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Patrick Ellwood, Director
Tara Lucke, Director of Adviser Solutions
22 March 2017
ADVISER FACILITATED ESTATE PLANNING –EVERYTHING YOU NEED TO KNOW TO DELIVER EXCEPTIONAL VALUE
Overview
Estate planning toolkit1
Adding value as a facilitator2
Interactive case study examples3
Tips for young players 4
How Are We Different?
Relationship driven
Wholesale – not retail1
Compliance focus2
Technology3
Quality4
Upfront service guaranteed pricing5
6
Start with WHY1
Use estate planning to position wealth advice2
Increased revenue from risk and other advice3
Intergenerational advice opportunities4
Solutions focused, not product focused5
Why are we so Passionate?
Estate Planning Documents
After you have passed away1
While you are alive but if you have lost capacity or are outof the State/Country: Powers of attorney
2
Don’t forget superannuation and life insurance nominations3
– Will
– Memo of directions – optional, morally binding, update yourself
– Financial matters
– Medical and lifestyle matters
No Testamentary Trust
Bankruptcy
Estate Challenge
Spendthrift
Divorce
Tax on income
Simplicity
Cost
✓✗
A TT will be appropriate where:
Children1
Asset protection important2
Tax flexibility important 3
Assets in estate sufficient to justify extra administration toaccess tax and asset protection advantages (don’t forget lifeinsurance and super!)
4
No children but contemplating children in future5
When in doubt, use a TT!
How many Testamentary Trusts?
Single TT Multiple TTs
Some or all the children are minors All the children are adults or close to being adults
Asset protection is criticalAsset protection is important but autonomy for each child is more important
Children are intended to be the custodians of wealth for next generation
Children should have autonomy over their inheritance
Assets are difficult to divide between multiple trusts Assets can easily be divided between multiple trusts
The relationship between children is good, and it is practical for them to jointly manage the trust
Poor relationhip between some or all children means it would be difficult to manage a single trust
Children in same life cycle with their own familiesChildren are in different life cycles with their own families
Same control mechanism is appropriate for all children
Different children should have different control mechanisms over their inheritance
Children are in the same country and can easily manage the trust together
Children are living in different countries
Risk profiles of children are similar Children have vastly different risk profiles
If a couple, when should TT start?
Option Use if:
Only after both clients have died
• Older couple with grown up children• Majority of assets are held as joint tenants, superannuation or in a
trust• No grandchildren• Spouse is not in a high-risk occupation• No need for surviving spouse’s control over assets to be limited • Establishing multiple TTs after both passed
On death of the first spouse
• If a young couple with minor children• If an older couple with adult children, TT should come into operation
in first instance if:– Significant assets can pass into the TT on death of first spouse– Asset protection is important to surviving spouse– There are grandchildren where it would be useful to stream
income to them from the TT– Surviving spouse is in a high-risk occupation– Don’t want assets to pass under surviving spouse’s will
EstateTrustee
TT
Beneficiaries
Assets
Receives assets personally e.g.
• Assets held as joint tenants
• Superannuation
• Joint bank accounts
Receives assets as trustee for TT e.g.
• Life insurance
• Assets owned 100% by will maker
Assets
Estate
TT
Beneficiaries
Trustee
Surviving spouse receives all assets personally
All assets held via TT after both spouses have passed
EstateTrustee
TT #1
Beneficiaries
Assets
Receives assets personally e.g.
• Assets held as joint tenants
• Superannuation
• Joint bank accounts
Estate
TT #2
Beneficiaries
Estate
TT #3
Beneficiaries
TrusteeTrustee
Assets
Estate
Surviving spouse receives all assets personally
EstateTrustee
TT #1
Beneficiaries
Estate
TT #2
Beneficiaries
Estate
TT #3
Beneficiaries
TrusteeTrustee
Independent Trustee for single TT
Trust Beneficiaries
TestamentaryTrust
Trustee
Primary beneficiariesChildren, grandchildren and sometimes willmakers’ spouse
1
Secondary beneficiariesSiblings, parents, nieces and nephews, aunts and uncles
2
Tertiary beneficiariesTrusts, companies, nominated charities
3
Independent back up Trustee
Where:
– Back up trustee is also a secondary beneficiary and manages TT for benefitof primary beneficiaries
– If several children are trustees and beneficiaries of the TT, and one childdies, leaving children of their own
Tara and Jayne are trustees of the Lucke TT. If Jayne dies, Tara should manage the TT equally for herself and Jayne’s children. However, there is nothing preventing Tara from distributing the TT assets to herself solely,
excluding her nieces and nephews if Tara is the sole trustee.
Mirror image for couples
Couples with children should have the same financial controllers and guardians for minors
Executors, trustees and financial attorneys should be the same so there is consistent management of finances for children regardless of how assets are held
1
2$
Be careful when nominating couples –what happens if they divorce or one dies?
3
Robust Succession for Executors and Trustees
For couples with children, consider having at least twofinancial controllers
1
Shares responsibility2
Keeps trustees accountable3
Back up plan if someone is acting out of character or has unexpectedlife event
4
Each side of the family has a seat at the table 5
Consider second level successors to fill vacancy and maintain twocontrollers at all times
6
How do children obtain control of TT?
Memo of directions versus hardwire into the will1
Balance flexibility versus certainty2
Memo of directions:3
– Morally binding only
– Give guidance on value based decisions
– Empower people will maker trusts to assess appropriatecircumstances at the relevant time
– Will maker can amend themselves over time
Do you need a principal?
Principal is also known as an appointor or guardian1
Principal is the ultimate controller of the trust, as they can unilaterally change the trustee
2
Option Use if:
Use a principal
• There will be independent trustees managing the trust for minor children
• A change of control is anticipated in the future• A staged succession plan would be useful, e.g current controllers
can retire as trustees but retain their role as principal, to supervise management of the trust
• Want someone to have a supervisory role without involvement in day to day management of the trust
No principal
• Simplicity is preferred e.g. all control is centralised with the trustee
• Trustees and principal would be the same people for foreseeable future
Use full names and complete addresses
Don’t forget back ups
Triple check spelling
Don’t use CAPS
Include AKA names
Some common issues
1
2
3
4
5
Calls to action
Have the conversations now1
Audit even if they appear 2017 compliant2
Level of specialisation unique in the market3
Truly leverage being the trusted adviser4
War stories5
Immediate opportunities even if an estate plan is 2017 compliantand health excellent
6
THANK YOUPatrick EllwoodDirector
Mobile: 0400 503 111
Email: [email protected]
Website: http://www.viewlegal.com.au/
Blog: http://www.blog.viewlegal.com.au/
Linked in: https://au.linkedin.com/pub/patrick-ellwood/96/625/348
The material contained in this presentation is based either on information derived from our proprietary business diagnostics (including research) or fromother sources within the market, which we believe to be reliable and accurate. It is general in nature and does not constitute specific advice. BusinessHealth makes no representation or warranty as to the validity, relevance or accuracy of this information as it pertains to any specific practice or business.
Proprietary & Confidential
THANK YOUTara LuckeDirector of Adviser Solutions
Mobile: 0417 578 150Email: [email protected]: http://www.viewlegal.com.au/Blog: http://www.blog.viewlegal.com.au/Twitter: https://twitter.com/tlucke1Linked in: https://au.linkedin.com/pub/tara-lucke/60/1bb/532
The material contained in this presentation is based either on information derived from our proprietary business diagnostics (including research) or fromother sources within the market, which we believe to be reliable and accurate. It is general in nature and does not constitute specific advice. BusinessHealth makes no representation or warranty as to the validity, relevance or accuracy of this information as it pertains to any specific practice or business.
Proprietary & Confidential