SMSF practitioners should exercise caution when including or excluding estate planning details on a member statement as errors could lead to legal action, a technical specialist has warned.
“How many of you are putting information on the member statements and how many are you confident the information you’re putting on the statement is correct and valid?” Accurium senior SMSF educator Anthony Cullen said during a recent webinar, noting many software programs provide room to include the details of a pension or accumulation account.
“As a member, you might receive a statement that says this pension has a death benefit nomination to a spouse or to a child, and the accountant tells you that you’ve got a valid nomination and you think you don’t have to do anything about it.
“However, when it comes time to make a payment and we find out that there isn’t a valid nomination, but rather the client has lied on that member statement, are we opening ourselves up to litigation?
“Be very careful about what we tell our clients and whether we can back up the statements that we’re making.”
When asked if practitioners should remove details entirely from the member statement to reduce the risk of future legal action, Cullen generally advised against this approach, stating it depended on the client’s individual circumstances.
He suggested providing evidence to support any claims made in the member statement is more effective and less risky from a legal perspective.
“It’s not necessarily a bad thing to have information on the member statements, but make the clients aware of what you’re basing your decisions on,” he said.
“For example, you might put in the member statement that it’s a reversionary pension based on a document we have on file, or you might include a disclaimer to say that you’re not a legal practitioner, so you don’t provide any assurance on the validity of it.
“With some clients, if they’re used to seeing that information on the statements and you remove it, you’re probably going to get questions.
“It’s more about opening up the lines of communication with your clients. Whatever approach you take, make sure your clients are aware of the limitations on that information and you’re only putting it on the statement as a general guide based on the paperwork that you have, but you don’t have any legal assurance that it’s valid.”
