Estate planning requires additional skills for financial advisers
Financial advisers are well-placed to assist clients through the estate planning process, but the complexity of drafting a binding Will may require more technical and compliance skills than they currently hold.
That's according to Equity Trustees senior manager - estate planning Anna Hacker, who said when advisers expand their range of services into estate planning, the most common mistake she sees revolves around the distribution of superannuation assets through a Will.
"In most cases, superannuation funds cannot be left to someone in a Will, unless prior arrangements have been made for superannuation to become part of the estate by making a valid binding death benefit nomination naming the legal personal representative as beneficiary," she said.
If no binding agreement is in place, the super fund's trustees can decide how the assets are distributed, which may not necessarily mean the funds will go to the testator's nominated beneficiary, she said.
In addition, advisers should be aware that binding nominations are not automatically cancelled as a result of a divorce, so it is important to draft a Will to ensure, for example, that an ex-spouse does not inherit the super assets, Hacker said.
Advisers should also consider the unintended consequences of insurance within super, specifically, resulting in one beneficiary being awarded insurance funds on top of super savings.
"For example, a person may decide that they want to leave the family home to one child in their Will, and their superannuation savings to another child by nominating them as their beneficiary, as these two amounts are equal," Hacker said.
"But the second child also receives the insurance payout, which may be as much again as the superannuation funds."
Other issues to consider in estate planning include differences in state laws pertaining to individuals authorised to lay claim on estate assets, and the importance of having a truly independent 'power of attorney' arrangement to avoid conflicts of interest, Hacker said.
Recommended for you
An adviser has received a written reprimand from the Financial Services and Credit Panel after failing to meet his CPD requirements, the panel’s first action since June.
AMP has reported a 61 per cent rise in inflows to its platform, with net cash flow passing $1 billion for the quarter, but superannuation fell back into outflows.
Those large AFSLs are among the groups experiencing the most adviser growth, indicating they are ready to expand following a period of transition and stabilisation after the Hayne royal commission.
The industry can expect to see more partnerships in the retirement income space in the future, enabling firms to progress their innovation, according to a panel.
