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Estate planning not just for the wealthy

Peter Townsend of Townsends Business and Corporate Lawyers tells Wealth Professional why and how advisers should be helping all their clients with their estate planning. 

Video transcript below:

Peter Townsend, Townsends Business and Corporate Lawyers
Peter Townsend:
 The myth that estate planning is only for the wealthy and it is a myth,  if you are in the work force you have superannuation.  Your superannuation can’t be dealt with in your will, because your superannuation is not controlled by you, it’s controlled by the trustee of the fund.  So if you have superannuation then part of your estate, part of your assets are outside the ambit of your will.  So now when you pass away you need a will and you need a death benefit nomination to tell the trustee how you want your superannuation dealt with. All of a sudden we have two documents and we have started estate planning.  That applies to just about everybody in the work force and there are some other documents that could apply as well that would help you before you pass away such as an enduring power of attorney or a guardianship document or a living will, what some states call an advanced health directive.  All of these document together constitute basic estate planning and they are for everybody, not just for wealthy people.  

Traditionally financial planners have had a little bit of problem with estate planning because frankly they have not been able to work out how to make a quid out of it.  And these days of course as we are moving away from commission based remuneration to fee based remuneration, there will be a lot more interest in estate planning from financial planners.  In the perhaps the bad old days, financial planners understood that their clients estate planning had to be dealt with, had to be considered, but they weren’t active in that role, many of them anyway weren’t active in that role.  We feel that this will change as planners move to fee for service, they will be looking for value adds and estate planning is a great value add.  The fact is there is much to consider, so it’s not a super cheap process, but if it can be provided according to a system, then the financial planner can benefit from it, can be able to charge the client for that service for being the liaison between the client and the lawyer, for helping the design of the estate plan itself and for being heavily involved in the process to the benefit of the client.
So one of the times it’s best to think about estate planning is when you start an SMSF.  A lot of people, a lot of advisors who put their clients into a SMSF get them to sign a death benefit nomination almost as a matter of course without thinking about the process.  We think that’s very unwise.  Certainly a death benefit nomination is necessary, but you need to think about it and you need to think about it as part of and against the background of the client’s estate as a whole.  So we don’t think that it’s a good idea to simply sign the death benefit nomination like a form that you are filling out for the tax office or ASIC or whatever.  We think you need to think about it more seriously and it’s a great time to consider the member’s will as well and it’s a great time to consider some of their other estate planning needs.  Trustee in capacity and estate planning in our view go hand in hand with the establishment of a self managed super fund and are almost axiomatic.  In other words, I would be a little worried that an advisor had not fully met their duty to their client, if those matters weren’t addressed.  So if you are setting up an SMSF for a client, consider their estate planning at the same time, it’s the perfect time to do it.