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Estate Planning, Succession Planning

Wider asset pool key to SMSF advisers’ future

estate planning SMSF advisers

SMSF advisers should expand their skills to include estate planning to engage with clients who will pass on trillions to family in the next 20 years.

SMSF advisers should consider becoming better equipped to tackle estate planning and family succession matters, according to an SMSF strategist who believes the sector has matured as fund establishments have stabilised and will begin to decline.

In a recent message to subscribers, I Love SMSF chief executive Grant Abbott said the job of accountants and financial planners was to protect the families of their clients who will be the recipients of large levels of family wealth over the next 20 years.

“We are not talking about the only 1 per cent of wealthy Australians, but a large majority of our parents and our generation,” Abbott said in the message.

“So my challenge to you is to take the leap of faith and move into this field, not wholly – keep on doing what you are doing – but start slowly, read, listen and learn about what is happening to the $3 trillion in Australian family wealth that is to pass in the next 20 years.”

The SMSF sector had reached its peak in terms of growth and was unlikely to have the same growth path it had until 2016 due to a combination of changes to pension and contribution limits, adviser licensing, regulatory scrutiny and the growth of industry funds, he said.

He expanded on this idea and the need for accountants and planners to capture a wider pool of assets for their clients as part of a webinar yesterday, during which he noted the assets inside SMSFs were dwarfed by those held outside SMSFs by older Australians and their wider families.

“SMSFs are a mature market and I have looked at all the statistics, and from what I have seen there is $300 billion which will transfer hands from SMSFs over the next 20 years, but looking at the broader community through family trusts, estates and investment properties, this pool is $3 trillion,” he said.

“I would rather go for the $3 trillion, which catches the $300 billion, and the big growth area for SMSF advisers is in the estate planning and family wealth protection area for people of any age and for those with significant amounts of wealth aged over 60.”

Given recent legal cases involving family disputes, advisers should look beyond the SMSF structure and consider other methods of protecting assets as well, he said.

“SMSFs are a great vehicle, but they are limited in their usage. My preference is to run an SMSF alongside a discretionary trust and my thematic is that when a client dies, there is nothing in their estate but is rather in their SMSFs or discretionary trusts, and this works with assets outside of superannuation as well. The reason for this is to prevent family estate disputes that take years to resolve,” he said.

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