Putting a value on a family business

A question that often is asked in family law proceedings is “What is the value of my husband’s/wife’s business?”

In a normal commercial context, that question can often be answered by looking at what an “arms-length” purchaser would be willing to pay for the business. Very often, in family law cases, there may be no ready market for the particular business and if the “arms-length” test was applied, the result might be a nil value.

The Family Court has often said that it is willing to look at what the business is worth to the spouse who is going to retain it in establishing a value. Accordingly, where a husband or wife will continue after separation to conduct a business that is generating substantial income, the Court may put a value on that business that is a value to the remaining spouse personally.

For any information or assistance concerning family law or estate litigation matters, please contact Greg Dickson at greg@wmdlaw.com.au or on 9526 2608.

Employees leaving? What else is walking out your door?

In the current economic crisis, many employees are being made redundant. Businesses need to consider that some employees whose employment has been terminated may be walking out the door with your intellectual property to help them set up their own business or possibly worse, to assist a competitor.

While general know-how in an employee's head may be something that he or she is entitled to use after their employment ends, a former employee may not divulge a trade secret. Understanding who owns the intellectual property rights in work done by employees in the course of their employment (copyright, designs, inventions, etc) is key to protecting your business from the potential loss of that intellectual property.

A former employee is not allowed to use intellectual property created for one employer for the benefit of another employer simply because that person created them.

Employers needed to take steps to seek to protect their valuable property from being taken by rogue workers as preventing the loss is much more effective that seeking to repair the damage later.

The best way for an employer to assert ownership over intellectual property created by employees is to include express terms to that effect in their employment contract and stating that those rights are assigned on creation to the employer. In respect of protecting confidential information disclosed to those in the course of their employment, appropriate restraint clauses can prohibit unauthorised disclosure of client lists and other information that is not in the public domain.

If you wish to discuss ways to protect your business and it’s intellectual property, please contact Craig Pryor on 925 8688 or email craig@wmdlaw.com.au or for more information in relation to employment issues and contracts, please contact Kevin Dwyer on 9525 8688 or email kevin@wmdlaw.com.au.

Children's Medical Appointments

As a matter of general principle, children who are mature enough to provide consent to medical or dental treatment can do so in their own right and without parental consent or knowledge.

A leading case in this area is an English decision known as the Gillick case. In that case, the mother of a child had argued that a medical practitioner should not give contraceptive advice or prescriptions to a teenage child unless parental consent was first obtained.  The case established a rule that children with the intellectual capacity and emotional maturity to understand the nature and consequences of the treatment could legally consent to that treatment on their own behalf.

In Australia the High Court adopted the rule in Gillick in a case known as Marion's case in 1992. The age at which a child is normally said to be able to consent is 14 but this can be higher or lower depending on the individual child and the nature of proposed treatment.

These principles apply to most types of medical treatment (including abortion and contraception) but do not include special treatments such as sterilisation and some psychiatric treatments.

If the child is sufficiently mature to understand and consent to the medical treatment it also follows that the child has a right to privacy in relation to the fact of the visit to the doctor and the treatment prescribed and the doctor would be liable to the child if he or she divulged information about the child's visit to the parents without the child's consent.

For any information concerning parenting obligations or any family related matter please contact Greg Dickson, greg@wmdlaw.com.au or 9525 8688.

Duty to disclose contamination

Under recent Guidelines introduced by the Department of Environment, Climate Change and Water (DECC), a landowner is required to take ‘notice’ of changes in their land and have assessments conducted if they suspect any contamination.  If these assessments indicate contaminates are present in the soil or in the groundwater in levels which are above the regulations than the landowner has a duty to report the findings to the DECC.

The duty to report will arise if an owner should reasonably be aware of contamination on their site. Potential indicators are:
1.       Illnesses in people who have exposure to the site;
2.       The presence of chemicals (eg odours or discolouration of water);
3.       Visible signs of toxic responses to contaminants in flora and fauna (eg unusual numbers of birds dying near the site);
4.       The presence of liquid or solid chemical waste on the site;
5.       The presence of discarded explosive materials on the site; and
6.       Evidence of migration of contaminants into adjacent or nearby environments.

If suspicion arises as a result of the above, or any other, indicators, then a landowner must undertake further investigation. If contamination is found to be above the legal levels, the landowner is required to submit a detailed report in the specified DECC form.

If contamination is present and the report is not to DECC made as required, the landowner may be subject to prosecution. If convicted, the penalties can be in excess of $165,000 for corporations and $77,000 for individuals.

If you are concerned about your duty to disclose under the new guidelines or need assistance in reporting to the DECC, please contact Rebecca Flynn, on rebecca@wmdlaw.com.au, on 9525 8688.

 

What is an Estate Proceeds Trust?

People often provide gifts in their wills without having regard to the taxation consequences that their beneficiaries may face. For example, where your partner dies and leaves you an income producing asset, like a rental property, your income tax may be significantly increased especially where you are already earning an income. Luckily, if you have minor children, the tax payable may be hugely reduced by spreading that income between yourself and the children by setting up an estate proceeds trust.

An estate proceeds trust exists where a person receives a gift under a will and transfers part or all of the property represented by that gift to a trust for the benefit of a minor. Income flowing to a minor from such a trust is ‘excepted trust income’ and is separately taxed in the same way as an adult.

There are 3 requirements for such a trust to be valid:
1. the trust must be set up within 3 years of the death of the testator;
2. the amount transferred to the trust must not be more than the child would have received from the estate if there was no will (ie, had the deceased died intestate); and
3. the child must be entitled to the assets of the trust when the child turns 18 (ie, it is not a discretionary trust).

In regards to the second requirement, the amount of money that can be transferred to the trust varies between states. In New South Wales, the surviving spouse in the case of an intestacy generally receives the first $200,000 and 50% of the balance of the estate and the remainder falls to the children equally. If more than the maximum amount is transferred, the excess will not be ‘excepted’ income and will be taxed at the higher rate. It is important to note that if assets other than money are transferred to such a trust, that transfer can attract stamp duty.

Whilst it would be ideal for everyone to consider the possible taxation consequences when drafting their will, it is also important to seek legal and financial advice upon receiving part of an estate as a beneficiary.

If you would like any further information in relation to estate planning or wills generally or your options as a beneficiary, please contact Craig Pryor on 9525 8688 or email craig@wmdlaw.com.au.