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Estate Planning

Barriers to litigation key in estate planning

SMSF estate planning

Advisers should put barriers in place to protect clients’ wealth structures, including SMSFs, from legal disputes eating into their family estate upon their death.

Advisers need to ensure the wealth of SMSF clients is protected from future litigation when providing estate planning services, an SMSF technical expert has said.

LightYear Docs and I Love SMSF chief executive Grant Abbott said advisers should prioritise putting barriers in place to protect clients’ wealth structures, including SMSFs, in order to prevent the likelihood of legal disputes eating into their family estate upon their death.

Citing Miller v Taylor (2018), where a small family estate was “ravaged” by legal fees, Abbott said protecting clients’ estates from financially devastating legal challenges in the future should be an essential part of any estate planning strategy.

Using an estate planning tool, such as LightYear Docs’ Moat, could help advisers ensure the correct protective structures were in place, he added.

“Essentially, what we want to do is put a barrier around these [wealth] structures and make it really solid so that it’s very difficult for the ‘no-win, no-fee’ lawyers to really start to cross that [barrier] and start to attack the family’s wealth,” he said today during a LightYear Docs webinar.

“To do that we need to put in place a lot of structures. The key area there for us is obviously litigation, not only from any bad characters, but also from the regulators.”

He noted creating a barrier protecting clients’ wealth from litigation would not help someone who was bankrupt or on the brink of insolvency, but that it was vital for clients who did not have glaring financial concerns.

“If you’ve got a clean balance sheet and no issues, it’s absolutely important to put a [barrier] together,” he added.

In March, SMSF administrator SuperGuardian said trustees needed to ensure they had clarity regarding who would be in control of their SMSF in the event of a member’s death.

Earlier in the year, CBA Commonwealth Private Office strategic advice specialist Caroline Harley noted financial advisers needed to give great consideration to language and not just figures when providing items such as estate planning strategies for their SMSF clients.

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