Learn the essentials of offering estate planning in your practice with Anna Hacker, National Manager of Estate Planning at Australian Unity. Find out why estate planning can help advisers get to know their clients better, why they are vital in any financial plan and some of the complexities you may encounter.
Netwealth educational webinar: The transfer of trust - Effective estate planning for financial advisers
1. The transfer of trust:
Effective estate planning for
financial advisers
Presented by
Anna Hacker
National Manager of Estate Planning
Australian Unity
5 July 2018
2. | netwealth
This webinar is being recorded
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1 CPD point available
• A questionnaire will be sent early next week
2
Housekeeping
2018 Federal Budget Review
4. 4
Be able to:
Introduce estate planning into the advice conversation
Connect the dots for clients who do not see estate as valuable
Identify possible cases of elder law and appreciate how you can protect your clients
Understand:
How the estate planning conversation adds value to your relationships with your clients
The ways in which estate planning can be effective in the intergenerational transfer of your
client’s trust (and wealth)
Structures to put in place now and in the future for protection and tax effective estate planning
Learning Outcomes
At the conclusion of this webinar you will:
5. 5
Dictionary definition
The preparation of a plan to carry out an individual’s wishes and the administration and disposal
of his/her property before and/or after their passing
Anna Hacker’s definition
Making sure what you want to happen with your affairs happens
Estate Planning
What does it mean?
6. 6
Guardianship and Administration
If a person loses capacity during their lifetime and does not have valid documents in place, an
application must be made to the relevant Guardianship Tribunal
Each State has different legislation
Intestacy
If a person passes away without a valid Will, the laws of intestacy will say how their estate is
distributed
Each State has different legislation
Superannuation
If a person loses capacity and has a role in a self managed superannuation fund which they
continue to hold, the fund may become non-compliant
Estate Planning
What happens if your client does not have their estate
planning in order?
7. 7
How does estate planning help clients?
Personal wealth preservation and business succession
Ensures a smooth transition to the next generation
How does assisting with estate planning assist advisers?
Ensures continuity of service
Builds further trust with client and the next generation
Multi-disciplinary approach may involve adviser, lawyer and accountant
Why is estate planning important to advisers?
8. 8
Focus on the next generation and the tax advantages of each different approach
Be direct – if you are vague or unable to articulate why estate planning is important, the client
may not understand how vital it is
Find an area of importance
Caring for elderly parents/children
Charity
Pets
Minimising tax
Case studies are useful for illustrating what might go wrong (or right)
Talk about outcomes not just documents
How to start the conversation
9. 9
Estate planning is not “one size fits all” – be wary of always offering “testamentary trusts”
Collaborate with lawyers – you are the facilitator/project manager
Advisers and lawyers both need to understand where each role starts and ends otherwise it
creates confusion for the client
Be careful – the clients’ intentions may not always result in the best financial outcome – keep
good notes!
How to start the conversation
10. 10
Case Study 1
Re Lauer; Corby & Anor v Lyttleton [2017] VSC 728
Background
Elizabeth passed away 10 May 2011, suffered from
dementia since 2006
Probate of Will dated 21 November 2002 was granted to the
plaintiffs on 29 September 2011
Estate worth $448,168 (reduced to $255,053 by trial)
Residue went to “The Trustee for the time being of the
Elizabeth Lauer Family Trust”
Question: Was the Trust validly established, could it
receive the residue?
11. 11
Case Study 1
Re Lauer; Corby & Anor v Lyttleton [2017] VSC 728
Decision
Having regard to the “three certainties” of trust creation, the
trust failed
Certainty of intention - The settlor failed to settle the Trust
Certainty of subject matter - It was unclear what property
was actually Trust assets and where it came from
Certainty of objects – Failed as there was no clear link
between the original deficient Trust deed and the “Trust
assets” (only inferences)
12. 12
Case Study 1
Re Lauer; Corby & Anor v Lyttleton [2017] VSC 728
Learnings
Ensure any original documentation is reviewed and any
deficiencies are corrected
Do not rely on entities having ‘accepted’ the documents as
confirmation that they are valid
Never copy and paste another person’s documents and
amend for other purposes – they may appear generic but
there are always important nuances to be considered
13. 13
Case Study 2
Re Damman and Secretary to DFHCSIA (2010/508)
Background
Damman was a 51 year old with an acquired brain injury, he
was in receipt of a disability support pension
His mother passed away in 2002
Her Will provided for each of her four children to receive an
equal share of her estate
Damman’s share was held in a Trust controlled by his
siblings with absolute discretion to access income and
capital
14. 14
Case Study 2
Re Damman and Secretary to DFHCSIA (2010/508)
Decision
Initial Centrelink decision was that Trust was controlled
private Trust and therefore all assets were attributable to
Damman
His assets thus exceeded the relevant assets threshold and
his DSP payments were cancelled
Appeal to SSAT affirmed Centrelink’s decision. Further
appeal was made to AAT
AAT found Damman, as a potential beneficiary did not have
‘effective control’, the class of beneficiaries was open and
the Trust was not exhaustive
15. 15
Case Study 2
Re Damman and Secretary to DFHCSIA (2010/508)
Learnings
Issue became whether Damman had control or whether
those in control were influenced by him
The evidence as that the trustees were not simply
distributing all income to him and were considering his
needs and using their discretion
There was no evidence that he would receive future
significant distributions
16. 16
“Testamentary Trusts” are not one size fits all
Discretionary Trusts
Capital Protected Trusts
Protective Trusts
Special Disability Trusts
Charitable Trusts
Structures of Trust
17. 17
Structures of Trust
Discretionary Trusts
Settlor: Establishes Trust
with initial contribution
Appointor: Power to hire
and fire a trustee
Trustee: Power to
distribute income and
capital to a variety of
beneficiaries or classes of
beneficiaries
18. 18
Structures of Trust
Capital Reserved Trusts
Appointor: Power to
hire and fire a trustee
Income Beneficiary:
Receives income
from the Trust initially
Capital Beneficiary:
Receives remaining
capital usually when
income beneficiary
has passed.
19. 19
Structures of Trust
Protective Trusts
Trust: Committed to
supporting the main
beneficiary, ensuring their
needs are met
Trustee: Provides limited
access to capital in the
interest of supporting the
beneficiary’s needs
Beneficiary: Only one
main beneficiary who is
vulnerable in some way
20. 20
Structures of Trust
Special Disability Trusts
Trust: Committed to
supporting the principal
beneficiary and providing
exemption to assets test
Trustee: Provides no
access to capital
Principal Beneficiary:
Only one main beneficiary
who has met established
criteria for severe
disability
21. 21
Structures of Trust
Charitable Trusts
Private Ancillary Fund
(PAF): Established during
a client’s lifetime
Public Ancillary Fund
(PuAF): Established
during a client’s lifetime
Testamentary Charitable
Trust: Established as part
of a Will
DGR1 Charities:
Beneficiaries of a
PAF/PuAF with Deductible
Gift Recipient Status
22. 22
Partnership with other trusted advisers is critical – it helps the client to see that there is a team
working with them and supporting them
Estate planning is not just about tax implications – it is a very person discussion
An adviser needs to know enough to start the conversation but does not need to know
everything
It is important for clients to see advisers as neutral territory when it comes to making those
tough decisions – let the lawyer break the bad news
Why is it different to the advice conversation?
Intergenerational transfer of wealth and trust
23. 23
What is elder abuse?
It does seem relevant to my practice, why
should I worry about it?
Case study 3 – Stan Lee
Case study 4 – Liliane Battencourt
Elder Abuse – we need to talk about it
24. 24
Case study 3 – Stan Lee
Stan Lee, 95, is the co-creator of fictional Marvel comic
book characters such as Black Panther
Investigation into Lee’s business manager and adviser,
Keya Morgan
Police issued an emergency restraining order against
Morgan. Associates accused of stealing $300,000 from
bank account and $850,000 to purchase a unit
Also alleges that several vials of Lee’s blood were
obtained and used to sign comic books
25. Case Study 4 – Liliane Bettencourt
25
Liliane, 92, is the heiress to the L’Oréal cosmetics
fortune, an estimated $40 billion
Trial claims Bettencourt is victim of predators and being
manipulated “like a marionette”
Some of Bettencourt’s house staff including
chambermaids and cooks questioned signs of early
dementia and expensive gifts lavished on her lawyer
and other associates
Maximum sentence including a prison term and fines
were ordered by a court for some of these associates
26. 26
Practical solutions to reduce risk
Ensure clients have all the relevant documents in place
Have the tough conversations now – before it is too late
Consider a plan for how to deal with a potential case of elder abuse
Have a checklist for clients where you believe there may be issues of capacity – if they tick two
or more boxes you require a medical certificate
Elder Abuse – we need to talk about it
29. | netwealth 2018 Federal Budget Review29
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