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.

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

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2
Housekeeping
2018 Federal Budget Review

3. | netwealth
Anna Hacker
National Manager of Estate Planning
Australian Unity
2018 Federal Budget Review3
Meet today’s speakers

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

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 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

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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?

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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

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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

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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

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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

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“Testamentary Trusts” are not one size fits all
 Discretionary Trusts
 Capital Protected Trusts
 Protective Trusts
 Special Disability Trusts
 Charitable Trusts
Structures of Trust

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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

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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.

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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

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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

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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

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 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

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 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

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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
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 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

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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

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28. Questions and Answers

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