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Do you need help with Probate?

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Mitchell is a Principal Lawyer of Sharrock Pitman Legal. He is an Accredited Specialist in Business Law (accredited by the Law Institute of Victoria). He also deals with areas of Employment Law, Wills & Estate Planning and Probate and can answer all your questions related to probate.

For further information, contact Mitchell on his direct line:


CALL: (03) 8561 3318

Are you considering selling a business in Victoria? We have set out a checklist of important topics to consider when you are selling your business.

Checklist for Selling a Business:

1. Section 52 Statement

If you are selling your business for $450,000.00 or less, you will need to provide the Purchaser with a Section 52 Statement pursuant to s 52 Estate Agents Act 1980 (Vic) (unless you have a liquor licence).

The Section 52 Statement sets out details about the business, including its financial position. You should ask your accountant to prepare the Section 52 Statement for you.

It is an offence to fail to provide a Section 52 Statement when you are required to do so, and it could also give the Purchaser grounds to end the Contract, so it is important that you have this prepared.

2. Heads of Agreement

When selling a business, you may want to include the major terms and conditions of your sale in a Heads of Agreement with the Purchaser, prior to a formal Contract of Sale being prepared or entered into. Heads of Agreement are useful where it is going to take some time to prepare a formal Contract of Sale, or if some terms are still to be negotiated. They can be either binding or non-binding.

3. The Contract

It is critical that you have a Contract of Sale prepared that addresses all aspects of the sale. For many sales of small businesses, it will be appropriate to use the Law Institute of Victoria's precedent contract. No business is the same however, and so you will need to have Special Conditions in the Contract professionally drafted and tailored to your particular business.

When selling a business, it is critical that the Contract of Sale is comprehensive, so as to make it clear what the responsibilities of the Purchaser and you as Vendor are.

4. Business Premises

You will need to transfer any lease to the Purchaser. The Purchaser will usually want the sale Contract conditional upon the Landlord agreeing to the transfer of the lease.

Whilst it is the Purchaser's responsibility to prepare the lease transfer documents, you will need to make the formal request to the Landlord for the lease to be transferred. If the lease is a retail lease, you are also required to provide the Purchaser with details of the lease and a disclosure statement. If this is not done properly, you risk incurring damages and you could find yourself in a position where you are still liable under the original lease, should the Purchaser default on the terms of the lease.

5. Intellectual Property

The Contract should clearly state what intellectual property you are selling as part of the business, and what intellectual property you are retaining. If there is intellectual property that needs to be assigned or transferred, then this will need to be done as part of the sale process.

6. PPSR

The Purchaser will require any registrations against the business on the Personal Property Securities Register to be removed at or prior to settlement of the sale of your business.

7. Restraints of Trade and Confidentiality

The Purchaser may want restraint of trade and non-solicitation clauses in the Contract. If you are planning on operating or working in a similar business to the one you are selling, make sure these clauses are not going to affect your future plans.

8. Assistance period

Consider whether you are willing to assist the Purchaser in the business after settlement, prior to signing the Contract. This is something that should be addressed in the Contract, so everyone is clear on the expectations.

9. Employees

The Fair Work Act 2009 (Cth) sets out what entitlements and obligations need to be transferred to the Purchaser in relation to employees, including enterprise agreements. If the Purchaser is taking on responsibility for employee entitlements, they will want the sale price to be adjusted at settlement to take into account these entitlements.

If the Purchaser is not retaining your employees, then you will need to give your employees proper notice and pay your employees their redundancy entitlements and any accrued entitlements they may have. For more information, see our previous article on what happens to employees if you buy or sell a business.

10. GST

The sale of a business will usually be the sale of a going concern, so you will not usually need to collect GST on the sale. However, this must be documented in writing and you must confirm that the Purchaser is registered for GST.

11. Tax

The sale of your business will be a capital gains tax event. If you are selling a small business, you should see whether you are entitled to any of the small business CGT concessions or exemptions. Your accountant will be able to advise on the tax that you will be required to pay on the sale.

For more information if you are buying a business, see our previous article on buying & selling businesses.

Have any further queries?

At Sharrock Pitman Legal, we have assisted many customers with the sale of their business. If you would like assistance in selling a business or have any further queries, please feel free to give Mitchell Zadow, Managing Principal and Accredited Commercial Law Specialist, a call on (03) 9560 2922 or alternatively fill in the form below.

The information contained in this article is intended to be of a general nature only and should not be relied upon as legal advice. Any legal matters should be discussed specifically with one of our lawyers.

Liability limited by a scheme approved under Professional Standards Legislation.

Written by one of our lawyers

,

.

Samuel Ellemor

For further information contact

Mitchell Zadow

Mitchell is the Managing Principal of our law practice.

He is an Accredited Specialist in Commercial Law (accredited by the Law Institute of Victoria). He also deals with areas of Employment Law, Wills & Estate Planning and Probate. For further information, contact Mitchell on his direct line (03) 8561 3318.

More on

Commercial Law

Are you considering selling a business in Victoria? We have set out a checklist of important topics to consider when you are selling your business.

However, in this article we will set out the factors that influence how long it will take to obtain a Grant of Probate and to administer an estate in Victoria.

The basics

First things first: what is a Grant of Probate? A Grant of Probate is effectively a document issued by the Supreme Court of Victoria which formally authorises an executor to manage the estate of a deceased person in accordance with their Will. Without Probate, the asset holders (say a bank or share registry) cannot be satisfied as who has the correct authority to receive the deceased's assets and may refuse to pay out.

Sometimes, for smaller estates or if assets are mostly jointly owned with a surviving spouse, asset holders might agree to release payment without requiring a Grant of Probate. This is usually on the basis that the person who receives payment promises to repay (or Indemnify) the asset holder if it turns out they paid to the wrong person.

If there is no Will, then you cannot obtain a Grant of Probate. Instead you obtain Letters of Administration. This is effectively the same, in terms of authorising someone to administer the estate, and would usually be obtained by the person who is the closest next-of-kin to the deceased.

“A Grant of Probate is effectively a document issued by the Supreme Court of Victoria which formally authorises an executor to manage the estate of a deceased person in accordance with their Will.”

Timeframes for Probate in Victoria

In order to obtain a Grant of Probate, the Court needs to be given information about the assets and liabilities of the estate, the deceased person, the witnesses to the Will, the executors and the Will itself. An advertisement of your intention to apply for Probate must also be placed on the Supreme Court website for at least 14 days prior to any application.

Often, making enquires to obtain all the necessary information can take a number of weeks. Also, you will need the Death Certificate for the application for Grant of Probate and possibly for making proper enquires regarding the assets and liabilities. Waiting for the Death Certificate to issue can therefore add a few more weeks to the process. Overall, if you have your application for Grant of Probate lodged within 1 to 2 months from the date of death, you are making timely progress.

The Court itself does not take long to process the application (maybe another 1 to 2 weeks) and this is done 'on the papers'. This means you do not have to go to a court hearing. There is also a general discretion for the Court to issue a 'Requisition' asking that you provide more information before they process the application and this can delay matters.

“Overall, if you have your application for Grant of Probate lodged within 1 to 2 months from the date of death, you are making timely progress.”

So, here we are a few months after death and you finally have a Grant of Probate. It is important to remember that this is the start of the estate administration and not the end. For a very simple estate, you might only need a further month or so to cash the assets and pay them to the correct beneficiaries. However, it can often be more complex than that. Factors that determine the timeframe to administer the estate include:-

  • Some assets will take time to cash or transfer. For example, if selling a property, final settlement might be 60/90/120 days from the day of sale.
  • There is a 6 month period for challenges to be brought against the estate and executors must wait until this period expires before distributing the estate, if there is any risk that a disgruntled family member might come forward.
  • There might need to be final tax returns for the deceased or for the estate. Failing to wait for the ATO to process these could leave the executor personally liable for a tax bill.
  • You might need to advertise for creditors to come forward and wait for a period of months while this advertising timeframe expires. This protects the executor if they are unsure of all of the deceased's financial dealings and creditors.
  • It might not always be a good time to immediately cash estate assets. For example, the shares just took a nose-dive, do you still sell regardless of available price?

There is a general rule that executors have an 'executor's year' to complete the estate administration. This means that you should be aiming to have the estate finalised and distributed within 12 months from the date of death.

The information contained in this article is intended to be of a general nature only and should not be relied upon as legal advice. Any legal matters should be discussed specifically with one of our lawyers.

Liability limited by a scheme approved under Professional Standards Legislation.

Need help with Probate?

Our expert legal team is ready to take your call!

Mitchell is a Principal Lawyer of Sharrock Pitman Legal. He is an Accredited Specialist in Business Law (accredited by the Law Institute of Victoria). He also deals with areas of Employment Law, Wills & Estate Planning and Probate and can answer all your questions related to probate.

For further information, contact Mitchell on his direct line:

DIRECT LINE: 
(03) 8561 3318

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About Sharrock Pitman Legal

For fifty years Sharrock Pitman Legal has made a significant and long term contribution to meeting the legal needs of business owners and residents in the City of Monash and greater Melbourne area.