I “bequeath” my superannuation?

As indicated above, superannuation is held separately to your personal assets in a superannuation trust on behalf of the fund’s members, and so simply making a gift of your superannuation in your Will is not sufficient to deal with your death benefits. Instead, you must make a nomination directing the Trustee of your superannuation fund to pay your death benefits in accordance with your instructions.

The requirements for a nomination may vary according to the rules of the fund, but generally, in order to be binding, these nominations must be signed in the presence of two independent witnesses and submitted to the Trustee. If the Trustee does not receive your nomination before your death, it will not be valid and binding on the Trustee.

If your super fund permits, we recommend making your nomination non-lapsing, so that you do not have to renew it every three years.  We also recommend reading our blog post on the ability of your attorney to renew your nomination should you lose capacity to make decisions.

The nomination should be expressed in percentages to be paid to the eligible beneficiaries as explained above. For example, Naomi wishes to divide her superannuation between her children and her best friend Janet. Naomi makes a nomination directing her super fund to pay 33% of her death benefits to each of her two children. She also directs the fund to pay the remaining 34% to her Legal Personal Representative. Naomi then makes a Will, bequeathing any funds received from superannuation to Janet. On Naomi’s death, the fund will pay 34% of her death benefits to her Executor, who shall distribute the benefits in accordance with Naomi’s Will. This means that Janet will receive her share of Naomi’s superannuation death benefits, as per Naomi’s wishes, even though she is not a dependant of Naomi.

3. How are superannuation death benefits taxed?

We suggest obtaining specific financial advice as to the taxable and untaxed portions of your member balance to determine unequivocally how your death benefits will be taxed. As a general rule, however, death benefits paid to a tax dependant are not taxed. Please note that the definition of a tax dependant is slightly different to a SIS Act dependant, and includes only:

• A spouse or de facto partner
• A child under the age of eighteen
• Any person in an interdependency relationship with the Deceased

For benefits paid to adult children or your Legal Personal Representative (to be distributed under your Will to non-dependants), tax of 17% will apply to the taxable portion of the benefit. Any untaxed element will be taxed at 32% including Medicare levy.

Many clients are averse to paying such taxes on their superannuation (even though such payment will not occur until after they have died!). If you wish to minimise the taxation payable from your death benefits, you may consider nominating only tax dependants as beneficiaries, and providing for other family members through other means (such as your Will).

If you are of ‘preservation age’ (i.e. over 60), you may also begin withdrawing assets from your superannuation fund during your lifetime. Assets that have been removed from superannuation and that are in your personal name as at the date of your death will not incur the 17% tax, even if paid to a non-tax dependant from your Will. It is important to seek proper financial advice before deciding to draw down on your superannuation early for Estate Planning reasons.

It is also crucial that any such withdrawal requests are made in a timely fashion; if you die before the request is actioned by the fund, and the fund is aware of your death, the request may be treated as a payment of death benefits and taxed at 17%, rather than treated as a payment of a super benefit during your lifetime and not taxed at all.

4. What should I do next?

As a starting point, we recommend logging into your superannuation fund’s website (or otherwise contacting the fund) and confirming:

1. Whether you have a nomination in place;
2. Whether that nomination is binding; and
3. Whether the individuals you have nominated as beneficiaries are ‘dependants’ or your Legal Personal Representative.

If your answer to any of the above is ‘no’, we encourage you to contact us to discuss making a valid, effective Superannuation Binding Death Benefit Nomination. This document should be considered in tandem with your Will and wider Estate Plan. Our experienced and knowledgeable team can assist you in ensuring your superannuation death benefits (along with your other assets) are properly dealt with on your death.

The post Important considerations for your superannuation appeared first on Tony Kelly Lawyer & Estate Planner.

Binding Financial Agreements (BFA)

A BFA is an agreement between spouses or partners that determines how their assets will be divided in the event of separation or divorce. While many clients are aware of the American ‘pre-nup’, a BFA can be entered into at any time – either before marriage (or before entering into a domestic partnership by cohabiting), during the course of the relationship, or after separation. A BFA ensures your assets are protected while you are still alive and is an important consideration where:

• You and your spouse have brought unequal assets to the relationship;
• You or your spouse has inherited, or will inherit, a significant asset or assets and wishes for such asset to ‘stay in the family’;
• One partner has a higher earning capacity than the other (e.g. due to differences in age or health, or because one partner has greater work experience or qualifications) and you want to ensure fairness in any spousal maintenance; and/or
• You intend to purchase substantial assets together and want to ensure that, if you separate, such assets are divided according to your contributions.

In the absence of a BFA, a Court may award one partner a much larger share of the marital asset ‘pool’ and assets may need to be sold to fulfil the Court’s orders. For example, the Court may order that the parties sell the family home and divide the sale proceeds, when (prior to the separation) the parties had intended for their children to receive the house. In the case of a ‘blended family’ or subsequent relationship, the risk may be heightened; a widower may have received substantial assets from his late wife, whose intention was for their children to eventually receive the benefit, but without a BFA in place, such assets may be ‘lost’ should the widower separate from his new partner. A BFA is a key piece of your Succession Plan (what you hope to achieve during your lifetime) and a properly-drafted document is the only way to ensure your wishes are followed in the event of divorce or separation.

Will

While a BFA deals with the death of a relationship, a Will deals with assets on the death of a person. While you may trust your spouse implicitly, you may also be alive to the possibility that they may re-marry or re-partner after your death. If your spouse had received your assets absolutely on your death, they could then give ‘your’ assets to their new partner during their lifetime; bequeath them to their new partner in their Will; or ‘lose’ such assets in separation proceedings as described above. It is therefore crucial that you obtain proper legal advice in order to protect your assets for the benefit of your children in the event that your spouse survives you.

Some options which may be available to you to protect assets for your children include:

• Placing assets in a discretionary testamentary trust, created in your Will for the benefit of your children (potentially with your spouse having limited access to Trust capital);
• Creating a life interest in your residence for your spouse, so they can reside there for their lifetime, but on their death, the property reverts back to your children;
• Entering into mutual Wills so that your spouse cannot amend their Will after your death; and/or
• Making allowances for your children outside your Estate, for example through transferring assets to them during your lifetime or nominating them as recipients of your superannuation.

Any attempts to ‘ring-fence’ assets from your spouse must also be weighed up against your duty to make ‘fair and reasonable’ provision for them, hence the importance of proper advice. It is also important to remember that any BFA you may have entered into with your spouse is no longer binding when one partner has died unless divorce or separation proceedings had been commenced before death.

Our team specialises in Estate and Succession Planning, particularly for clients whose prerogative is asset protection. If you are looking to protect your assets for future generations, contact us today to arrange an initial discussion.

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