Feature: Estate planning


By Sarah Kendell

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While estate planning has traditionally been the domain of lawyers, the financial planning industry’s shift toward a more client-centric model in the wake of the Future of Financial Advice reforms has seen a greater number of advisers take an active interest in the way clients are structuring their wealth for the next generation.

As a result, many legal professionals in the space are increasingly working collaboratively with advisers in what is becoming a growing area of expertise for both professions, according to Australian Unity national manager of estate planning Anna Hacker.

“Five years ago most advisers would ask a client whether they had a will, but it would be a pretty static question – they used to see it like an add-on that they would send the client out to do themselves,” she says.

“The vast majority of clients now have an adviser involved in meetings [with lawyers] – the advisers understand they have to make sure what they are doing fits in with the estate planning.”

Townsends Business & Corporate Lawyers principal Peter Townsend agrees that more and more planners are wanting to add estate planning to their range of services as they move toward a fee-for-service business model focused on holistic advice.

“Currently most planners are acting as the fact-gatherer and mentor in the process and leaving their chosen lawyer the role of designing the estate plan,” he says.

“This is likely to change as their knowledge of estate planning increases and they take a more active role in the design process.”

Equity Trustees state manager for Western Australia and estate planning solicitor Stephanie Smith points out that more detailed assistance from a financial planner is also needed as clients develop more complex family and financial structures over time.

“Clients are relying more on their adviser to guide them through the estate planning process, especially where there are complexities such as blended families, self-managed superannuation or beneficiaries with special needs,” she says.

“The reality is that very few people actually have ‘basic’ estate planning needs – especially once family arrangements change and if children are involved, including adult children.”

It’s not only a client’s current family structure that needs to be taken into account in estate planning conversations, but also the way the family may evolve in the future, adds HLB Mann Judd partner Jonathan Philpot.

“I find with many clients it’s not so much what may be the situation now, but that they are worried about passing on their wealth to children and trying to protect them from what will happen in the future,” he says.

“Many clients have young children and they hope they will marry the right person, but realistically around one third of marriages end in divorce so it’s about what is the best way to financially protect the child from a marriage breakdown.”

Philanthropy can also play a role in estate planning conversations according to Hacker, who emphasises the topic “doesn’t have to be all about death”.

“It can be about giving and opening up discussions about what is important to you in life to protect or build – there are lots of ways that even families without a spare $200,000 around are starting to do more structured giving,” she says.

“As an adviser, if you are always having to talk to clients about markets it can be difficult because it’s a bit out of your control. Being able to talk about what charities you are going to give to this year is a nicer discussion to have.”

One estate planning area where the responsibilities of advisers and lawyers converge is superannuation, and Townsend notes the 1 July super reforms have further complicated things for both parties.

“Recent amendments affecting transfer balance caps, pension account balances and the wisdom of reversionary pensions versus death benefit nominations have not helped to simplify … the dovetailing of superannuation death benefits with gifts made in a will,” he says.

“There is a raft of issues to be considered, some of which need to be dealt with during the will-maker’s life rather than in documents that have no effect until after they’re gone.”

Smith also notes it’s important for a client’s super death benefit nominations to be dealt with alongside the broader estate planning process.

“This requires careful consideration of contingencies and making sure the client understands the different outcomes associated with their decisions,” she says.

“Collaboration between the adviser and estate planner is essential to ensure the right outcome is achieved.”

For this reason it can be helpful for practices to employ their own estate planning lawyer to ensure clients follow through on the adviser’s recommendations, Philpot suggests.

“We formed a joint venture with a specialist because while we had been talking to clients about [estate planning], we would send them to their local solicitor but then next time they came in they hadn’t done it,” he says.

“Having a lawyer there who can get the documents done makes it much easier to get everything implemented, and clients feel more comfortable having everything in the one place.”

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