Estate Planning Standards

 

Best practice for accountants and advisers building Wills on our law firm’s website

Welcome to Legal Consolidated’s Estate Planning Standard Policy. The Best Practice Policy is for Accountants, Licensees and Advisers.

There is an obligation by accountants and advisers to initiate, explain and support the needs of a client’s:

• Estate Planning
• Tax effective Wills
• Medical/Lifestyle Powers of Attorney, Guardianships and Appointing Medical Treatment Decision Maker
• Enduring Powers of Attorney
• Contractual Will Agreements – for second marriages
• Loans to Children – to escape the bankruptcy and family court
• Deed of Gift
• Forgive a Debt Agreement
• Changing control of a Family Trust at death

Advisers and accountants have a close ongoing relationship with their clients. A natural extension of this relationship is discussing estate planning. While a lawyer may see a client for a few hours, an adviser and accountant hold a special fiduciary relationship with their clients. They have unparalleled knowledge of the client’s family circumstances and overall affairs.

Often the client, even after many years of requests, still ‘can’t find the time’ to see a taxation lawyer to attend to their Estate Planning. Even then what can a lawyer learn in a few hours – versus the continual ongoing relationship with the accountant and financial planner?

The best solution is for the adviser and accountant to be the centre of the universe when it comes to Estate Planning. And build the Estate Planning documents on the law firm’s website. The law firm remains responsible for the Estate Planning documents.

You are building two documents:

Our law firm’s skill in Estate Planning

I am an Adjunct Professor lecturing both the Estate Planning and Superannuation units at a number of universities around Australia. I have done so since 1999.

Of my seven degrees, four of them are in law including my doctorate. My research was in Estate Planning and succession planning.

I author the two Australian leading textbooks on Estate Planning: CCH Australian Estate Planning and Thompson Reuters’ Australian Financial Planning Handbook.

Our ‘3-Generation Testamentary Trusts’ include:

• 3-Generation Testamentary Trusts – reduces CGT, Stamp duty and income tax for 80 years from the date of death
• Super Testamentary Trust – reduces the 17% and 32% tax on Superannuation going to adult children
• Bankruptcy Trusts – if a beneficiary is bankrupt
• Divorce Protection Trust – if a child separates
• Maintenance Trust – where beneficiaries under 18 years of age or unstable

Best Practice in building Estate Planning documents

Build these two documents. They provide you with best practice in building legal documents on our website.

Who is better at Estate Planning – lawyer or adviser?

I had a call from an adviser in Sydney. His client died. His children rang up the adviser. They claim that Dad’s estate is worth $100k. But the death tax is $32k. 

I found that hard to believe.

The adviser tells me that the only asset of the dead father’s estate is $100k. This is life insurance in the Superannuation fund. Because the children are over 18 there is a 32% non-dependency tax. 

I asked why there is no Superannuation Testamentary Trust in the Will. This reduces the non-dependency tax on the super. In fact, I telephoned the lawyer that put the Will together. He is a well-respected family lawyer that I know. To protect him I call him Robert. This is how the call goes:

Brett: Robert how come you didn’t put a Superannuation Testamentary Trust in his Will?

Robert: Brett as you know I only practice in family law.  I didn’t know that there is a tax on super at death. I did put a note in the cover letter. It states that I don’t do tax. In future when I get another Will to do, which is not that often, I will add to the note to say that I don’t give advice on tax and superannuation.

Brett: But Robert did you speak with the client’s accountant and financial planner?

Robert: I didn’t see much need to do so. I am the lawyer, not them.

The financial planner and accountant are the centre of the universe. Those professionals get the team together. They source the best risk adviser, family lawyer, tax lawyer, share broker, actuary, finance broker etc…

Estate Planning is best controlled by the accountant and the financial planner. They know the client. They are the best professionals to be the project manager of the estate planning process.

As the accountant and financial planner you are the centre of the universe. You get the team together. You are the project manager of the estate planning process.

Build the Estate Planning Quality Assurance Manual. The Manual authorises you to build Estate Planning documents on our website, throughout Australia, including the:

• 3-Generation Testamentary Trust Will
• Enduring and Medical/Lifestyle POAs

We look forward to helping you grow your Estate Planning practice.

New profit centre for Accountants and Financial Advisers:

Estate Planning

Some people incorrectly limit Estate Planning to a lawyer making a Will.

I have prepared an email for you to send to your clients setting them straight. Estate Planning is best managed by the trusted Accountant or Financial Planner.

Build, for your clients, these Estate Planning documents on our website:

1. 3-Generation Testamentary Trust Wills
2. Power of Attorneys
3. Medical Power of Attorneys

You are entitled to charge your normal fees for providing the work on the Estate Planning file.

Every document you build, for your clients, includes our law firm letter confirming we authored the document.

We are Australia’s only law firm providing legal documents online.
Your clients benefit from:

• law firm Professional Indemnity insurance
• legal professional privilege
• free legal advice, from us, as you build the documents
• document sample with explanatory notes

There are many hints and training videos as you build the Wills, POAs and Medical POAs online. Please contact me or my lawyers for help as you build the documents.

Keep control. Protect your clients.

Send this email below to your clients.

---

Dear client,

Every year, Australian tax payers voluntarily pay the Tax Office millions of dollars in “Death Taxes”.
I am going to make sure you are not going to be one of them.
Proper Estate Planning ensures that your estate goes to those you care about, and not the Tax Man.

Does the “Simple Will” protect your family?

Many people believe that their affairs are simple. You may wish to simply leave everything to your spouse, and if they die before you, then to your children. Simple. Right? Unfortunately, this is rarely the case.
There are pitfalls of preparing a “Simple Will”. A “Simple Will” may seem to fulfil your needs on the surface, but there are often many other issues that you may not have considered.
I am going to make certain that your estate goes to your family and loved ones – and not the Tax Man.

Will the Tax Man smile when I die?

Imagine $1.5 trillion “up for grabs!” That is the projected total value of estates from Australians who die in the next 20 years. The question is, who gets that money: the Tax Man, Trustee Companies or your family?
Careful planning reduces Capital Gains Tax, Stamp Duty, income tax and the 17% or 32% superannuation tax on adult children. A 3-Generation Testamentary Trust and Superannuation Testamentary Trust provides the best protection for your family.
A 3-Generation Testamentary Trust is the most effective safeguard to put into your Will to dampen the effects of Capital Gains Tax and Stamp Duty.

This is an example of a Will without a 3-Generation Testamentary Trust:

Tom always wanted to build his retirement home on the canals where he had purchased a block a few years ago. Unfortunately, Tom died before realising his dream to build on the block.

As a dutiful husband, Tom left everything to his much-loved wife Jenny.

Little did Tom know, but Jenny never shared Tom’s vision to live by the canals. Their 2 children did share Dad’s vision. Jenny decided to give the children the block of land. After all, it was now interfering with her aged pension and pharmaceutical entitlements.

The gift made the children excited. The block had increased in value to $175,000. However, the children were less excited when they got a Stamp Duty bill of over $4,200.

Later, Jenny gets a notice from the Tax Office to pay Capital Gains Tax of $28,000.00 on the “disposal” of the block. (“But I just gave it away!” she lamented)

The nightmare continues when Centrelink advises Jenny that the gift reduces her entitlements because of the Non-Abandonment rule.

Tom could have put 3-Generation Testamentary Trusts into his Will. Tom’s Will then leaves everything to his wife, children and extended family. Tom also makes his wife Trustee of the 3-Generation Testamentary Trust. Jenny controls the assets but does not own the assets for tax purposes.

Does that mean that Tom’s estate goes to Tom’s mother-in-law and Uncle Harry? Do the children have control over what Jenny does with her husband’s estate?
No, to both questions.

Jenny has full control of who gets what from the estate. With a Testamentary Trust, Jenny can give everything to herself or give some things to the children, grandchildren or any of the extended family as she so wishes. With her Accountant’s help, Jenny can take advantage of the lower income tax rates paid by some members of her family. Now that is flexibility.

Flexibility: 3-Generation Testamentary Trust?

In the above case, Jenny could have merely distributed the block to her children through Tom’s Will. Even if the transfer took place years after Tom’s death, the transfer is direct from Tom to his children. Therefore:

• No stamp duty is payable because Jenny did not own the land – she merely controlled the land in the Testamentary
• There is no “disposal” of the asset. Therefore, Jenny does not have a Capital Gains Tax bill – CGT Generation Skipping.
• Alternatively, the asset could have been kept out of Jenny’s hands to protect her Centrelink

Stop government meddling?

Mutual Power of Attorneys and Cascading Power of Attorneys

Sadly, your spouse gets Alzheimer’s disease at 61 years of age. Your children have left home. You decide to sell the large family home. You want to buy a smaller home closer to amenities that can help your spouse.
The family home is in both your names. Your spouse no longer has the legal capacity to sell the home. While there are many different types of Power of Attorney, you have none. Therefore, your only option is to apply to a government instrumentality for permission to sell the home.

During this Tribunal procedure, your children are asked to swear in court as to whether you are a “spendthrift”. Other people such as friends, other family members and even nosey neighbours may be contacted by the government to see whether they support your application. At the hearing, you are cross- examined as to whether you are a “good person” to look after the affairs of your partner.

Eventually, this government department tells you that you are allowed to sell your home. However, it can direct that you hold your spouse’s half of the proceeds in a separate bank account. If you need to buy toilet paper for your partner then you may need to provide a receipt.
Without all the proceeds of the sale of the home, you cannot afford to buy another property.
Overcome the government’s meddling with both a Mutual Power of Attorney and a Cascading Power of Attorney.

What do I do now?

Please contact me. I will build the estate planning documents you need with our lawyers.
These estate planning documents include:

1. 3-Generation Testamentary Trust Wills
2. Power of Attorneys
3. Medical Power of Attorneys

The cost for Estate Planning is $……………. This includes everything you need to fully prepare your entire Estate Plan.

Kind regards,

Your Name

Who is responsible for the documents you build on our law firm’s website?

• Legal Consolidated is responsible for the documents.
• Your client becomes our client.
• There is a direct client relationship between us and your client.
• Every document comes with a letter confirming we authored the document built on our website.

Legal Consolidated website vs non-law firm website

• Over 6,400 Australian accountants, law firms and advisers build legal documents on our website.
• This is for their clients.
• Because we are a law firm, your client becomes a client of the law firm.
• Therefore, our law firm is responsible for the documents built on our website.
• Every document comes with a letter addressed to your client confirming that we authored the legal document.

In contrast, a non-law firm website:

• merely resells a lawyer’s template; and
• therefore, there is no law firm responsible for the documents you built for your clients

Non-law firm’s websites merely re-sell a lawyer’s template – dangerous

Non-law firm websites buy, beg, borrow or steal a law firm’s template. 

Often the templates are never updated or monitored by a law firm. In Australia, a law firm is not responsible for ‘re-sold’ templates. You, as the accountant and your client, are on your own.

Worse still the adviser and accountant are providing ‘legal advice’. This is because the template is resold by non-lawyers. There is no direct relationship between the lawyer that first provided the template and the end-user being the accountant’s client. ‘Tax agent services’ does not extend to giving legal advice: s90-5(1) TASA 2009. Tax agents are not protected by non-law firm websites.

ACT and South Australian tax agents using non-law firm websites breach:

• s16(1) & 21(2)(b) Legal Profession Act 2006 (ACT); and
• Legal Practitioners Act 1981 (SA)

Using a non-law firm website breaches ‘preparing documents that create or regulate legal rights’.

In Western Australia, a non-law firm website breaches the ‘preparing of any deed, instrument or writing dealing with real or personal estate’.

Even the supply of Trust deeds and Employment Contracts breach the law. A tax agent building trust deeds on a non-law firm website breaches the law: sections 21(2)(d) and 21(2)(b) Legal Practitioners Act 1981 (SA).

Incorporating a company on a non-law firm website breaches the law because a company needs (or should have) a constitution. A constitution is a ‘deed’. Only lawyers can legally prepare deeds. Similarly, a POA is a deed. So an accountant or adviser building a POA on a non-law firm website, including a website provided by a State government, breaches the law.

We do not re-sell a lawyer’s template. We are the law firm.

Before using a non-law website consider:

1. Who is drafting the legal document? The Family Trust Deeds, Power of Attorneys, 3-Generation Testamentary Trust Wills, Loan Agreements, Leases and the 100s of other documents are drafted by the Australian law firm Legal Consolidated Barristers & Solicitors.

   While accountants and clients may type in answers to the questions, the law firm controls the logic flow, questions, hints, training videos and systems. We retain the copyright of our documents and we are responsible for the legal document. The law firm is drafting the online document.

2. Who is responsible for the drafting and its legal correctness? The law firm developed and controls the system. The law firm provides locked PDF documents of the finished document together with a covering letter on law firm letterhead confirming that we prepared and drafted the legal document.
3. Where are the client’s ‘personal information’ and data stored?  All information is stored on the law firm’s website. Your client retains legal professional privilege. However, Legal Consolidated does not see or retain any person’s credit card details.
4. Can non-lawyers charge to prepare legal documents? No, they cannot. However, a professional person such as a financial adviser or accountant can charge for the time in giving the relevant financial planning and accounting advice.
   For example, much of the work in Estate Planning is understanding the client’s tax position, financial planning, superannuation, insurance and business structures. Just as you cannot give legal advice. We are not able to give financial planning advice. For example, we can not give advice on reversionary pensions. And we are not licenced tax agents.

All documents built on Legal Consolidated’s website are signed off by us – the law firm

Non-qualified suppliers of legal documents claim that their Deeds are ‘signed off’ by an Australian lawyer.

This suggests that a lawyer has approved the legal document you are building online.

However, there can only be a ‘lawyer sign off’ when the legal document is prepared directly on a law firm’s website, such as Legal Consolidated Barristers & Solicitors’ website.

This is not the case with non-law firm websites.

Be careful with websites that are not law firms. Ask these non-law firm websites three questions:

1. Who is responsible for the legal document?
2. May I please have the above answer on a law firm’s letterhead?
3. Where is the covering letter, on law firm letterhead, confirming that the law firm authored and is responsible for the Deed?

A re-sold lawyer template is:

• different from purchasing a legal document directly from the law firm’s website
• not ‘signed off‘ by a lawyer.

With all Legal Consolidated Deeds, you get a cover letter. It is signed by a lawyer from our law firm. It confirms that Legal Consolidated authored the legal document.

Are accountants and advisers giving legal advice when building legal documents on our website?

Our law firm’s website empowers accountants and financial advisers to build legal documents for their clients. Documents include Trust Deeds, Self-Managed Super Deeds, Companies and 3-Generation Testamentary Trust Wills.

Legal Consolidated Barristers & Solicitors is the only law firm in Australia providing online legal documents. On our website, you deal directly with a law firm. We provide:

a. Legal Professional Privilege

b. legal advice and help to answer online questions – telephone, email or chat with us

c. letter confirming that Legal Consolidated Barristers & Solicitors authored and is responsible for the document

d. the law firm is responsible for the legal document including:

• • • • the questions, hints and training videos
      • dynamic logic flows – the next question changes depending on the previous answer
      • the answers you type in (e.g. if the accountant or adviser incorrectly misspells the client’s name we are responsible)
      • legal documents, minutes and cover letter
      • the signing of the documents

Am I giving legal advice when I build a document on a law firm’s website?

You are not giving legal advice when you build documents on our law firm’s website. You are a  ‘mere scribe’.  See:

• Attorney-General v Quill Wills Ltd (1990) 3 WAR 500
• Legal Practice Board v Computer Accounting and Tax Pty Ltd [2007] WASC 184
• Cornall v Nagle [1995] 2 VR 188 at 210
• Tax Agent Services Act 2009 (Cth)
• Sinclair v C of T [2010] AATA 902
• Andre Agassi v Robinson & Bar Council & Law Society [2005] EWCA 1507

The Tax Institute’s Estate & Business Succession Planning, 7th edition, states on page 9:

‘Work that is undertaken in association with the law or legal practice will not necessarily constitute engaging in legal practice. Examples include:

* clerical or administration tasks

* selling legal documents; and

* advising of incidental legal requirements by a person in the pursuit of an occupation other than law, eg tax agents advising on the requirements of tax legislation.’

What about a financial planner’s Dealer Group?

The Australian Financial Licensee (AFS) provides a list of ‘financial products’ financial advisers offer your clients. Legal services, such as our law firm’s online legal documents, are not investment products. They are legal documents.

Your practice can build legal documents online for clients. Each document comes with our letter confirming we authored the document.

Some dealer groups and accounting houses require that a lawyer speaks to your client. Just tick the box, as you build the document if you want this service. A lawyer contacts your client directly regarding the document.

Build your own Estate Planning Standard Policy for your practice.

For Estate Planning what do the accountant and adviser put on the Tax Invoice?

Q: We have just completed our first Estate Planning bundle for our client.

I am grateful that Legal Consolidated Barristers & Solicitors provides a written letter on its letterhead. The letter is addressed directly to the client. It clearly confirms that Legal Consolidated is the sole author, and owner and is responsible for the legal document.

Your online building process for Estate Planning allows me to generate a new revenue stream from work that I am largely already doing. Your website gives me the confidence to advise on the benefits of estate planning. It is a complete service model for my practice.

We are about to invoice the client for our time as a scribe. This is for typing in the answers to the questions.

What do you consider is appropriate wording, to have on our invoice, for being a scribe?

A: I don’t think you are looking at it from the correct perspective. On the back of many accountants’ and financial planners’ business cards, you see a list of services. One of them is often ‘Estate Planning’.

Estate Planning is much more than a Will and POAs. In fact, a Will and POAs are, with respect, only a minor part of a lifetime Estate Planning process that accountants and advisers embark upon for each of their clients. For example, is it not the job of the adviser to 1. create wealth 2. preserve wealth and 3. transfer wealth at the correct time, such as divorce, death and succession planning?

Further, many aspects of Estate Planning are the sole province of the financial planner. This includes Reversionary Pensions, superannuation and the like. Similarly, only accountants can give advice on the taxation implications and preparations.

I would have thought that on your Tax Invoice, you would put “Estate Planning $6,500” or whatever fee you charge as a financial planner or accountant. And then add incidental costs such as the costs of the insurance broker, finance broker fees, estate planning lawyer fees, valuers fees and the like.

Can the adviser’s client pay for the documents with their own credit card?

Yes, irrespective of whose account it is in, any credit card can be used to pay for the document. And that credit card can be different each time.

So the client can pay directly with their credit card.

This is the case even though the account is in the name of the accounting practice, financial planning or law firm.