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Do you need help with Probate?

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Mitchell is the Managing Principal of Sharrock Pitman Legal. 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 and can answer all your questions related to probate.

For further information, contact Mitchell on his direct line:


CALL: (03) 8561 3318

If you are buying or selling a business, you will need to decide what is to happen to the business's employees. The employees may be transferred from employment with the outgoing owner to the incoming owner, or the outgoing owner may decide to make its employees redundant and allow the incoming owner to hire its own employees. This article sets out the key matters you will need to consider if you are buying or selling a business that has employees.

The employment contract

The employment relationship is a contractual relationship between the employer and the employee. If an employer has sold its business, it will need to bring the employment contract with its employees to an end. If employees are to continue working in the business as employees of the new business owner, then there will need to be a new employment contract formed between the new business owner and the transferring employees. This may happen formally by a written agreement, or informally by oral agreement.

If an employee will not continue in the business

If the incoming owner has decided not to offer employment to an employee of the business, then the outgoing owner will need to bring that employee's employment to an end by way of redundancy. This would involve:

  1. Giving the proper notice required by the employment contract, the Fair Work Act 2009 (Cth) and any Award or Enterprise Agreement that affects the employee.
  2. Paying the employee any redundancy payments that they are entitled to; and
  3. Paying the employee any of their accrued entitlements, such as annual leave and long service leave.

If an employee will continue in the business

If the incoming business owner would like to continue employing an employee of the business, then they will need to enter into a new employment contract with the transferring employee. In many cases, an employee will be employed by the incoming business owner on the same terms that they were employed by the outgoing business owner. However, as a new employment contract is being formed, this is an opportunity for both the incoming owner and the employee to negotiate the terms of the employment contract.

If an employee is transferring to employment with the incoming business owner, that employee's accumulated personal leave and (in most cases) years of service for the purpose of calculating long service leave will need to be recognised by the new business owner.

For redundancy pay and annual leave, the outgoing and incoming business owners can decide how to treat the entitlements of the transferring employees. They can either:

  1. Have the outgoing owner pay the employee's redundancy pay and their accumulated annual leave; or
  2. Have the incoming owner take on responsibility for the employee's accrued annual leave and accept their years of service for the purpose of calculating any future redundancy entitlements the employee may have.

Adjustments on settlement of the business purchase

The new business owner will want to ensure that adjustments are made to the purchase price of the business at settlement to account for the fact that they are taking on the liability to pay the transferring employees' entitlements. This should be provided for in the sale of business contract. The parties should also specify a method of adjusting for contingent entitlements, such as personal leave and long service leave that has not yet accrued, as it is not possible to calculate with certainty what the future cost of these will be for the new business owner.

Transfer of Enterprise Agreements

An Enterprise Agreement is a collective agreement between an employer and their employees that set out the minimum conditions of employment. The Fair Work Act 2009 (Cth) provides that employees that are covered by an Enterprise Agreement will continue to be covered by the Enterprise Agreement when the business is sold to a new employer.

Additionally, new employees who were never employed by the old business owner, but who are employed by the new business owner in the same business, can also be covered by the Enterprise Agreement. Therefore, if you are buying a business that has an Enterprise Agreement, be aware that the Enterprise Agreement is likely to carry over and apply to you and your employees, whether those employees transferred from the outgoing owner or whether they are newly employed by you.

Conclusion

Whether you are buying or selling a business that has employees, it is important that you decide from the outset what you are going to do with the employees of the business. We have helped many customers buy and sell their businesses and are able to advise on all aspects of a business purchase or sale, including advising on how to treat the business's employees. If you would like assistance with the purchase or sale of a business, please give Mitchell Zadow a call on (03) 8561 3318.

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.

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Employment Law

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' using the electronic Court filing system. 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 the Managing Principal of Sharrock Pitman Legal. 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 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.