Estate planning : a practical guide for estate and financial service professionals [4th edition.] 9780409339499, 0409339490

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ESTATE PLANNING A PRACTICAL GUIDE FOR ESTATE AND FINANCIAL SERVICE PROFESSIONALS FOURTH EDITION

MICHAEL PERKINS DipLaw (SAB) Supreme Court of New South Wales TEP, Society Trust Estate Practitioners Partner, Perkins Fahey, Lawyers (Sydney) Lecturer, Faculty of Law, University of Technology Sydney Lecturer, School of Accounting and Finance, Charles Sturt University, Bathurst

ROBERT MONAHAN LLB (Syd) Supreme Court of New South Wales TEP, Society Trust Estate Practitioners Accredited Specialist (Wills and Estates)

Law Society of New South Wales Principal, Monahan Estate Planning, Sydney Lecturer, Faculty of Law, University of Technology Sydney

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National Library of Australia Cataloguing-in-Publication entry Author: Title: Edition: ISBN: Notes: Subjects: Other Creators/Contributors: Dewey Number:

Perkins, Michael John. Estate planning: a practical guide for estate and financial service professionals. 4th edition. 9780409339482 (pbk). 9780409339499 (ebk). Includes index. Estate Planning – Australia. Estates (Law) – Australia, Inheritance and succession - Australia. Monahan, Robert William. 346.94052

© 2015 Reed International Books Australia Pty Limited trading as LexisNexis. First edition 2005; second edition 2008; third edition 2011 This book is copyright. Except as permitted under the Copyright Act 1968 (Cth), no part of this publication may be reproduced by any process, electronic or otherwise, without the specific written permission of the copyright owner. Neither may information be stored electronically in any form whatsoever without such permission. Inquiries should be addressed to the publishers. Typeset in Electra LT and Gill Sans. Printed in China. Visit LexisNexis Butterworths at www.lexisnexis.com.au

FOREWORD Professionals entering estates practice, whether on the first rungs of their career ladder or as experienced professionals transferring from another area of practice into the private wealth administration arena, could do no better than grab themselves a copy of this new, revised edition of Michael Perkins and Robert Monahan’s established textbook on estate planning. Targeted at the aspiring estate planner, the fourth edition of Michael Perkins and Robert Monahan’s textbook places the client and his or her needs at the very centre of the planning process. In our modern multicultural society, those needs are becoming increasingly diverse and complex; people are living much longer, and are often much wealthier than in the past. Estate planning must continue to evolve in line with these changing demographics in order to satisfy individual and family objectives. Tax mitigation on death has for many years been one of the main drivers for efficient and effective planning for clients. As an out and out practitioner, with over 30 years of experience in an offshore jurisdiction, I think I can safely say that the days of tax mitigation being the prime motivator in arranging a client’s affairs are giving way to a wider array of drivers as we enter this new age of global fiscal transparency. Nevertheless, the impact of inheritance taxes on a family’s wealth remains a key consideration in estate planning as the professional adviser continues to ensure that a person’s estate will pass in accordance with their wishes and that adequate provision is made for spouses, partners, children and grandchildren. The professional estate planner will also recognise the need to consider the extended lifetime needs of individuals and their families too, especially as we all live longer and the attendant expenses such as health care and other agerelated costs, and their drain on retirement income, become a reality. Each individual’s financial, personal and family circumstances will be different and in order to assist in meeting their objectives advisers and

planners need to be appropriately qualified and skilled. For example, investments, insurance and non-financial assets may well feature in an estate plan which is likely to evolve as circumstances (family, financial etc) change. The diligent and client-focused estate planning professional will meet regularly with the client to ensure that the ‘plan’ remains up to date and in line with the individual’s current objectives. So the estate planner needs to be not only knowledgeable, experienced and skilled but must also be aware of the limits of their competence. As a result, the ability to develop and access a wide, multi-disciplinary network becomes all the more vital if the estate planner is to meet their client’s needs. In this multi-disciplinary environment it is vital that estate planners observe the highest level of professional standards — integrity, commitment and competence — in their dealings with clients. When I first entered the profession, many years ago, my old boss drummed home to me that the ‘client is king’, certainly as far as our organisation and his employees were concerned. This client-centric approach has always worked well for me and it is a practice which I have followed since those early days of my career. Putting the interests of the clients before our own, and observing the duty of care which we have to those clients, is an onerous responsibility. In order to fulfil our responsibilities we need to be, and to remain, technically competent. The fourth edition of Estate Planning offers a comprehensive and practical introduction to the technical world of the estate planner. Rosemary Marr TEP Vice President of STEP Chair of STEP WW’s Professional Development Committee

FOREWORD TO THE THIRD EDITION Estate planning. The word conjures up an image of management of a wonderful old house and grounds, a timeless treasure that is a home for generation after generation. The estate is the platform for life, which is lived in different ways, with a different drama by each generation. By providing a solid, dependable and sustainable platform, life can be lived well and passed on to others. The estate planner is a solid, thoughtful designer who supports the foundation for the family to live and thrive across generations. This book by Monahan and Perkins fits nicely with this image of the estate planner as designer and sustainer for successive lives. The process of estate planning is a triumph of faith for a family. Knowing that creating family wealth is a sign of power and success, but is regarded by society (‘shirtsleeves to shirtsleeves’) as greatly ephemeral, the idea of safeguarding family wealth across generations is decidedly futile. But what would the world look like if a family could not pass on wealth to the next generation? Would parents work hard and take huge risks, dedicate their lives to something that they could not pass on to their children? Would children feel as tied and connected to their families if it was a short-term relationship where they could not expect to inherit something, even if just a share of a family vacation home? Let’s shift our attention a bit and think about the profession of estate planning. It is practised by legal and financial professionals, with the major aim to safeguard as much financial wealth for the family from taxation, and also to keep the family wealth from being quickly dissipated by the next generation. This is both a financial/legal and an interpersonal venture. Its success has to do with the structure that is set up, but also the behaviour of the next generation of family members. From a financial, legal and tax point of view, large assets must be placed

into complex structures to deal with the regulations and needs of multiple constituencies. The family must be able to pass on governance and control, the assets must be managed to control substantial operating businesses and complex investments, and the people must feel that the choices that are made are fair and reasonable to all members of the family. This is a difficult and complex undertaking that must take into account all manner of legal, financial and interpersonal factors. Monahan and Perkins have designed a guide to these factors that is both clear and comprehensive. The family element comes first, as only the family can define clearly a set of goals and aspirations for the plan. Then come experts who take the ambiguous values and desires, and make them work technically. Monahan and Perkins have a clear sense that estate planning is not a transaction; one with a beginning, middle and end whose outcome is a clear, written plan. While there is a plan and it is clear and written and an outcome, it is a process which involves all sorts of engagement and input from different places. Their account never loses sight of that, and communicates nicely how it is done. They have a great ability to keep us in touch with the whole system of players and factors, and to look at parts without losing the larger picture. Their guide looks at each element, but in their introductory and concluding chapters they put things into context as a larger system. Every profession has one part of the whole to attend to, but they cannot operate without having an eye on the greater whole. This guide helps people from all the individual professions understand and envision the larger meaning of estate planning for the lives of a family. Finally, their view of the family is a human one, not a technical one. They understand that estate planning is a sign of trust from the older generation to the younger, where the younger generation must be stewards of the vision, values and mission of their elders, who gave them a gift, but also that the legacy must change and evolve over generations. They show faith and a focus on the people in the family who are the planners and beneficiaries, and how the technical plan is a design for the life and future of a living system.

It is a wonderful achievement. Dennis T Jaffe, PhD Professor of Organizational Systems and Psychology Saybrook University

PREFACE Our continued experience of teaching estate planning as an undergraduate face-to-face subject at the University of Technology Sydney (UTS) and as an online distance education delivered Masters Degree Subject at Charles Sturt University (CSU) continues to inform the development of this book. The Financial Planning Association of Australia, by the operation of its Accredited Estate Planning Strategist (AEPS) designation, continues to contribute to the development of the estates practice context of financial planning. The launch of dedicated education programs in Australia by the Society of Trust and Estate Practitioners (STEP), expected during 2015, will build further on these foundations, producing more concentrated education and training of professionals focused on private clients and their associated wealth management issues. Wills and probate practice including deceased estate administration remains the specialist domain of succession lawyers. The administration of commercial and investment management structures and the management of estates during the lifetime of family members is an expanding occupation which is gaining increasing attention across the professions through their continuing recognition of trust and estates practice. The Future of Financial Advice reforms1 (FOFA) have introduced a statutory best interest duty that refines the regulatory expectations of financial advisers. Developing the community’s understanding of the distinction between financial advisers and professional financial planners remains a work in progress, largely led by the Financial Planning Association. With the release of the report from the Financial System Inquiry,2 some clarity about the distinction between sales, general information and personal financial advice is finally emerging in the media. Irrespective of these trends, the private professions focused on wealth management continue to develop their competitive relationship with not only commercial trustee companies but also banks and the broader

categories of financial institutions operating within Australia and in offshore jurisdictions. Transnational operations by clients, families and the commercial concerns to which they are connected are the practical consequence of postwar migration to this country. In this edition we enlarge our treatment of estate planning and administration for cross border clients. With increasing community concern about longevity, vulnerable beneficiary support and managing family capital for the benefit of multiple generations, the socially responsive estate planning framework that this book teaches continues to be practised as part of a relational focused, advice led service model for delivering estate planning services across all types of clients. The adaptation of our estate planning service framework into the daytoday operations of accounting and taxation practices and not just law firms and professional financial planning practices remains a work in progress. In this edition we have combined the former Chapters 2 and 10 into a revised Chapter 2 dealing with the practice of estate planning. This chapter is further developed in the companion online service to this text: Estate Planning.3 Estate planning remains the client discovery and strategic advisory component of estates practice. Estate planning lays the foundation for the appropriate use of estate structures in managing the affairs of clients as well as establishing the principles that guide an estate’s administration during the life and after the death of its founders for the benefit of their chosen successors. We would like to thank John Taggart and Mark Squire for their continuing support of the teaching and development of the estate planning course at UTS. We would like to also acknowledge the role of the Financial Planning Academic Forum in facilitating the development of the Estate Planning Masters Course at Charles Sturt University. Deidre Keogh, Adam Steen and Ben Bohmfalk have been instrumental in these developments. The Society of Trust and Estate Practitioners (STEP)4 continues the development of its education programs and qualification pathways for estates

practice in Australia. The Committee of STEP South Australia Branch has been instrumental in helping expose the work summarised in this text to an expanding international audience within the STEP community. We look forward to developing the discussion of cross border estate planning and administration in future editions. David Harvey and Nigel Race of STEP, Deen Sanders (formerly of the FPA, now CEO of Professional Standards Councils) and John Bacon of the FPA have provided invaluable support to the recognition of our work in the operations of their organisations. The permission to reproduce the codes of conduct of STEP and the FPA as full appendices of this book is appreciated. We appreciate deeply the Foreword provided by Rosemary Marr to this edition. Her perspective as an offshore based estates practitioner about the elemental features of professionalism in the field of estates practice provides a timely reflection about the importance of cross border practice in our work. The fact that there is an international network of some 20,000 STEP practitioners means that local estates practitioners have a rich resource to assist them in their practice. Outside UTS, CSU and STEP, Vic Ruth of Estplan Pty Limited and John Green of Kaplan Professional Education have been instrumental in extending the teaching of estate planning to practising professionals focused on the estates practice field. We look forward to the continued development of their work by their organisations. The publishing and editorial teams at LexisNexis Butterworths have provided invaluable support to the development of this edition. Jennifer Burrows and Annabel Adair have been diligent, practical and friendly guides to the production of this edition. We would like to acknowledge the support of John Dymond of Dymond Foulds & Vaughan and Millie Telan of Telan Lawyers in contributing to the development of our discussion about the interaction of the accounting, tax and legal professions and to Julia Monahan for her research contribution to this edition. Finally we would like to thank our partners and families whose continued support has been inestimable.

Responsibility for all opinions and errors remains ours. The law is stated as available to us in October 2014. Michael Perkins Robert Monahan Sydney 1 2 3 4

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THE SCHEME OF THIS BOOK This book is intended to be used in the teaching of estate planning at a tertiary level for students wishing to practise in the trusts and estates field of the legal, accounting, tax and financial planning professions. We are also aware that many professionals have not studied trusts and estates related subjects in obtaining their qualifications. This book is also intended to support those professionals who wish to embark on offering estate planning and administration services in the operation of their practice or firm. The following themes are discussed from a number of differing perspectives: estate territoriality and control; client accountability; estate composition; undertaking estate planning as a professional service from the client and adviser’s perspective; distinguishing estate management and succession in estate planning; recognising particular groups of issues as common to particular clients; establishing methods to manage a client’s declining capacity; establishing methods to achieve particular client objectives such as retirement, family provision or social contribution; and managing the endurance of a client’s capital. This edition of the book builds on the coverage of state-based legal issues and applicable state legislation and introduces a discussion about cross border estate administration issues in Chapter 10.

Chapter 1 Chapter 1 sets out reasons for the broad community need for estate planning. It then introduces the idea of estate planning as a strategic advisory service built on an appropriate investigation of a client’s affairs. Estate planning is then placed in the context of a client’s estate management and succession needs.

Chapter 2 Chapter 2 describes the practice of estate planning from the perspective of a business owner, manager or sole practitioner. The formal elements of estate planning as a business process are described. The management environment of estate services practices is discussed. The professional role and responsibility of an estates practitioner are outlined in the context of their disciplines or occupations of origin.

Chapters 3–8 These chapters describe the formal legal elements of estate planning practice. For professionals who are not lawyers, these chapters provide a primer of the legal issues that need consideration within estate planning and a basis from which lawyers can be briefed to give legal advice. For lawyers, these chapters provide a summary of the law that the trust and estates practitioner should know in depth in order to act comprehensively for a client. For more narrowly skilled lawyers, these chapters provide pointers to what additional resources may be needed to deliver trust and estates services.

Chapter 9 Chapter 9 explores estate planning from the client’s perspective. The process and approach introduced in Chapter 2 of the book are applied to a number of exemplar client situations.

Chapter 10 Chapter 10 provides a final reflection on particular issues surrounding the complexities of estates practice including cross border aspects of estate planning and administration.

TABLE OF CASES References are to paragraph numbers

A Abernethy v Simpson [2007] NSWSC 186 (8 March 2007) …. 3.45 ANZ Trustees Ltd v Hamlet [2010] VSC 207 …. 3.32 Aoun v Clark [2000] NSWSC 274 …. 3.15 Application of M [2000] NSWSC 1239 (11 December 2000) …. 3.10 Application of Spooner (unreported) …. 3.32 Armstrong DLW GmbH v Winnington Networks Ltd …. 5.2

B Ball v Newey (1988) 13 NSWLR 489 …. 7.31 Banks v Goodfellow (1870) LR 5 QB 549 …. 8.12, 8.13 Barker v Magee [2001] NSWSC 563…. 7.38 Barns v Barns (2003) 214 CLR 169; [2003] HCA 9 …. 7.45 Batton Singh v Amirchand [1948] AC 161 …. 8.12 Baudains v Richardson [1906] AC 169 …. 8.14 BD v Protective Commissioner [2007] NSWADTAP 73 …. 8.3 Belfield v Belfield [2012] NSWCA 416 …. 7.39 Benny v Jones (1991) 23 NSWLR 559 …. 7.31 Bevan v Bevan (2013) FLC …. 7.10 Bigg v Queensland Trustees Ltd [1990] 2 Qd R 11 …. 7.45 Birmingham v Renfrew (1937) 57 CLR 666 …. 7.45

Bishop v Bishop [2013] FamCAFC 138 …. 7.24 Blomley v Ryan [1954] HCA 79; (1956) 99 CLR 362 …. 2.14 Boardman v Phipps [1967] 2 AC 46 …. 8.10 Boughton v Knight [1873] LR 3 P and D 64 …. 8.12 Boulton v Sanders [2004] VSCA 112 …. 3.26 Boyse v Rossborough …. 8.14 Boyter v Lepre; Estate of Umberto Lepre [2001] NSWSC 127 …. 7.41 Brian William Mortensen v New South Wales …. 3.32 Brown v Pourau [1995] 1 NZLR 352 …. 7.33 Bull v Fulton (1942) 46 CLR 295 …. 8.12 Burgess v Leech [2007] NSWSC 700 (19 July 2007)…. 8.13 Burns Philp Trust Co Ltd v Stott (1955) WN(NSW) 322 …. 3.52

C C E F Rickett (1991) 54 MLR 581 …. 7.45 Caltex Oil (Australia) Pty Ltd v The Dredge ‘Willemstad’ (1976) 136 CLR 529 …. 7.31 Caparo Industries plc v Dickman (1990) 2 AC 605 …. 2.9 Cf Bigg v Queensland Trustees Ltd [1990] 2 Qd R 11 …. 7.45 Cf Westdeutsche Landesbank Girozentrale v Islington Borough Council [1996] 2 WLR 802 …. 7.45 Chan v Zacharia (1984) 154 CLR 178 …. 8.10 Chapman v Chapman [2014] NSWSC 1140 …. 3.14 Cheese v Lovejoy (1877) 2 PD 251 …. 3.15 Christie v Permewan, Wright & Co Ltd (1904) 1 CLR 693 …. 8.9 Clemens v Byrnes [2007] NSWSC 421 (7 May 2007)…. 8.13

Commercial Bank of Australia v Amadio (1983) 151 CLR 447 …. 2.14 Commissioner of Stamp Duties (Qld) v Livingstone [1965] AC 694 …. 5.42 Consul Development Pty Ltd v DPC Estates Pty Ltd (1975) 132 CLR 373 …. 5.44 Cook v Benson (2003) 214 CLR 370; 198 ALR 218; [2003] HCA 36 …. 4.102 Coward v Motor Insurers’ Bureau (1963) 1 QB 259 …. 6.5 Craig v Lamoureux …. 8.14 Crawley, Re the Estate of [2010] NSWSC 618 …. 3.26

D Davis Estate; Application of May [2010] NSWSC 989 …. 3.32 De Gois v Korp [2005] VSC 326 …. 3.26 Dehnert v Perpetual Executors & Trustees Assn of Australia Ltd (1954) 91 CLR 177 …. 3.91 Delaforce Simpson v Cooke [2010] NSWCA 84 …. 5.41, 6.1, 9.62 Dodd v Lang SC(NSW) …. 3.8, 3.19 —v Dodds [2013] NSWSC 1933 …. 7.35 Doe d Reed v Harris (1837) 6 Ad & E 209; 112 ER 79 …. 3.15 Dolman v Palmer [2005] NSWCA 361 …. 7.34 Donoghue v Stevenson [1932] AC 562 …. 7.31 Draper v Nixon [1999] NSWSC 629 …. 7.38 Dunn v Public Trustee …. 7.31

E Elayoubi, Application of Wosif [2010] NSWSC 1004 …. 3.26 Elgabri v Elgabri [2009] FamCA …. 7.24

Elliott v Elliott 18 May 1984 …. 7.33 —v Joicey [1935] AC 209 …. 3.92 Ellis v Leeder (1951) 82 CLR 645 …. 7.31 English v Dedham Vale Properties Ltd [1978] 1 WLR 93 …. 5.43 Equiticorp Industries Ltd v ACI International Ltd [1987] VR 482 …. 7.39 Esanda Finance Corporation Ltd v Peat Marwick Hungerford (Esanda) [1997] HCA 8 …. 2.9 Essex v Essex [2007] FamCA 639 …. 7.23 Estate of Cook [1960] 1 All ER 689 …. 3.8 Estate of Cross BC9601803 …. 3.32 Estate of Edwards; Treacey v Edwards (2000) 49 NSWLR 739 …. 3.7, 3.21 Estate of Finn (1935) 105 LJP 36 …. 3.8 Estate of Masters (dec’d); Hill v Plummer (1994) 33 NSWLR 446 …. 3.23 Estate of O’Dell [2010] NSWSC 678 …. 3.23 Estate of Peter Brock [2007] VSC 415 (24 October 2007) …. 3.60 Estate of Scott; Re Application for Probate [2014] NSWSC 465 …. 3.26 Estate of Slavinskyj (1988) 53 SASR 221 …. 3.7 Estate of Spinks BC9003281 …. 3.32 Estate of Theakston (1956) 74 WN (NSW) 113 …. 3.8 Estate of V D Bolton [2002] NSWSC 235 …. 3.15

F Fagan v The Crimes Compensation Tribunal (1982) 150 CLR 666 …. 7.39 Fairweather v Fairweather (1944) 69 CLR 121; [1944] HCA 11 (11 May 1944) …. 3.45

Farley v Farley [1999] NSWSC 328 (14 April 1999) …. 3.13 Faull v Superannuation Complaints Tribunal [1999] NSWSC 2294 …. 4.73 FCT v Bamford [2010] HCA 10 …. 4.30 Fenwick, Re; Application of JR Fenwick and Re Charles [2009] NSWSC 530 …. 3.10, 3.26 Ffinch v Combe [1894] P 191 …. 3.18 Fischer v Foreman [2003] NSWSC 417 …. 3.23, 3.24 —v Howe [2013] NSWSC 462 …. 3.23 —v Mansfield [1997] 2 NZLR 230 …. 7.45 Flinn v Fearne [1999] NSWSC 1041 …. 7.39, 7.45 Franguescos v Shaw [1977] 1 NSWLR 660 …. 3.60 Frizelle v Old [2009] NSWSC 1259 …. 7.34

G Garcia v National Australia Bank Ltd [1998] HCA 48 …. 2.14 Gibbons v Wright (1988) NSW …. Ch 8 App B Goodman v Windeyer (1980) 144 CLR 490 …. 7.31 Gorton v Parks (1989) 17 NSWLR 1 …. 7.36 Gray v Perpetual Trustee Co Ltd [1928] AC 391 …. 7.45 Gregory v Hudson (No 2) BC9704375 …. 7.35 Grynberg v Muller; Estate Late M Bilfeld [2001] NSWSC 532 …. 8.14

H Harwood v Barker (1840) 3 Moo PC 282 …. 8.12 Hedley Byrne & Co Ltd v Heller & Partners Ltd (1964) AC 465 …. 2.20

Hedman v Frazer; Egan v Frazer [2013] NSWSC 1915 …. 7.35 Heydon v NRMA Ltd [2000] NSWCA 374; 51 NSWLR 1 …. 3.23 Hickey & Hickey v Attorney-General of the Commonwealth of Australia (Intervener) (2003) FLC 93-143 …. 7.10, 7.11 Hill v Crook (1873) LR 6 HL 265 …. 3.90 Hill v Van Erp (1997) 188 CLR 159 …. 1.20, 2.23, 3.23, 9.19, 9.63 —v Rosen (1982) FLC 91-230 …. 7.20 Hodson v Barnes (1926) 43 TLR 71 …. 3.7 Hoffmann v Waters [2007] SASC 273 …. 3.26 Hospital Products Ltd v United States Surgical Corp (1984) 156 CLR 41 …. 2.64, 2.68, 5.43, 5.44, 8.10 Howe v Fischer [2014] NSWCA 286 …. 1.20, 2.24, 3.23 —v Lord Dartmouth (1802) 7 Ves 137; 32 ER 56 …. 4.37 Hubbard v Mason [1997] NSWSC (9 December 1997); BC9706574 …. 7.45 Hyde v Holland [2003] NSWSC 733 …. 3.48

I International Harvester Co of Australia Pty Ltd v Carrigan’s Hazeldene Pastoral Co (1958) 100 CLR 644 …. 8.9 Ioppolo & Hesford v Conti [2013] WASC 389 …. 4.102

J J v J [2006] FamCA 443 …. 7.18 Jackson v Horizon Holidays Ltd (1975) 1 WLR 1468; (1975) 3 All ER 92 …. 6.32 Johnston v Maclarn [2002] NSWSC 97 (27 February 2002) …. 3.45

K Katz v Grossman [2005] NSWSC 934 …. 1.20, 2.16, 4.102, 5.56, 10.47 Kavalle v Burbidge (1998) 43 NSWLR 422 …. 7.38, 7.39 Kearns v Ellis …. 7.31 Keith Henry & Co Pty Ltd v Stuart Walker & Co Pty Ltd (1958) 100 CLR 342 …. 5.44 Kennon v Spry [2008] HCA 56 …. 5.52 Kleinig v Neal (1981) 2 NSWLR 532 …. 7.34, 7.36 Kooragang Investments Pty Ltd v Richardson & Wrench Ltd [1981] 2 NSWLR 1 …. 8.9

L Lassence v Tierney (1849) 1 Mac & Cr 551 …. 3.54, 3.56 Law Society of New South Wales v Harvey [1976] 2 NSWLR 154 …. 8.10 Lawler v Herd [2010] QSC 281 …. 3.32 Lee v Munro (1928) LJKB 49; 21 BWCC 401 …. 7.31 Levy Estate — Application of Samuels [2010] NSWSC 1014 …. 3.26 Lovine v Connor [2011] FamCA 432 …. 7.24 Low v Perpetual Trustees WA Ltd (1995) 14 WAR 35 …. 7.45 Lowe v Lowe [2014] NSWSC 371 …. 7.35 Luciano v Rosenblum [1985] 2 NSWLR 65 …. 7.33, 7.45

M Mabo v Queensland (No 2) (1992) 175 CLR 1 …. 5.9, 5.14, 5.16 Malek v Federal Commissioner of Taxation 99 ATC 2294 …. 4.73 Malfroot v Noxal Ltd (1935) 51 TLR 551 …. 2.23

Marshall v Carruthers [2002] NSWCA 42 …. 7.33, 7.45 McBride v Hudson (1962) 107 CLR 604 …. 3.53 McCrae and Burtenshaw v Burtenshaw [2006] NSWSC 396 …. 7.40 Milankov v Milankov [2002] FamCA 195 …. 7.20 Milstead v Richards [2014] FCCA 13 …. 7.10 Mistle v Mistle [2010] FamCA 29 …. 7.24 Mulcahy v Weldon [2001] NSWSC 474…. 7.41

N National Companies and Securities Commission v Brierly Investments Ltd (1988) 14 NSWLR 273 …. 7.39 Needham v Needham (SC(NSW)) …. 7.45 Nicholas v Nicholas [2006] NSWSC 1244 …. 7.33 Nicholls v Hall [2007] NSWCA 356 …. 7.36 Nock v Austin (1918) 25 CLR 519 …. 3.11 Norbis v Norbis (1986) 161 CLR 153 …. 7.13

O Ormsby v Ormsby …. 7.40

P Palmer v Dolman [ 2005] NSWCA 361 …. 7.36 Parfitt v Lawless …. 8.14 Permanent Trustee Co Ltd v Fraser (1995) 36 NSWLR 24 …. 7.31 Petersen v Moloney (1951) 84 CLR 91 …. 8.9 Petrohilos v Hunter (1991) 23 NSWLR 343 …. 7.31 Petrovski v Nasev; The Estate of Janakievska [2011] NSWSC 1275 …. 8.14

Phegan v Hynes [2011] NSWSC 246 …. 7.34 Phillips v Britannia Hygienic Laundry Co [1923] 1 KB 539 …. 2.23 Phipps v Boardman [1967] 2 AC 46 …. 5.43 Placer Development Ltd v Commonwealth (1969) 121 CLR 353 …. 6.5 Pontifical Society for the Propagation of the Faith v Scales (1962) 107 CLR 9 …. 7.28 Pope v Christie [1998] NSWSC 118 …. 7.40, 7.45 Public Trustee of Queensland v Smith [2008] QSC 339; [2009] 1 Qd R 26 …. 3.32 Public Trustee v Permanent Trustee Co Ltd [2003] NSWSC 556 …. 3.32

Q Queensland Art Gallery Board of Trustees v Henderson Trout [2000] QCA 93 …. 3.23 Queensland Mines …. 5.44

R Ranclaud v Cabban …. Ch 8 App B Rawack v Spicer [2002] NSWSC 849 …. 3.32 Re Allen [1922] NSWLR 218 …. 7.35 Re ASIC; Richstar Enterprises Pty Ltd v Carey (No 6) (2006) 153 FCR 509 …. 5.54 Re Brown [1972] VR 36…. 7.35 Re Brown; the Estate of Springfield (1991) 23 NSWLR 535 …. 3.23 Re Burt [1988] Qd R 23 …. 3.93 Re Cleaver (dec’d) [1981] 1 WLR 939 …. 7.45 Re Colling; Lawson v Von Winckler [1972] All ER 729 …. 3.19

Re Collins [1990] 2 WLR 161 …. 3.91 Re Dale (dec’d) [1993] 4 All ER 129 …. 7.45 Re Emanuel …. 3.11 Re Estate Johnson Deceased [2014] NSWSC 512 …. 3.32 Re Estate of Max Frederick Dippert [2001] NSWSC 167 …. 3.32 Re Estate of Warren [2001] NSWSC 104 …. 3.93 Re Fulop (dec’d) (1987) 8 NSWLR 679 …. 7.32 Re Goodchild [1996] 1 WLR 694 …. 7.45 —v— [1997] 1 WLR 1216 …. 7.45 Re Griffith; Easter v Griffith NSWCA …. 8.12 Re Hagger [1930] 2 Ch 190…. 7.45 Re Hawkes [2005] VSC 93 …. 3.32 Re Hodges; Shorter v Hodges (1988) 14 NSWLR 698 …. 3.11, 8.12 Re Lawrence [1973] Qd R 201 …. 3.92 Re Male [1934] VLR 318 …. 3.8 Re Newey (dec’d) [1994] 2 NZLR 590 …. 7.45 Re O’Malley [1981] Qd R 202 …. 3.93 Re Pitts [2005] NSWSC 887 …. 3.10 Re Redding’s Goods (1850) 2 Rob Eccl 339 …. 3.8 Re Snowden [1979] Ch 528 …. 7.33 Re Sutton Coldfield Grammar School (1881) 7 App …. 7.39 Re WTN McLelland …. 7.35 Renfrew v Birmingham [1937] VLR 180 …. 7.45 Robert Paul Schneider v Sydney Jewish Museum Inc [2008] NSWSC 1331 …. 3.15

Rogers v Whitaker [1992] HCA 58; 175 CLR 479 …. 3.23 Russell v Quinton [2000] NSWSC 322 …. 7.41

S San Sebastian …. 2.9 Schaeffer v Schaeffer (1994) 36 NSWLR 315 …. 7.39 Secretary Department of Family & Community Services v K [2014] NSWSC 1065 …. 3.10 Seeley v Back [2005] NSWSC 68 (18 February 2005) …. 8.13 Shipard v Chief Commissioner of State Revenue [2006] NSWADT 254 …. 3.67 Sim v Powell (1997) 22 Fam LR 243 …. 7.6 Sinclair v Griffiths [1999] NSWSC 491 …. 7.38 —v Sinclair [2012] FamCA 388 …. 7.24 Singer v Berghouse (1994) 181 CLR 201 …. 7.31, 7.36 Slack v Rogan; Palffy v Rogan [2013] NSWSC 522 …. 3.24 Smith v Tebbitt (1867) LR 1 P and D 354, 398 …. 8.12 Spry v Kennon [2008] HCA 56 …. 7.20 Stanford v Stanford (2012) FLC …. 7.10 Stansfield v National Australia Trustees Ltd [2004] NSWSC 1107…. 7.35, 7.45 Stennett v Hancock [1939] 2 All ER 578 …. 2.23 Stone v Hoskins [1905] P 194 …. 7.45 Strong v Bird [1874] LR 18 Eq 315 …. 5.45 Summerville v Walsh [1998] NSWCA 52 …. 3.19

T

Taxation Ruling No. IT 2622 …. Ch 9 App C Taylor v Farrugia [2009] NSWSC 801 (5 June 2009) …. 7.30, 7.37 The Estate of Moyle …. 8.12 The Estate of Stefan Miegoch …. 8.12 Timbury v Coffee (1941) 66 CLR 277 …. 8.12 Tobin v Ezekiel; Estate of Lily Ezekiel [2011] NSWSC 81…. 8.13, 8.14 Townley v Watson (1844) 3 Curt 761; 163 ER 893 …. 3.18 Townsend v Townsend (1995) FLC 92-569 …. 7.20 Trickey v Davies (1994) 34 NSWLR 539 …. 3.24 Trident General Insurance Co Ltd v McNiece Bros Pty Ltd [1988] HCA 44 …. 6.32 Trimmer v Lax (9 May 1997, unreported)…. 3.32 Trustee for the Salvation Army (NSW) Property Trust v Becker [2007] NSWCA 136 (15 June 2007) …. 8.14 Trustees Executors and Agency Co Ltd v Johnston [1970] VR 587 …. 3.93 Tufton v Sperni (1952) 2 TLR 516 …. 5.43

U Union Fidelity Trustee Co of Aust Ltd v FCT (1969) 119 CLR 117 …. 4.49

V Vagg v McPhee [ 2013] NSWCA 29 …. 3.23 Vakauta v Kelly (1989) 167 CLR 568 …. 7.20 Vaysbakh v Vaysbakh [2007] NSWSC 1223 …. 7.33 Vescio v Bannister (Estate of the late Betty Tait) [2010] NSWSC 1274 …. 3.32

Vigolo v Bostin (2005) 221 CLR 191; [2005] HCA 11…. 7.35 Voges v Monaghan (1954) 94 CLR 231 …. 7.33

W W P Keighery Pty Ltd v Federal Commissioner of Taxation (1957) 100 CLR 66 …. 7.39 Wade v Harding (1987) 11 NSWLR 551 …. 7.40 Ward v Ward [2004] FMCAfam 193 …. 7.21 Weekes v Weekes …. 7.40 Weston v Public Trustee (1986) 4 NSWLR 407 ….. 7.6 White v Barron (1980) 144 CLR 431 …. 7.31 Wik Peoples v Queensland [1996] HCA 40 …. 5.17 Williams and Williams [2007] FamCA 313 …. 7.13 Williams v Public Trustee of New South Wales (No 2) [2007] NSWSC 974…. 8.13 Wingrove v Wingrove (1885) LR 11 PD 81 …. 8.14 Winter v Crichton (1991) 23 NSWLR 116 …. 8.14 Wollacott v Wollacott [2014] FamCA 5 …. 7.10 Woodar …. 6.32 Worth v Clasohm (1952) 86 CLR 439 …. 8.12

Y Yanner v Eaton (1999) 201 CLR 351 …. 5.39

Z Zaravinos v Houvardas [2004] NSWCA 421 …. 6.34 Zaronias v Constantine [2004] NSWSC 774 (26 August 2004) …. 7.6

TABLE OF STATUTES References are to paragraph numbers

COMMONWEALTH A New Tax System (Goods and Services Tax) Act 1999 ss 9–20 …. 9.31 Administration and Probate Act 1929 Sch 6 …. Ch 3 App B Administration & Probate Act 1958 s 91 …. 7.28 Administration and Probate Act 1969 ss 66–74 …. Ch 3 App D Anti-Money Laundering and Counter-Terrorism Financing Act 2006 …. 2.10, 2.63, 2.82 Assisted Reproductive Treatment Act 2008 …. 3.95 Australian Constitution s 51(xxxi) … 5.13, 5.24, 7.18 Australian Consumer Law …. 2.13, 6.38 Australian Securities and Investments Commission Act 2001 …. 2.33 Australian Trustee Acts …. 10.90 Bankruptcy Act 1966 …. 2.52, 7.8, 9.42, 9.44 s 116(2) …. 4.95 s 121 …. 6.33

s 121(a) …. 6.33 s 121(b)(i) …. 6.33 s 121(b)(ii) …. 6.33 s 121(2) …. 6.33 s 121(3) …. 6.33 s 121(4)(a) …. 6.33 s 121(4)(b) …. 6.33 s 121(4)(c) …. 6.33 s 121(5) …. 6.33 s 121(6)(a) …. 6.33 s 121(6)(b) …. 6.33 s 121(6)(c ) …. 6.33 s 121(6)(d) …. 6.33 s 121(7) …. 6.33 s 121(8) …. 6.33 s 121(9)(a) …. 6.33 s 121(9)(b) …. 6.33 s 121(9)(c ) …. 6.33 s 128B …. 4.95, 4.96, 4.97, 6.33 s 128C …. 4.95, 4.96, 4.97, 6.33 s 128C(2) …. 4.97 Child Support (Assessment) Act 1989 …. 7.8 Children and Young Persons (Care and Protection) Act 1998 s 9 …. 10.46

Civil Liability Act 2002 …. 2.56 Civil Procedure Act 2005 s 61 …. 3.26 s 62 …. 3.26 s 86 …. 3.26 Conveyancers Licensing Act 1995 …. 8.3 Conveyancing (Amendment) Act 1930 …. 6.21 Conveyancing Act 1919 s 23 …. 5.40 s 23(1)(a) …. 5.40 s 23(1)(b) …. 5.40 s 23(1)(c) …. 5.40 s 23(2) …. 5.40 s 163B …. 5.40, Ch 8 App B Sch VII Copyright Act 1968 …. 5.24 s 8A …. 5.29 s 31 …. 5.42 s 31(a)(i–vii) …. 5.42 s 31(b)(i–iii) …. 5.42 s 31(c) …. 5.42 s 31(d) …. 5.42 s 196 …. 5.41, 6.10 s 196(1) …. 5.41

s 196(2)(a) …. 5.41 s 196(2)(b) …. 5.41 s 196(2)(c) …. 5.41 s 196(3) …. 5.41 s 196(4) …. 5.41 s 197 …. 6.22 s 198 …. 6.22 Corporations Act 2001 …. 2.13, 2.33, 2.50, 2.51, 2.57, 5.48, 9.20, 9.23, 9.24, 9.28, 9.69, 10.57 Ch 5C …. 12.3.2(iii) Ch 5D …. 2.63 Ch 8 App A s 766B …. 2.63 s 917B …. 2.63 s 961B(2)(d) …. 2.3 s 961E …. 2.20 s 1071E …. 9.24 s 1071F …. 9.24 s 1071F(1)(a)(b) …. 9.24 s 1071F(2)(a)(b)(i)(ii) …. 9.24 s 1071F(3)(a)(b) …. 9.24 s 911A …. 2.63 912A …. 2.63 s 917B …. 2.63 De Facto Financial Act …. 7.3, 7.5

Digital Agenda Act 2000 …. 5.24 Disability Services Act 1986 s 8 …. 4.81 s 8(1) …. 4.65 Domicile Act 1982 …. 10.44 Environment Protection and Biodiversity Conservation Act 1999 s 3(a) …. 5.13 s 3(b) …. 5.13 s 3(c) …. 5.13 s 3(d) …. 5.13 s 3(e) …. 5.13 s 3(f) …. 5.13 s 3(g) …. 5.13 Evidence Act 1995 s 48 …. 7.18 Family Law (De Facto Financial Matters and other Measures) Act 2008 …. 7.2 Family Law Act 1975 Part VIII …. 7.8, 7.18 Part VIIAB …. 7.18 Part VIIIAA …. 7.19, 7.21 Part VIIIAB …. 7.8, 7.9 Part VIIIB …. 7.18 s 4 …. 9.16, 7.6, 7.20 s 4(2) …. 7.6

s 4AA …. 7.6 s 55(1) …. 3.14 s 66D …. 3.93 s 66M …. 3.93 s 78 …. 9.16 s 75(2) …. 7.10, 7.14, 7.20, 7.23, 7.24 s 78(1) …. 9.16 s 78(2) …. 9.16 s 79 …. 7.8, 7.10, 7.13, 7.20, 7.23, 7.24 s 79(1)(a) …. 7.8 s 79(1)(b) …. 7.8 s 71(1)(c) …. 7.8 s 71(d)(i)(ii) …. 7.8 s 79(1A) …. 7.8 s 79(1B)(a)(ba)(bb)(c) …. 7.8 s 79(1C)(a)(ba)(bb)(c) …. 7.8 s 79(4) …. 7.10 s 79(4)(a–g) …. 7.8 s 79(5)(a) …. 7.8 s 79(5)(b)(i–iv) …. 7.8 s 79(6)(a)(b) …. 7.8 s79 (7)(a) …. 7.8 s 79(7)(b) …. 7.8 s 79(8)(a) …. 7.8

s 79(b)(i–iv) …. 7.8 s 79(8)(c ) …. 7.8 s 79(9)(a–c) …. 7.8 s 79(10)(a)(aa)(i–ii)(ab)(b) …. 7.8 s 79(10A)(a–b) …. 7.8 s 79(10B)(a–b) …. 7.8 s 79(11)(a–d) …. 7.8 s 79(12) …. 7.8 s 79(13) …. 7.8 s 79(14)(a) …. 7.8 s 79(b)(i, ii) …. 7.8 s 79(c) …. 7.8 s 79(d) …. 7.8 s 79(15) …. 7.8 s 79(16) …. 7.8 s 79(17)(a) …. 7.8 s 79(17)(b) …. 7.8 s 90AC …. 9.16 s 90AC(1)(a) …. 9.16 s 90AC(1)(b) …. 9.16 s 90AC(2) …. 9.16 s 90B …. 7.18 s 90C …. 7.18 s 90D …. 7.18

s 90G …. 7.18 s 90G(1) …. 7.18 s 90G(2) …. 7.18 s 90G(3) …. 7.18 s 90G(4) …. 7.18 s 90G(5) …. 7.18 s 90G(6) …. 7.18 s 90H …. 7.18 s 90K(1) …. 7.18 s 90K(1A) …. 7.18 s 90SF(3) …. 7.9, 7.14 s 90SL …. 7.18 s 90SM …. 7.8, 7.9, 7.18 s 90UB …. 7.18 s 90UC …. 7.18 s 90UD …. 7.18 s 90UH …. 7.18 s 90UJ …. 7.18 s 90UK …. 7.14 s 90UM …. 7.18 s 90UN …. 7.18 s 93A(2) …. 7.20 s 104 …. 7.8 s 106B …. 7.20

Family Provision Act 1982 …. 3.14, 3.67, 7.33, 7.34, 7.36 s 6(1)(d)(i) …. 7.30 s 7…. 7.30 s 17 …. 3.31 s 22(1) …. 7.39 s 22(1)(a) …. 7.39 s 22(4)(a)(ii) …. 7.39 s 26(a) …. 7.39 s 59(1) …. 7.32 Family Relationships Act 1975 …. 3.95 Financing of People Smuggling and Other Measures Bill 2010 …. 2.63 Foreign Account Tax Compliance Act …. 10.54, 10.100 Guardianship and Administration Act 1993 s 3(a) …. 8.3 s 3(b) …. 8.3 Hindu Succession Act, 1956 …. 10.94 Income Tax Assessment Act 1936 …. 4.30, 5.5, 9.42 Pt IIIA …. 5.3 Pt IVA …. 2.63 s 6 …. 10.52 s 6(a)(i–iii) …. 10.52 s 6(b) …. 10.52 s 6(A) …. 10.52 s 6(B) …. 10.52

s 6(C) …. 10.52 s 23AH …. 5.4 s 30B …. 9.30 s 97 …. 4.30 s 99 …. 5.1, 6.30 s 99A …. 4.7, 4.30 s 104-165(3) …. 5.4 s 102AG …. 4.54, 4.104 s 160J(b) …. 4.37 s 160X(3) …. 4.37 s 160ZZI(1) …. 1.37 s 160ZZI(1) …. 1.37 s 279D …. 4.39 s 279D(2) …. 4.94 s 295-465 …. 4.65 s 295-485 …. 4.65 s 302-10 …. 4.65 s 307-290 …. 4.65 s 302-195 …. 4.65 s 302-200 …. 4.65 s 307-5(4) …. 4.65 s 307-125 …. 4.65 s 307-210 …. 4.65 s 307-216 …. 4.65

s 307-220 …. 4.65 s 307-225 …. 4.65 s 307-290 …. 4.65 s 995-1 …. 4.65 Income Tax (Transitional Provisions) Act 1997 s 108–5 …. 5.3 Indian Succession Act, 1925 …. 10.94 Infants’ Custody and Settlements Act 1899 s 7 …. 10.46 Insurance Contracts Act 1984 …. 2.33 Interpretation Act 1987 s 21 …. 3.16, 3.21 s 21(a) …. 3.21 s 21(b) …. 3.21 s 21(c) …. 3.21 s 21(d) …. 3.21 Intestacy Act 2010 …. Ch 3 App G Income Tax Assessment Act 1936 …. Ch 4, Div 6AA s 6 …. Ch 9 App C s 6(a) …. Ch 9 App C s 6(b) …. Ch 9 App C s 97 …. 4.49 s 99 …. 4.49 s 99A …. 4.49

s 102AG …. 4.54 s 160X(3) …. 4.37 s 160J(b) …. 4.37 s 272 …. 5.61 s 273 …. 5.61 s 274 …. 5.61 s 275 …. 5.61 s 272-80(1) …. 5.61 s 290 …. 4.76 s 307 …. 4.76 Income Tax Assessment Act 1997 …. 5.6 Pt 3-1 …. 4.31 Pt 3-3 …. 4.31 Pt IVA …. 9.84 Div 104 …. 4.35 Div 128 …. 4.32 s 28-15(3) …. 4.30 s 102-5 …. 4.50 s 102-5 …. 4.30 s 102-15 …. 4.50 s 104-35 …. 4.48 s 104-40(1) …. 4.42 s 104-40(5) …. 4.42 s 104-215 …. 4.42

s 104-215(1) …. 4.42 s 106-50 …. 4.42 s 108-5 …. 4.30, 4.42 s 108-10 …. 4.42 s 108-20 …. 4.42 s 108-20(3) …. 5.5 s 108-D …. 5.5 s 108-7 …. 4.30 s 110-55 …. 4.30 s 114-10(6) …. 4.30 s 115-30 …. 4.30 s 116-30 …. 4.50 s 118-5 …. 4.42 s 118-B …. 4.47 s 118-10(1) …. 4.42 s 118-10(2) …. 4.42 s 118-10(3) …. 4.42 s 118-60 …. 4.42 s 118-110 …. 4.47 s 118-130 …. 4.47 s 118-195 …. 4.30, 4.47 s 118-210 …. 4.47 s 118-300 …. 4.42 s 118-305 …. 4.42

s 128-10 …. 4.48 s 128-15(2) …. 4.30 s 128-15(3) …. 4.39, 4.40 s 128-15(4) …. 4.30 s 128-20 …. 4.37, 4.39, 4.40 s 134-1 …. 4.42 s 134-14(4) …. 4.42 s 855-15 …. 5.4 s 855-20 …. 5.4 s 855-25 …. 5.4 s 995-1 …. 4.42 Justice Legislation Amendment (Succession and Surrogacy) Bill 2014 …. 7.28 Law and Equity Act s 5 …. 5.36 Legal Profession Act 1987 Ch 8 App A Pt 3.1 …. 2.86 Div 2 …. 2.86 Life Insurance Act 1995 …. 2.33, 9.23 s 199 …. 6.20 s 199(1)(a) …. 6.20 s 199 (b) …. 6.20 s 199(2) …. 6.20 s 200 …. 6.19

s 200(1) …. 6.19 s 200(2)(a–f) …. 6.19 s 200(3)(a–i) …. 6.19 s 200(4)(a–b) …. 6.19 s 200(5)(a–c) …. 6.19 s 200(6) …. 6.19 s 200(7) …. 6.19 s 200(8)(a–b) …. 6.19 s 202 …. 6.19 s 203 …. 6.19 Medical Indemnity (Prudential Supervision and Product Standards) Act 2003 …. 2.33 Parentage Act 2004 …. 3.95 Partnership Act …. 1.31 Real Estates of Intestates Distribution Act of 1862 (‘Dr Lang’s Act’) Pt 2 …. 1.33 Real Property Act 1900 …. 6.21, 6.23 Registration of Deeds Act 1935 …. 8.3 Relationships Act 2003 …. Ch 3 App G Retirement Savings Accounts Act 1997 …. 2.33 Revised Professional Conduct and Practice Rules r 11, 11.1 …. Ch 8 App A Superannuation Act 1976 …. 10.52 Superannuation Act 1990 …. 10.52 Superannuation Industry (Supervision) Act 1993 …. 2.33

s 10 …. 4.65, 4.69, 4.78, 4.80, 4.83 s 10A …. 4.65, 4.69 s 17A …. 4.102 s 17A(1) …. 4.65, 4.100 s 17A(2) …. 4.65, 4.99, 4.100 s 17A(3) …. 4.104 s 17A(3)(a) …. 4.100 s 17A(3)(b) …. 4.100 s 17A(3)(c) …. 4.100 s 17A(4) …. 4.104 s 58 …. 4.85 s 59 …. 4.84, 4.88 s 59(1)(a) …. 4.65, 4.84, 4.88 s 59(1A) …. 4.84, 4.86, 4.88 s 62 …. 4.65 Superannuation Industry (Supervision) Regulations 1994 reg 1.04AAAA …. 4.65, 4.70 reg 6.17A …. 4.65, 4.86 reg 6.21 …. 4.65 reg 6.21(2) …. 4.65, 4.81 reg 6.21(2A) …. 4.65, 4.81 reg 6.21(2B) …. 4.65 reg 6.21 …. 4.77, 4.81 reg 6.22 …. 4.81

reg 6.22(3) …. 4.70 reg 21(2B) …. 4.65, 4.81 Solicitors’ Rules r 12 …. 4.70 r 12.1 …. 4.70 r 12.2 …. 4.70 r 12.3 …. 4.70 r 12.3.1 …. 4.70 r 12.3.2 …. 4.70 r 12.4 …. 4.70 r 12.4.1 …. 4.70 r 12.4.2 …. 4.70 r 12.4.3 …. 4.70 r 12.4.4 …. 4.70 Stamp Duties Act 1920 …. 6.23 Statute of 1854 (England) Locke King’s Act …. 3.47 Succession Act 2006 Ch 4 Sch 1 …. 3.83, 3.11, 5.41 s 6 …. 3.13, 3.24, 3.67, 3.76 s 6(1)(a) …. 3.8 s 6(1)(b) …. 3.23 s 6(2) …. 3.70 s 8 …. 3.20, 3.32, 3.23, 3.24, 3.67 s 8(2)(a) …. 3.23, 3.24

s 8(1)(a–b) …. 3.20 s 8(2)(a–c) …. 3.20 s 8(3)(a–b) …. 3.20 s 8(4) …. 3.20, 3.22 s 8(5) …. 3.20 s 11 …. 3.15, 3.71 s 11(1)(a) …. 3.15 s 11(1)(c) …. 3.15 s 11(1)(d) …. 3.15 s 11(1)(e) …. 3.15 s 11(1)(f) …. 3.15 s 11(2) …. 3.15 s 12 …. 3.15 s 13 …. 3.14, 3.15 s 13 cl 3(9) …. 3.14 s 13(1) …. 3.14 s 13(1)(a) …. 3.14 s 13(1)(b) …. 3.14 s 13(1)(c) …. 3.14 s 13(2) …. 3.14 s 13(2)(1) …. 3.14 s 13(3)(a) …. 3.14 s 13(3)(b) …. 3.14 s 13(4) …. 3.14

s 13(5)(a) …. 3.14 s 13(5)(b) …. 3.14 s 13(6)(a) …. 3.14 s 13(6)(b) …. 3.14 s 13(6)(c) …. 3.14 s 14 …. 3.16, 3.18 s 14(1)(a) …. 3.16 s 14(1)(b) …. 3.16 s 14(1)(c) …. 3.16 s 14(2)(1) …. 3.16 s 14(3)(a) …. 3.16 s 14(3)(b) …. 3.16 s 15(1) …. 3.24 s 15(2) …. 3.24 s 15(3) …. 3.24 s 15(4) …. 3.24 s 16 …. 3.15 s 16(5) …. 3.16 s 18 …. 3.15, 3.16, 3.26 s 18A …. 3.24 s 18(1)(a) …. 3.26 s 18(1)(b) …. 3.26 s 18(2)(a) …. 3.26 s 18(2)(b) …. 3.26

s 18(3) …. 3.26 s 18(4) …. 3.26 s 18(5) …. 3.26 s 18(6) …. 3.26 s 18(7) …. 3.26 s 19 …. 3.26 s 19(1) …. 3.26 s 19(2) …. 3.26 s 20 …. 3.26 s 21 …. 3.26 s 22 …. 3.26 s 23 …. 3.16, 3.26 s 23(b)(ii) …. 7.38 s 24 …. 3.26 s 25 …. 3.26 s 26 …. 3.26 s 27 …. 3.32 s 27(1)(a) …. 3.32 s 27(1)(b) …. 3.32 s 27(2)(a) …. 3.32 s 29 …. 3.34 s 30 …. 3.35 s 31 …. 3.36 s 32 …. 3.37

s 35 …. 3.38, 3.67, 3.78 s 41 …. 3.28, 3.30, 3.81 s 41(a) …. 3.28 s 41(b) …. 3.28 s 41(c) …. 3.28 s 41(d) …. 3.28 s 41(2) …. 3.28 s 41(3) …. 3.28 s 41(4) …. 3.28 s 41(5) …. 3.28 s 42 …. 3.39, 3.60 s 42(1) …. 3.51 s 44 …. 3.40 s 45 …. 3.41 s 47 …. 3.42, 3.67 s 48 …. 3.42, 3.67 s 49 …. 3.42, 3.67 s 50 …. 3.42, 3.67 s 51 …. 3.43 s 54 …. 3.44 s 74 …. 7.38 s 75 …. 7.38 s 76 …. 7.38 s 77 …. 7.38

s 78 …. 7.38 s 79 …. 7.38 s 80 …. 7.38 s 80(1) …. 7.38 s 80(2)(a–c) …. 7.38 s 80(3)(a–b) …. 7.38 s 81 …. 7.38 s 82 …. 7.38 s 83 …. 7.38 s 84 …. 7.38 s 85 …. 7.38 s 86 …. 7.38 s 87 …. 7.38 s 88 …. 7.38 s 89 …. 7.38 s 90 …. 7.38 Succession Amendment (International Wills) Act 2012 …. 3.96 Suitors’ Fund Act …. 7.36 Superannuation (Resolution of Complaints) Act 1993 …. 2.33 Supreme Court Rules Pt 78 r 19 …. 3.16 Supreme Court Act 1970 …. 5.36 Surrogacy Act 2008 …. 3.95 Surrogacy Act 2010 …. 3.95

Tax Agent Services Act 2009 …. 2.63 Taxation Administration Act 1953 Sch 1 …. 9.30 ss 12–45(3) …. 9.30 The Australian Accounting Standard AASB s 138(a) …. 5.30 s 138(b)(i–ii) …. 5.30 s 138(c)(i–ii) …. 5.30 s 138(d) …. 5.30 s 138(e) …. 5.30 s 138(f) …. 5.30 s 138(g) …. 5.30 s 138(h) …. 5.30 s 138(i) …. 5.30 s 138(j) …. 5.30 s 138(k) …. 5.30 The Income Tax Assessment Act 1997 s 108-5 …. 5.3 s 108-5(1)(a) …. 5.3 s 108-5(1)( (b) …. 5.3 Trade Practices Act 1974 …. 6.38 Transfer of Land Act 1893 …. 8.3 Trustee Act 1925 …. 9.69, 9.70 s 3A(1)(a)(b) …. 10.90

s 3A(2) …. 10.90 s 10(1)(2) …. 10.90 s 32(a)(b) …. 10.90 s 59 …. 10.90 s 59(1) …. 10.90 s 59(2) …. 10.90 s 59(3) …. 10.90 s 59(4) …. 10.90 s 59(5) …. 10.90 Trustee Companies Act 1964 …. 8.3 Uniform Law on the Form of an International Will Articles 1--15 …. 3.99 Wills Probate and Administration Act 1898 …. 3.3 s 7 …. 3.19, 3.23 s 7(4) …. 3.8 s 9(1) …. 7.32 s 11 …. 3.15 s 13 …. 3.11 s 13(2)(c) …. 3.11 s 18A …. 3.15 s 18A …. 3.21, 3.23 s 29A …. 3.32 s 61A …. 3.83 s 61B …. 3.83, 7.32

s 61C …. 3.83 s 61D …. 3.83 s 61E …. 3.83 s 61F …. 3.83

AUSTRALIAN CAPITAL TERRITORY Administration and Probate Act 1929 Pt 3A …. 3.83 s 44 …. 3.83 s 45 …. 3.83 s 46 …. 3.83 s 47 …. 3.83 s 48 …. 3.83 s 49 …. 3.83 s 49A …. 3.83 Sch …. Ch 3 App B Adoption Act 1973 s 43 …. 3.91 s 44 …. 3.91 s 47 …. 3.91 Civil Partnerships Act 2008 …. 1.20 Family Provision Act 1969 s 7 …. 7.28 s 7(1)(d) …. 3.93, 3.94 s 8(1) …. 7.27

s 22 …. 7.40 s 22(4)(e) …. 7.40 s 22(4)(f) …. 7.40 Medical Treatment Act 1994 …. 8.4 Parentage Act 2004 s 5(1) …. 3.91 s 7 …. 3.91 Powers of Attorney Act 2006 …. 8.2, 8.4 s 22 …. 8.3 s 29 …. 8.3 s 89 …. 8.3 Wills Act 1968 …. 3.4, 3.5, 3.32 s 8 …. 3.32 s 8A …. 3.32 s 8B …. 3.32 s 9 …. 3.32 s 11A …. 3.32 s 12 …. 3.32 s 12A …. 3.32 s 14A …. 3.32 s 15 …. 3.32 s 15B …. 3.32 s 15C …. 3.32 s 15D …. 3.32

s 15E …. 3.32 s 15F …. 3.32 s 15G …. 3.32 s 16A …. 3.32 s 16B …. 3.32 s 16C …. 3.32 s 16D …. 3.32 s 16E …. 3.32 s 16F …. 3.32 s 16G …. 3.32 s 16H …. 3.32 s 16I …. 3.32 s 20 …. 3.32 s 20A …. 3.32 s 21 …. 3.32 s 22 …. 3.32 s 23 …. 3.32 s 24 …. 3.32 s 25 …. 3.32 s 31 …. 3.32 s 31A …. 3.32 s 31C …. 3.32 s 32 …. 3.32

NEW SOUTH WALES

Adoption Act 2000 s 95 …. 3.91 s 96 …. 3.91 s 97 …. 3.91 s 98 …. 3.91 s 99 …. 3.91 s 100 …. 3.91 Agricultural Tenancies Act 1990 …. 5.34 s 5 …. 6.26 s 5(1) …. 6.26 s 5(2) …. 6.26 Associations Incorporation Act 1984 …. 9.20 s 3 …. 9.28 s 3(a) …. 9.30 s 3(b) …. 9.30 s 15(2)(a–d) …. 9.30 s 16 …. 9.30 s 16(1) …. 9.30 s 16(2) …. 9.30 Biodiversity Strategy (Threatened Species Conservation Act 1995) …. 5.15 Building and Construction Industry Security of Payment Act 1999 s 7 …. 6.29 s 7(1) …. 6.29 s 7(2)(a)(i–iii) …. 6.29

s 7(2)(b) …. 6.29 s 7(2)(c) …. 6.29 s 7(3)(a), (b), (c)(i–iii) …. 6.29 s 7(4)(a–b) …. 6.29 s 7(5) …. 6.29 Business Names Act 2002 …. 6.25 Catchment Management Act 1989 …. 5.15 Children (Care and Protection) Act 1987 s 72 …. 3.10 Children (Criminal Proceedings) Act 1987 s 5 …. 6.12 Children (Protection and Parental Responsibility) Act 1997 …. 6.17 Children and Young Persons (Care and Protection) Act 1998 s 3 …. 6.17 s 8 …. 6.17 s 9 …. 6.17 s 149 …. 6.17 Civil Procedure Act 2005 s 61 …. 3.26 s 62 …. 3.26 s 86 …. 3.26 Community Land Development Act 1996 …. 5.15 Contracts Review Act 1980 s 4(a)(b) …. 6.36

s 5(a)(b) …. 6.36 s 7(1)(a), (b), (c), (d)(i)(ii) …. 6.35 s 7(2) …. 6.35 s 7(3) …. 6.35 s 17 …. 6.35 s 17(1)(a)(b) …. 6.35 s 17(2)(a)(b) …. 6.35 s 17(3)(a)(b)(c) …. 6.35 s 19 …. 6.35 Conveyancing (Amendment) Act 1930 …. 6.21 Conveyancing Act 1919 …. 5.15, 5.20 s 9 …. 5.22 s 23 …. 5.40 s 23B(1) …. 5.10 s 23C …. 6.10 s 26 …. 3.55 s 36C …. 6.32 s 37A …. 6.34 s 66C …. 4.37 s 145 …. 3.47, 3.67 s 157A …. 4.37 Co-operatives Act 1992 …. 9.28 s 5 …. 9.29 s 6 …. 9.29

Crown Land Act 1989 …. 5.15 Domicile Act 1979 s 11 …. 10.53 Duties Act 1997 s 63 …. 3.67 Environmental Planning and Assessment Act 1979 …. 5.15 Evidence Act 1995 s 140 …. 7.45 Family Provision Act 1882 …. 3.12 s 6(1) …. 7.31 s 7 …. 7.31 s 9(1) …. 7.32 s 22 …. 7.40 s 22(1) …. 7.39 s 22(1)(a) …. 7.39 s 22(4)(a)(ii) …. 7.39 s 22(4)(e) …. 7.40 s 22(4)(f) …. 7.40 s 26(a) …. 7.39 s 31 …. 7.41 s 31(2) …. 7.41 s 31(3) …. 7.41 s 31(4) …. 7.41 s 31(5) …. 7.41

s 59(1) …. 7.32 Fisheries Management Act 1994 …. 5.15 Forestry Act 1916 …. 5.15 Forestry and National Parks Estate Act 1998 …. 5.15 Guardianship Act 1987 Pt II …. 8.4 s 4 …. 10.84 s 4(a) …. 6.15 s 4(b) …. 6.15 s 4(c) …. 6.15 s 4(d) …. 6.15 s 4(e) …. 6.15 s 4(f) …. 6.15 s 4(g) …. 6.15 s 4(h) …. 6.15 s 5 …. 8.6 s 6 …. 8.6 s 6A …. 8.6 s 6B …. 8.6 s 6C …. 8.6 s 6D …. 8.6 s 6DA …. 8.6 s 6E …. 8.6 s 6F …. 8.6

s 6G …. 8.6 s 6H …. 8.6 s 6HA …. 8.6 s 6HB …. 8.6 s 6I …. 8.6 s 6J …. 8.6 s 6K …. 8.6 s 6L …. 8.6 s 6M …. 8.6 s 6N …. 8.6 s 6O …. 8.6 s 33A …. 6.14, 9.38 Guardianship of Infants Act 1916 s 14(1–6) …. 6.16 Home Building Act 1989 …. 6.29 s 7 …. 6.25 s 7(1) …. 6.25 s 7(2)(a–g) …. 6.25 s 7(3) …. 6.25 s 7(4) …. 6.25 s 7(5) …. 6.25 s 7(6) …. 6.25 s 7(7) …. 6.25 s 7BA …. 6.25

Imperial Acts Application Act 1969 s 8 …. 5.22 Industrial Relations Act 1996 …. 6.29 Infants Custody and Settlements Act 1899 s 5(7) …. 6.16 Interpretation Act 1987 s 21 …. 3.16, 3.21, 3.26 s 21(1) …. 3.7 Law Reform (Law and Equity) Act 1972 s 6 …. 5.36 Local Government Act 1993 …. 5.12 Legal Profession Act 1987 Pt 11 …. Ch 8 App A Legal Profession Act 2004 Pt 3.1, Div 2 …. 2.86 s 14 …. 2.49, 2.63 s 143 …. 2.67 s 304(1)(b)(i)–(iii) …. 2.56 s 304(1)(e) …. 2.56 s 304(1)(f) …. 2.56 s 304(1)(g) …. 2.56 s 304(1)(i) …. 2.56 s 304(1)(j) …. 2.56 s 304(1)(l) …. 2.56

s 309 …. 2.56 s 310(1) …. 2.56 s 312(1)(c) …. 2.56 s 312(1)(d) …. 2.56 s 316(1A) …. 2.56 s 318 …. 2.56 s 322(1)(c) …. 2.56 s 322(4) …. 2.56 s 323(3)(c)(i)(iii) …. 2.56 s 323(3)(d) …. 2.56 s 323(3)(e) …. 2.56 s 324(1) …. 2.56 s 327(1) …. 2.56 s 328 (1)(d), (Divs 8, 11) s 329 …. 2.56 s 330 …. 2.56 s 395A…. 2.55 Local Government Act 1993 …. 5.15 Married Persons (Equality of Status) Act 1996 s 4(1) …. 1.17 s 4(1)(a)(b) …. 6.13 s 4(2) …. 6.13 Minors (Property and Contracts) Act 1970 s 9 …. 6.12

National Parks and Wildlife Act 1974 …. 5.15 Native Vegetation Conservation Act 1997 …. 5.15 Partnership Act 1892 …. 9.27 s 12 …. 9.28, 9.29 Perpetuities Act 1984 s 3 …. 9.20 s 3(a) …. 9.20 s 3(b) …. 9.20 s 3 (c) …. 9.20 Powers of Attorney Act 2003 …. 1.31, 6.14, 8.2, 8.3, 8.4, Ch 8 App A Pt 5 …. 8.4 Sch 2 …. Ch 8 App A, 8.4 Sch 3 …. Ch 8 App A s 8 …. 8.3 s 9 …. 8.3 s 10 …. 4.103, 8.3 ss 10–13 …. 8.4 s 11 …. 8.3, 8.4 ss 11–13 …. 8.4 s 12 …. 8.3, 8.4 s 13 …. 8.3 s 15 …. 8.3 s 19 …. 8.3, Ch 8 App A s 19(1)(a) …. 8.3

s 19(1)(b) …. 8.3 s 19(1)(c)(i–v) …. 8.3 s 19(2) …. 8.3 s 19(2)(a) …. 8.3 s 19(2)(b) …. 8.3 s 19(2)(c) …. 8.3 s 19(2)(d) …. 8.3 s 19(2)(e) …. 8.3 s 20 …. 8.3 s 21 …. 8.3 s 22 …. 8.3 s 22(1) …. 8.3 s 23 …. 8.3 s 24 …. 8.3 s 25 …. 8.3 s 26 …. 8.3 ss 26–42 …. 8.3 s 27 …. 8.3 s 28 …. 8.3 s 29 …. 8.3 s 30 …. 8.3 s 31 …. 8.3 s 32 …. 8.3 s 33 …. 8.3

ss 33–38 …. 8.3 s 34 …. 8.3 s 35 …. 8.3 s 36 …. 8.3 s 36(4)(a) …. 8.3, Ch 8 App A s 36(4)(d) …. 8.3, Ch 8 App A s 37 …. 8.3 s 38 …. 8.3 s 39 …. 8.3 s 40 …. 8.3 s 41 …. 8.3 s 42 …. 8.3 s 43 …. 8.3 s 44 …. 8.3 s 45 …. 8.3 s 46 …. 8.3 s 46(1) …. 8.3 s 46(2) …. 8.3 s 47 …. 8.3 s 48 …. 8.3 s 49 …. 8.3 s 50 …. 8.3 s 51 …. 8.3 s 52 …. 8.3

Probate & Administration Act 1898 Pt II Sch 3 s 3 …. 1.33 s 46C(2) …. 4.36, 4.39 Property (Relationships) Act 1974 …. 7.6 s 4 …. 7.6 Property Relationships Act 1984 …. 9.15, 9.19 Property, Stock and Business Agents Act 2002 …. 2.63 s 36 …. 6.27 s 55 …. 6.27 s 55(1)(a)(i–ii) …. 6.27 s 55(1)(b) …. 6.27 s 55(1)(c) …. 6.27 s 55(2) …. 6.27 s 55(3) …. 6.27 s 55(4) …. 6.27 s 55(5)(a) …. 6.27 s 55(5)(b) …. 6.27 s 55(5)(c) …. 6.27 Protected Estates Act 1983 …. 3.44 s 76 …. 8.3 Real Estates of Intestates Distribution Act 1862 Pt II …. 1.33

Real Property Act 1900 …. 5.15, 6.35, 6.36 Relationships Register Act 2010 s 3 …. 1.20 Relationships Register Regulation 2010 reg 4 …. 1.20 Residential Tenancies Act 2010 …. 5.34 Restraints of Trade Act 1976 …. s 4, 4(1), 4(2), 4(3), 4(4), 4(5) …. 6.37 Retail Leases Act 1994 …. 5.34 s 15 …. 6.23 s 15(1)(a) …. 6.23 s 15(1)(b) …. 6.23 s 15(1)(c) …. 6.23 s 15(1)(d) …. 6.23 Retail Trading Act 2008 …. 5.34 Retirement Villages Act 1999 …. 5.34, 5.15 s 24 …. 6.24 Retirement Villages Regulation 2009 reg 15A …. 6.24 Rural Fires Act 1997 …. 5.15 Sale of Goods Act 1923 s 5 …. 6.28 s 8 …. 6.28 Stamp Duties Act 1920 s 73(1)(f) …. 4.37

Status of Children Act 1996 s 8 …. 3.90 s 14(1) …. 3.91 s 14(2) …. 3.91 Strata Schemes (Leasehold Development) Act 1986 …. 5.15 Strata Schemes Management Act 1996 …. 5.15, 9.20 Succession Act 2006 …. 3.3, 3.4, 3.9, 3.32, 5.10, 8.13 Ch 4 …. 3.83, 3.86, Ch 3 App A s 3(2) …. 3.92 s 5(1) …. 3.9 s 5(2) …. 3.9 s 6 …. 3.5, 3.11 s 6(2) …. 3.70 s 6A …. 3.10 s 7 …. 3.11 s 8 …. 3.23 s 8(3) …. 3.22 s 8(4) …. 3.22 s 9 …. 3.11 s 10 …. 3.11 s 10(2) …. 3.11 s 10(3) …. 3.11 s 10(3)(a) …. 3.11 s 10(3)(b) …. 3.11

s 10(3)(c) …. 3.11 s 11 …. 3.15, 3.71 s 11(1)(a) …. 3.15 s 11(1)(c) …. 3.15 s 11(1)(d) …. 3.15 s 11(1)(e) …. 3.15 s 11(1)(f) …. 3.15 s 11(2) …. 3.15 s 12 …. 3.12 s 12(1) …. 3.12 s 12(1)(a) …. 3.12 s 12(1)(b) …. 3.12 s 12(1)(c) …. 3.12 s 12(3) …. 3.12 s 12(4) …. 3.12 s 13 …. 3.12, 7.30, 10.46 Pt 4 …. Ch 3 App A, Ch 4 App A s 13(2) …. 3.14 s 14 …. 3.16, 3.18 s 14(1) …. 3.16, 3.91 s 14(2) …. 3.91 s 15 …. 3.24 s 16 …. 3.15 s 18 …. 3.5

ss 18–26 …. 3.4, 3.26 s 19 …. 3.26 s 19(1) …. 3.26 s 19(2) …. 3.26 s 20 …. 3.26 s 21 …. 3.26 s 22 …. 3.26 s 23 …. 3.16, 3.26, 3.33 s 25 …. 3.26 s 26 …. 3.26 s 27 …. 3.31 s 27(1)(a–b) …. 3.31 s 27(2)(a–b) …. 3.31 s 27(3)(a–b) …. 3.31 s 29 …. 3.34 s 30 …. 3.4, 3.35 s 31 …. 3.4, 3.36 s 32 …. 3.32, 3.36 s 35 …. 4.74 s 4 …. Chs 3, 4 App A s 42 …. 3.34, 3.39, 3.60 s 42(2) …. 3.39 s 45 …. 3.34, 3.41 ss 47–50 …. 3.42, 3.67

s 51 …. 3.33, 3.43 s 54 …. 3.33, 3.34 s 57 …. 3.93, 3.94, 7.27, 7.28, 10.46 s 64 …. 9.8 ss 74–90 …. 7.38 s 75 …. 7.38 s 76 …. 7.38 s 80 …. 7.38 s 95 …. 7.41 s 100 …. 7.42 s 101 …. 3.85, 3.86 s 102 …. 3.85, 3.86 s 103 …. 3.85, 3.86 s 104 …. 3.85, 3.86 s 105 …. 3.85, 3.86 s 106 …. 3.85, 3.86 s 107 …. 3.85, 3.86 s 108 …. 3.85, 3.86 s 109 …. Ch 4, 3.85, 3.86 Supreme Court Rules 1970 Pt 78, r 18 …. 3.77 Pt 78, r 19 …. 3.16 The Partnership Act 1892 …. 9.28 The Saint Andrew’s College Act 1998 …. 9.20

Threatened Species Conservation Act 1995 …. 5.15 Trustee Act 1925 s 6 …. 4.104 s 14 …. 4.37 s 14A …. 10.68 s 14C …. 5.52, 10.68 s 33 …. 4.37 s 34 …. 4.37 s 35 …. 4.37 s 36 …. 4.37 s 37 …. 4.37 s 38 …. 4.37 s 43 …. 3.34 s 46 …. 4.39 s 63 …. 5.52 s 81 …. 4.37, 5.52 s 82 …. 4.37 s 83 …. 4.37 s 84 …. 4.37 Trustee and Guardian Act 2009 …. 6.14 Trustee Companies Act 1964 …. 2.63 Water Management Act 2000 …. 5.15 Wills, Probate and Administration Act 1898 …. 9.19 Pt II, Sch 3 …. 4.40

s 5 …. 3.32 s 6 …. 3.32 s 7 …. 3.19, 3.23, 3.32 s 7(4) …. 3.8 s 8 …. 3.32 s 9 …. 3.32 s 10 …. 3.32 s 11 …. 3.32 s 12 …. 3.32 s 13 …. 3.11, 3.12, 3.13, 3.32 s 13(2)(c) …. 3.11 s 14 …. 3.32 s 15 …. 3.12, 3.14, 3.32 s 15(A) …. 3.12, 3.14 s 16 …. 3.32 s 17 …. 3.15 s 17(3)(c) …. 3.15 s 18 …. 3.23, 3.32 s 18A …. 3.23 s 18(a) …. 3.23 s 18(b) …. 3.23 s 18(c) …. 3.23 s 19 …. 3.32 s 20 …. 3.32

s 21 …. 3.32 s 22 …. 3.32 s 23 …. 3.32 s 24 …. 3.32 s 25 …. 3.32 s 26 …. 3.32 s 27 …. 3.32 s 29 …. 3.32 s 29A …. 3.32 s 30 …. 3.32 s 31 …. 3.32 s 32 …. 3.32 s 35 …. 3.32 s 41 …. 3.32 s 42 …. 3.32 s 44 …. 3.32 s 45 …. 3.32 s 47 …. 3.32 s 48 …. 3.32 s 49 …. 3.32 s 50 …. 3.32 s 51 …. 3.32 s 54 …. 3.32 ss 61A–61F …. 3.83

s 61D …. 8.3

NORTHERN TERRITORY Administration and Probate Act 1969 s 66 …. 3.83 s 67 …. 3.83 s 68 …. 3.83 s 69 …. 3.83 s 70 …. 3.83 s 71 …. 3.83 s 72 …. 3.83 s 73 …. 3.83 s 74 …. 3.83 Adoption of Children Act 1994 s 45 …. 3.91 s 46 …. 3.91 s 47 …. 3.91 Family Provision Act 1970 s 7 …. 7.28 s 7(1)(d) …. 3.93 s 7(2)(b) …. 3.93 s 7(1)(e) …. 3.94 s 8(1) …. 7.27 Natural Death Act 1988 …. 8.4 Powers of Attorney Act 1980 …. 8.2, 8.3

s 6A …. 8.3 s 7 …. 8.3 s 14 …. 8.3 Status of Children Act s 4 …. 3.90 Wills Act 2000 …. 3.32, 3.4 s 7…. 3.32 s 8 …. 3.32 s 9 …. 3.32 s 10 …. 3.32 s 11 …. 3.32 s 12 …. 3.32 s 13 …. 3.32 s 14 …. 3.32 s 15 …. 3.32 s 16 …. 3.32 s 17 …. 3.32 s 18 …. 3.32 s 19 …. 3.32 s 20 …. 3.32 s 21 …. 3.32 s 22 …. 3.32 s 23 …. 3.32 s 24 …. 3.32

s 25 …. 3.32 s 26 …. 3.32 s 27 …. 3.32 s 28 …. 3.32 s 29 …. 3.32 s 30 …. 3.32 s 31 …. 3.32 s 34 …. 3.32 s 40 …. 3.32 s 41 …. 3.32 s 43 …. 3.32 s 44 …. 3.32 s 48 …. 3.32 s 50 …. 3.32 s 54 …. 3.32

QUEENSLAND Adoption of Children Act 1964 s 28 …. 3.91 s 29 …. 3.91 s 32 …. 3.91 Powers of Attorney Act 1998 …. 8.2, 8.4 s 25 …. 8.3 s 31 …. 8.3 s 34 …. 8.3

Relationships Act 2011 …. 1.20 Status of Children Act 1978 s 3 …. 3.90 s 15(2)(a) …. 3.91 s 15(2)(b) …. 3.91 s 15(3) …. 3.91 s 16(2)(a) …. 3.91 s 16(2)(b) …. 3.91 s 17(2)(c) …. 3.91 s 17(2)(d) …. 3.91 s 17(3) …. 3.91 Succession Act 1981 …. 3.32, 3.4 Ch 3 App D Pt 3 s 9 …. 3.32 s 10 …. 3.32 s 11 …. 3.32 s 13 …. 3.32 s 14 …. 3.32 s 15 …. 3.32 s 16 …. 3.32 s 17 …. 3.32 s 18 …. 3.32 s 19 …. 3.32

s 20 …. 3.32 s 21 …. 3.32 s 22 …. 3.32 s 23 …. 3.32 s 24 …. 3.32 s 25 …. 3.32 s 26 …. 3.32 s 27 …. 3.32 s 28 …. 3.32 s 29 …. 3.32 s 30 …. 3.32 s 31 …. 3.32 s 32 …. 3.32 s 33 …. 3.32 s 33(1) …. 3.32 s 33B …. 3.32 s 33C …. 3.32 s 33E …. 3.32 s 33F …. 3.32 s 33G …. 3.32 s 33N …. 3.32 s 33O …. 3.32 s 33R …. 3.32 s 33S …. 3.32

ss 33T–33Y …. 3.32 s 33Z …. 3.32 s 40 …. 3.93 s 40A …. 3.93 s 41 …. 3.81 s 61 …. 3.26 Trusts Act 1973 s 24 …. 5.52 s 95 …. 5.52 s 96 …. 5.52 s 97 …. 5.52

SOUTH AUSTRALIA Administration & Probate Act 1891 s 75 …. 3.67 Administration and Probate Act 1919 Ch 3 App F Pt 3A ss 72A–72O …. 3.83 Adoption Act 1988 …. 3.91 s 9 …. 3.91 Consent to Medical Treatment and Palliative Care Act 1995 …. 8.4 Family Relationships Act 1975 s 6 …. 3.90 ss 10D(1), 10E(2) …. 3.91

Guardianship and Administration Act 1993 …. 8.4 s 3 …. 8.3 s 6 …. 7.28 s 6(g) …. 3.93 s 6(h) …. 3.94 s 7(1) …. 7.27 Inheritance (Family Provision) Act 1972 s 6 …. 7.36 s 7(1) …. 7.27 Law of Property Act 1936 s 62 …. 9.20 Powers of Attorney and Agency Act 1984 …. 8.2 s 6 …. 8.3 Registration of Deeds Act 1935 Pt 2 …. 8.3 Trustee Act 1936 s 9 …. 5.52 s 59B …. 5.52 s 59C …. 5.52 Wills Act 1936 …. 3.32, 3.4 s 5 …. 3.32 s 6 …. 3.32 s 7 …. 3.32 s 8 …. 3.32

s 12 …. 3.32 s 13 …. 3.32 s 16 …. 3.32 s 17 …. 3.32 s 20 …. 3.32 s 20A …. 3.32 s 22 …. 3.32 s 24 …. 3.32 s 25 …. 3.32 s 25A …. 3.32 s 25AA …. 3.32 s 25B …. 3.32 s 25C …. 3.32 s 25D …. 3.32 s 26 …. 3.32 s 27 …. 3.32 s 28 …. 3.32 s 36 …. 3.32 s 38 …. 3.32

TASMANIA Administration and Probate Act 1935 s 35 …. 3.67 s 44 …. 3.83 Pt IV …. 3.83

s 45 …. 3.83 s 46 …. 3.83 s 47 …. 3.83 Adoption Act 1988 s 50 …. 3.91 s 51 …. 3.91 s 53 …. 3.91 Guardian and Administration Act 1995 …. 8.4 Powers of Attorney Act 2000 …. 8.2 s 4 …. 8.3 s 9 …. 8.3 s 42 …. 8.3 Relationships Act 2003 …. 1.20 Status of Children Act 1974 s 3 …. 3.90 s 10C(1) …. 3.91 s 10C(2) …. 3.91 Testator’s Family Maintenance Act 1912 s 3(1) …. 7.27 s 3A …. 7.28 s 2(1) …. 3.93 s 2(1) …. 3.93 s 2(2) …. 3.93 Trustee Act 1898

s 42 …. 5.52 s 43 …. 5.52 s 44 …. 5.52 s 45 …. 5.52 s 46 …. 5.52 s 47 …. 5.52 Wills Act 2008 …. 3.32, 3.4 s 7 …. 3.32 s 8 …. 3.32 s 9 …. 3.32 s 10 …. 3.32 s 11 …. 3.32 s 12 …. 3.32 s 15 …. 3.32 s 16 …. 3.32 s 17 …. 3.32 s 18 …. 3.32 s 19 …. 3.32 s 20 …. 3.32 s 20A …. 3.32 s 22 …. 3.32 s 24 …. 3.32 s 25 …. 3.32 s 25AA …. 3.32

s 36 …. 3.32 s 43 …. 3.32 s 44 …. 3.32 s 45 …. 3.32 s 46 …. 3.32 s 49 …. 3.32 s 50 …. 3.32 s 58 …. 3.32 s 59 …. 3.32 s 60 …. 3.32 s 61 …. 3.32 s 62 …. 3.32 s 63 …. 3.32

VICTORIA Administration and Probate Act 1958 Pts I, IV Div 6 …. 3.38, 3.93 s 5(2) …. 3.92 s 40 …. 3.67 s 50 …. 3.83, Ch 3 App H s 51 …. 3.83, Ch 3 App H s 52 …. 3.83, Ch 3 App H s 53 …. 3.83, Ch 3 App H s 54 …. 3.83, Ch 3 App H s 55 …. 3.83, Ch 3 App H

s 56 …. 3.83, Ch 3 App H s 91 …. 3.93, 7.27, 7.28 Adoption Act 1984 s 53 …. 3.91 s 54 …. 3.91 s 58 …. 3.91 Guardianship and Administration Act 1986 …. 8.4 Instruments Act 1958 …. 8.2 s 116 …. 8.3 s 123 …. 8.3 s 125 …. 8.3 s 125C …. 8.3 Medical Treatment Act (1988) …. 8.4 Relationships Act 2008 …. 1.20 Status of Children Act 1974 …. 3.91 Pts II & III …. 3.91 s 3 …. 3.90 Trustee Act 1958 s 8 …. 5.52 s 13 …. 5.54 s 23 …. 5.54 s 63 …. 5.52 s 63A …. 5.52 Wills Act 1997…. 3.32, 3.4, 3.60

s 5 …. 3.32 s 6 …. 3.32 s 7 …. 3.32 s 8 …. 3.32 s 9 …. 3.32 s 10 …. 3.32 s 11 …. 3.32 s 12 …. 3.32 s 13 …. 3.32 s 14 …. 3.32 s 15 …. 3.32 s 16 …. 3.32 s 17 …. 3.32 s 18 …. 3.32 s 19 …. 3.32 s 20 …. 3.32 s 21 …. 3.32 s 22 …. 3.32 s 22 …. 3.32 s 23 …. 3.32 s 24 …. 3.32 s 25 …. 3.32 s 26 …. 3.32 s 27 …. 3.32

s 28 …. 3.32 s 29 …. 3.32 s 30 …. 3.32 s 31(1) …. 3.32 s 31 …. 3.32 s 33 …. 3.32 s 34 …. 3.32 s 35 …. 3.32 s 36 …. 3.32 s 39 …. 3.32 s 45 …. 3.32 s 46 …. 3.32 s 48 …. 3.32 s 49 …. 3.32 s 50 …. 3.32

WESTERN AUSTRALIA Administration Act 1903 Pt II, ss 12A–15 …. 3.83 s 14 …. Ch 3 App I s 104 …. 8.3 Adoption Act 1994 s 75 …. 3.91 s 132 …. 3.91 Artificial Conception Act 1985

s 5 …. 3.91 s 6 …. 3.91 s 7 …. 3.91 Domicile Act 1981 …. 10.53 Family Provision Act 1972 s 6(1) …. 7.27 s 7 …. 7.28 s 7(1)(d) …. 3.94 Guardianship and Administration Act 1990 …. 8.2, 8.4 s 104 …. 8.3 s 104A …. 8.3 Inheritance (Family and Dependants Provision) Act 1972 s 6 …. 7.36 s 6(3) …. 7.36 s 9 …. 7.36 s 9(a) …. 7.36 s 9(b) …. 7.36 s 9(c) …. 7.36 s 9(d) …. 7.36 s 9(3) …. 7.36 s 9(4) …. 7.36 s 9(5) …. 7.36 Transfer of Land Act 1893 …. 8.3 Trustees Act 1962

s 19 …. 5.52 s 89 …. 5.52 s 90 …. 5.52 s 92 …. 5.52 Wills Act 1970 …. 3.32, 3.4 s 7 …. 3.32 s 8 …. 3.32 s 10 …. 3.32 s 11 …. 3.32 s 14 …. 3.32 s 14A …. 3.32 s 15 …. 3.32 s 16 …. 3.32 s 25 …. 3.32 s 26 …. 3.32 s 27 …. 3.32 s 28 …. 3.67 s 28A …. 3.32 s 30 …. 3.32, 3.90 s 31 …. 3.32 s 32 …. 3.32 s 33 …. 3.32 s 34 …. 3.32 s 35 …. 3.32

s 36 …. 3.32 s 37 …. 3.32 s 38 …. 3.32 s 39 …. 3.32 s 40 …. 3.32 s 41 …. 3.32 s 42 …. 3.32 s 43 …. 3.32 s 44 …. 3.32 s 45 …. 3.32 s 46 …. 3.32 s 47 …. 3.32 s 48 …. 3.32 s 49 …. 3.32 s 50 …. 3.32

UNITED KINGDOM Commonwealth of Australia Constitution Act 1900 …. 5.12, 5.13, 5.14, 5.27 Statute of Frauds 1677 …. 3.3 s 7 …. 7.45 Statute of Wills 1540 …. 3.3 Trustee Act 1925 …. 5.48 Wills Act 1837 …. 3.3, 3.12

UNITED STATES Uniform Fiduciary Access to Digital Assets Act …. 9.8

US Foreign Account Tax Compliance Act …. 1.7

REPUBLIC OF CHINA The Property Law of the People’s Republic of China Article 1 …. 10.87 Article 2 …. 10.87 Article 3 …. 10.87 Article 6 …. 10.87 Article 7 …. 10.87 Article 8 …. 10.87 Article 9 …. 10.87 Article 10 …. 10.87 The Trust Law of the People’s Republic of China Article 19 …. 10.87, 10.90 Article 20 …. 10.87, 10.90 Article 21 …. 10.87, 10.90 Article 22 …. 10.87, 10.90

TABLE OF CONTENTS Foreword Foreword to the Third Edition Preface The Scheme of this Book Table of Cases Table of Statutes

PART ONE ESSENTIAL FRAMEWORKS CHAPTER 1 Introduction to Estate Planning Introduction Estate Planning is a Strategic Advisory Engagement The First Step — Delivering the Estate Situation Review Estate Succession Plans Conclusion Revision Questions CHAPTER 2 Establishing and Managing the Engagement Introduction Client Choice — What Kind of Adviser Do I Need? Client Duty — An Obligation to Communicate Client Responsibility — An Ability to Communicate Client Responsibility — An Ability to Decide Practitioner Responsibility at Initial Engagement Statements Reasonably Relied on — General Duty of Care The Professional Landscape of Estates Practice

Professionalism Risks for Estates Practitioners Aspects of the Client/Adviser Relationship Client Interest-Based Advising — A Reflection on the Duty of Care Moving from Estate Planning to Administration Compliance, Management and Operations Compliance Regime Accountability Impact of Business Models on Professional Practice Business Process — Client Engagement Systems to Support the Engagement Policies to Support Estates Practice Revision Questions

PART TWO THE LEGAL ENVIRONMENT CHAPTER 3 Wills, Probate and Succession Introduction Formal Requirements of Wills Wills of Minors Witnesses Effect on a Will of Marriage and Divorce Revocation Alterations to Wills Informal Wills Revival Court Authorised Wills for Persons Who Do Not Have Testamentary Capacity Gifts to Descendants Who Do Not Survive the Will-Maker Rectification of Wills by Courts Important Miscellaneous Provisions How the Provisions Apply to New South Wales

The Principles of Ademption, Description of Assets, Satisfaction and Debt, and Public Policy Types of Gifts in a Will The Preparation and Structure of a Will The Structure of a Will Intestacy Children and Succession Law International Wills Revision Questions CHAPTER 4 Taxation of Estates Introduction Tax Obligations of Executors Tax Rates for the Deceased Estate Capital Gains Taxes and Deceased Estates Testamentary Discretionary Trusts Taxation of Superannuation Benefits Revision Questions CHAPTER 5 Property, Equity and Trusts Introduction Property Ownership and Control Property Law Equity Trusts Revision Questions CHAPTER 6 Contracts Introduction Contracts in Estates Practice Sources of this Law

Impacts on Estate Administration Revision Questions

PART THREE RESPONSES CHAPTER 7 Responding to Family Breakdown Introduction Family Breakdown before Death Family Breakdown after Death Summary and Suggestions Revision Questions CHAPTER 8 Responding to Changes in Capacity and Cognition Introduction Planning for Declining Capacity and Deteriorating Health Agents, Fiduciaries, Carers and Representatives — The Difference Testamentary Capacity and Undue Influence Revision Questions CHAPTER 9 Estate Planning in Action Introduction Common Estate Analysis Work Challenges and Choices for Advisers and Clients Estate Planning Solutions — Some Choices Documenting Recommendations Revision Questions

PART FOUR ESTATE ADMINISTRATION CHAPTER 10 Getting on with the Work After the Estate Administration Plan — Next Steps Revision Questions

APPENDICES Chapter 1 Appendix A Estate Administration Flow Chart Chapter 1 Appendix B Implementing Estate Advisory Services Flow Chart Chapter 1 Appendix C Estate Founders Flow Chart Chapter 2 Appendix A Examples of Conduct Standards That Can Apply to an Australian Estates Practitioner What Sectors of the Economy Engage My Client? Chapter 2 Appendix B Case Management Process For Private Wealth Advisory Engagements Chapter 2 Appendix C Estate Situation Brief Chapter 3 Appendix A Intestacy Problems Chapter 3 Appendix B Intestacy Rules in Each Jurisdiction Chapter 3 Appendix C Intestacy Distribution in New South Wales — Pt 4 of the Succession Act 2006 Chapter 3 Appendix D Intestacy Distribution in Northern Territory — Sections 66–74 of the Administration and Probate Act 1969

Chapter 3 Appendix E Intestacy Distribution in Queensland — Pt 3 of the Succession Act 1981 Chapter 3 Appendix F Intestacy Distribution in South Australia — Pt 3A of the Administration and Probate Act 1919 Chapter 3 Appendix G Intestacy Distribution in Tasmania — Intestacy Act 2010 Chapter 3 Appendix H Intestacy Distribution in Victoria — Sections 50–56 of the Administration and Probate Act 1958 Chapter 3 Appendix I Intestacy Distribution in Western Australia — Section 14 of the Administration Act 1903 Chapter 8 Appendix A Guidelines for Solicitors Preparing An Enduring Power of Attorney Chapter 8 Appendix B Guidelines for Assessing Competence for Granting an Enduring Power of Attorney Chapter 8 Appendix C Solicitors’ Rules — 12 — Conflict Concerning a Solicitor’s Own Interests Chapter 9 Appendix A Sample Client Queries and Initial Replies About General Estate Planning Issues A Moderately Complex Family Situation Chapter 9 Appendix B

Estate Administration Document Update Documents Now Submitted for Approval Our Understanding of Your Objectives Our Approach to This Work The Extent of Your Estate Estate Management and Succession Principles Chapter 9 Appendix C Taxation Issues at Death Common Taxation Administration Issues Following Death ATO — Guidance for Deceased Estates Chapter 10 Appendix A What Work Does the Will Have to Do? FURTHER READING Index

[page 1]

PART ONE Essential Frameworks

[page 3]

CHAPTER 1 INTRODUCTION TO ESTATE PLANNING INTRODUCTION 1.1 As we move through the 21st century, Australians are challenged not only by an increasingly complex world but also by the increasing longevity of themselves, their families and successors. The Australian Institute for Health and Welfare reports:1 Australia enjoys one of the highest life expectancies of any country in the world, at 82.0 years in 2011 for males and females at birth combined—ranked seventh among Organisation for Economic Cooperation and Development (OECD) countries. As at 30 June 2012, 3.2 million Australians were aged 65 and over (constituting 14% of the population) and 423,700 people were aged 85 and over (1.9% of the population). Women accounted for 54% of people aged 65 and over and 65% of people aged 85 and over.2 1.2 In this book we use the term estate in the sense of defining the overall property of a client, whether legally or beneficially owned or otherwise held, managed or able to come to the benefit of a client. A person’s estate is not defined by the residue of their property that remains for administration after they die. Assets may be held outside the personal ownership of a client but nonetheless come to the benefit of themselves and their successors. Superannuation and family trusts are two common examples of such asset-

holding arrangements. Personal ownership of property is no longer the sole determinant of what property will be included in a person’s estate. 1.3 Estate planning is the discipline in estates practice that allows the estates practitioner to focus on diagnosing and resolving their clients’ concerns about their wealth, its preservation and transfer. 1.4 The term estate planning has traditionally been associated with the impact of death and taxes on the affairs of a client, their family or successors. With the increased longevity of Australians, declining health, disability and incapacity have all become substantial risks to personal and family wealth. Estate planning now has to deal with the consequences of a client’s connections [page 4] to multiple legal jurisdictions, their longevity and steadily increasing wealth, as well as the prospect of many clients being retired from the full-time workforce for 20 or 30 years. Estates practice encompasses the operation of a range of professionals and other occupations engaged in the planning, administration, management and succession of a person’s wealth.3 A measure of successful estate planning is the extent to which the client’s ability to achieve their estate administration objectives has been enhanced through the assistance of the estates practitioner. The professionals and advisers normally engaged in this work include members of the following occupational groups: accountant; banker; barrister; estate planner; family business adviser; family dynamics and dispute resolution adviser; financial planner;

insurance adviser; solicitor/attorney; tax adviser; and trustee. The extent of a client’s need for assistance may be generally classified into calls for three main types of assistance: 1. Let me do it! 2. Help me do it! Do it with me … 3. Please do it for me … The assistance of carers, service providers and other professionals may also be required to achieve the client’s requirements for the administration of their estate. 1.5 In addition to an appreciation of the significance for their estate planning of their longevity and property, a person at any age also needs to consider what part of their life they can expect to live at full health. The World Health Organization has coined the term Healthy Life Expectancy (HALE).4 Australians can expect on average to have seven to eight years of their life impacted by disability.5 Consideration of the cost of this risk needs to be taken up into the financial, life and estate planning of all Australians. Care planning is now emerging as a discrete dimension of estate and financial planning. [page 5] With both life expectancy and the average age at death steadily increasing and healthy life expectancy decreasing, a substantial challenge for most Australian adults is to be able to maintain their lifestyle and standard of living as they age through their 70s and beyond. 1.6 Wills have always been necessary to manage a person’s estate after death and remain an important part of estates practice. Normally, for people born before 1945, their estate was personally owned and not particularly

substantial. The expectation of a male adult was that he worked until he was aged 65 and then retired from the workforce. A simple life then ensued that would be funded by a pension and hopefully some superannuation, an inheritance or investments. Non-working spouses normally had little property of their own. They had been brought up with an expectation that a life beyond three score and ten would be a bonus and they would be very old if they reached their 80s. Their capital had to last 5–15 years on average after retirement from the workforce and fund a lifestyle that was supported by income around two-thirds of their final working salary. This expectation has substantially changed for the healthier and wealthier baby boomer clients and their descendants. 1.7 Migration and the increasing interconnection of the Australian and global economies have also substantially increased the complexity of the affairs of many Australians. Around 25% of Australian residents are foreign born.6 Assets, family and social connections outside Australia may all impact the operation of an Australian resident’s affairs and must be considered, to the extent relevant in any estate planning engagement. Cross border issues are becoming more frequent issues in practice. This is partly fuelled by the commencement of the Australia–US Intergovernmental Agreement (IGA) to improve international tax compliance and to implement FATCA (the US Foreign Account Tax Compliance Act).7 As Australia moves to support the Common Reporting Standard proposed by the Organisation for Economic Co-operation and Development (OECD), how clients prudently operate in an increasingly fiscally transparent world will become a day-to-day concern for estates practitioners.8 1.8 The need to hold substantial capital to meet health, care and ageing costs once a client leaves the full-time workforce remains a key estate planning objective for all Australians, irrespective of their age. Capital can be sourced from savings, gifts, inheritances, insurance proceeds or windfall gains. For younger workers, the prospect of long-lived parents and grandparents simply reduces the prospective value of their inheritances and highlights the need for all workers in the community to make sufficient lifelong savings to support their needs in retirement. Establishing capital adequacy planning for older Australians is a substantial task for the financial

planning profession. The [page 6] need for lifelong savings and investment plans in order to reduce or eliminate this risk remains a matter of vital importance to all working Australians irrespective of age. Estate planning provides a relevant service framework for the consideration of these issues with clients, irrespective of their age. To the extent that personally owned or controlled capital to sustain older Australians is insufficient to sustain them in retirement, alternate family-, community- or broader-based social or government-funded welfare solutions are needed. Enhancing the functionality and sustainability of the affairs of a client and their successors is a prime objective of estate planning. In many circumstances, however, the best the estates practitioner can do is identify the nature and extent of the capital inadequacy of the client to meet their estate administration objectives and leave the client and family the issue of how they may need to cooperate to plug the resulting capital gap. We are used to hearing about the ageing of the baby boomer generation. Table 1.1 is a summary of the current trend in growth of the population over 65 years and how it is expected to continue: TABLE 1.1: POPULATION OVER 65 YEARS YEAR

POPULATION OVER 65 YRS

% TOTAL POPULATION

1976

1,300,000

9

1999

2,300,000

12

2016

3,600,000

16

2041

5,700,000

25

This trend is mirrored in the growth of the population aged over 80 years, as shown in Table 1.2 below:

TABLE 1.2: POPULATION OVER 80 YEARS YEAR

PROPORTION OF OVER 65 POPULATION OVER 80 YRS

1976

ONE IN

6

1996

ONE IN

5

2016

ONE IN

4

2041

ONE IN

3

Client concerns 1.9 While death is inevitable, its timing is uncertain. With increased longevity postponing the immediacy of death, other life risks assume increased [page 7] importance, even for those people aged 70 and older. Client concerns may be focused initially on themselves and often include personal concerns about others for whom the client feels accountable. It is vital that during the initial phase of any engagement, the adviser establishes what issues are currently of most concern to the client. These may include concerns about: Relationship risk On average 40% of current marriages end in divorce. De facto and domestic partners may receive property rights as a consequence of their relationship. Capacity With the increased incidence of dementia and other cognitive disorders, the ability of a person to retain full or substantial capacity throughout their retirement cannot be assumed. Retirement income support The government has recognised that public pensions cannot fully support the majority of workers in retirement. Achieving the accumulation of sufficient savings, superannuation, inheritance and other capital in order to fund retirement remains the

primary responsibility of workers and their families. Family support Substantial capital is still held by family members born before 1945. As baby boomers reach retirement, their inheritance path needs to be managed for the concurrent benefit of their parents, themselves and their successors. Having multiple generations retired from the fulltime workforce means that the lifestyle expectations of a 65-year-old (with a projected lifespan of 18.3 years) may have to be tempered with the needs and expectations of parents aged, say, 85 years (with a projected lifespan of 5.9 years). Even at this age, parents have to plan on outliving their children! In all cases, the estates practitioner is called on to consider first what is in the best interest of their client. Estate planning provides a procedural framework to take a client from expressing a concern about the management of their affairs to carrying out (possibly with the assistance of advisers and others) the necessary activities to resolve the client’s concerns and improve how the client achieves their estate administration objectives.

Estate planning — the core concept 1.10 With these observations in mind, it is now necessary to recast the focus of estate planning for the 21st century and beyond as: A professional service (encompassing strategies, processes and actions) focused on the preservation and transfer of a client’s wealth for the client and their designated successors. Estate planning is a relational professional practice focused on advising and serving the client from their perspective. The estates practitioner is in this context an advocate of the interest and objectives of their client, not merely a service provider to the client. The value of estate planning is measured not only by the delivery of transactional service results to the client but also by the extent of change achieved in the management of the client’s affairs that results in the attainment of the client’s estate administration objectives.

[page 8] We believe that estate planning must have a sound intellectual framework as its foundation so that all of a client’s needs and objectives can be given full voice. Only when this occurs can a client’s affairs be managed to respond to the full range of a client’s concerns and accountabilities. Planning must also be seen as the process that enables efficient estate management and operation. Estate succession is simply an element of estate management and operation. All Australians have the right, in planning for their life, death, diminished capacity or disability, to organise the management, operation and succession of their estates to meet their needs, requirements and objectives. The wealth of the client will always comprise financial and non-financial elements. Estate planning allows balanced consideration to be given to all the wealth elements of a client and, as appropriate to the engagement, responsibility for certain wealth elements of a client’s estate to be excluded from the scope of an estate planning engagement. Estates practitioners must remain pragmatic about the limits of their skills and confine their core responsibilities in an engagement to those tasks that advance the interest of the client and are also within the core competence of the estates practitioner concerned or their firm.

Estate administration — a management process 1.11 Efficient estate planning results in estate management that rests on a foundation of scalable operational processes that respond to and reflect the nature and extent of the client’s estate as well as the actions that respond to their concerns and objectives. The value created by estate planning is in the delivery to a client of not only a series of instruments which support the operation of their estate, such as investment plans, family agreements, wills, powers of attorney, powers of guardianship and insurance policies, but also a set of defined plans, processes, objectives and purposes that provide appropriate explanatory information and assist the client to manage the operation of their affairs

(estate administration). Estate planning must not be driven primarily by concerns about relationship risk, social security qualification, taxation or solvency. It must nonetheless respond appropriately to these issues. At its heart, estate planning and administration is driven by the simple need of clients to ensure that they, their family and successors can respond to the consequences of their accountability, longevity, diminished capacity, disability or death.

ESTATE PLANNING IS A STRATEGIC ADVISORY ENGAGEMENT 1.12 The Macquarie Dictionary defines strategy as ‘the method of conducting operations’. A client’s estate situation must initially be reviewed but, once that [page 9] is done, the adviser must ask, ‘For what purpose is this estate being operated and how is this operation to be conducted?’ In engaging with our clients, we must therefore agree with them that the purpose of estate planning is to establish improved processes and actions to manage their estate. Once the client has agreed to at least a preliminary set of objectives for the engagement, the adviser can provide initial engagement documents to formalise the relationship which will include, to the extent appropriate for each client: providing an overview of the client’s current estate including identification of current objectives, problems and issues as well as assets, liabilities and risks to be managed; establishing an appropriate management plan for the estate; managing the plan;

operating the plan including delivery of the agreed operational outcomes; and periodic review of, refinement of and, as appropriate, refocusing the plan. 1.13 For the professional adviser, undertaking estate planning normally results in not only the agreed professional service being delivered, but also, co-extensively, a procedural framework being established for the ongoing management of the client’s affairs. The measure of successful estate planning is the extent to which the required change in the client’s situation is achieved in order that their objectives for the engagement are met. Advisers must therefore become skilled in describing their role, function and value from the client’s perspective. The following statements illustrate examples of client aspirations that will be used as the primary measure of the success or not of the results of an estate planning engagement: ‘After my death or disability, my wife must be maintained to the level of her current lifestyle.’ ‘I want my children to have control of my family trust after my death or incapacity.’ ‘I only want my best friend to be involved in the management of my affairs after my incapacity, disability or death.’ ‘My wife and children cannot manage my business after I am gone. I need to assure the orderly sale of the business in the event of my disability or death.’ ‘The inheritance I am to receive from my parents is substantial. I want this preserved for the long-term benefit of my children and bloodline successors.’ ‘This country has been good to me. I am about to sell my business and there is a lot of capital gain. I want some money to go back to benefit the community that has supported my business and allowed me to succeed.’

[page 10] ‘My children are all afflicted with vulnerability of differing sorts. How can I continue to support them after my disability, incapacity or death? They need as much help as possible.’ ‘I migrated to Australia 10 years ago. My parents and uncles still live in my home country. Does this affect me in Australia?’ ‘I am an Australian but I married an American while I was on a posting to New York. How does my marriage to an American affect me? We have three children and my spouse’s parents still live in America.’ ‘I am 83. My husband died 10 years ago. We have one son aged 57 who runs a small business. I have a house, about $200,000 in investments and some jewellery and other personal effects. My son came and saw me last night and says he may have to go bankrupt. How can I help him?’ It is through this congruence of plan delivery, relationship establishment and relationship renewal that an adviser becomes the lead adviser and also, in many cases, the leader, of the client. In undertaking an estate planning engagement, clients invest in their adviser a great deal of knowledge about themselves and their world. In many cases, the way the adviser deals with this knowledge will determine the degree of loyalty shown by clients towards that adviser. Advisers also need to consider how they manage their client leadership/collaborator role in conjunction with the inevitable professional transactional responsibilities that follow the establishment of an estate plan. Professional advisers need to develop a balance between their requirement to deliver professional services to their clients with the need to quietly assert their leadership role in relation to their clients. In this regard, the following principles can serve as a framework of considerations for advisers when trying to quietly lead their clients:9 Put off what can wait until tomorrow Have the courage, where appropriate, to let time calm otherwise turbulent waters.

Pick your battles Getting on your white horse and leading a charge of the barricades often does not get the required results. Consider how best you can achieve your desired results while conserving your political capital with your client and their broader family and interests. Stay legal Bend the rules if necessary if the proposed action is otherwise legal and in the client’s interest, but do not break or breach your professional conduct rules. Use compromise as a tool Where necessary do not hesitate to craft responsible, workable compromises as the solution to the problem at hand. [page 11] In applying these principles to estate planning engagements, advisers should: Attend to people issues first and strategy second It is through the process of getting to know your clients and their family and understanding their personal interpretation of their accountability that the appropriate estate planning strategy will first take form. Fully appreciate the worldview of the client Ensure that irrespective of how dire clients assess their current position to be, you acknowledge the client’s assessment of their world and focus on how best to improve that state for them. Do not expect rapid change in the client’s views or assessment of their world in response to your initial advice As advisers, we often have to manage a conflict between the client’s assessment of their position and our appraisal of that position. Especially with engagements such as business succession planning, it is the entrenched habits and attitudes of our clients that may prevent them from adopting or accepting all of our advice. Be prepared to break the solution down to manageable steps and focus on defining an initial first step the client is prepared to take and an agreed milestone that will bring you back to discussion. Constructive compromise between the entrenched attitudes of a client

and the advisory solution being tendered can build momentum and a process of incremental improvement in the client’s estate management. Ensure your client understands the limits of your professional competency and how these limits match their actual requirements In this age of professional specialisation, assisting generally in the administration of a client’s affairs is itself an emerging speciality. An individual adviser needs to be focused on what he or she can do best and not be a jack-of-all-trades. Properly resourced teams are needed to deliver the necessary solutions in many complex or complicated cases. Therefore, advisers should ensure they establish an agreement with their clients to deliver the professional services that are needed to address the work plan agreed with the client. Establish with the client, as appropriate, the criteria by which you can measure the success achieved in the engagement This generally includes identification of the core objectives of the client and the professional services required to respond to and satisfy those objectives as well as the appropriate financial budgets and outcomes for the engagement. Treat your clients’ passions with respect Where clients’ passions and objectives become entwined, tread carefully, gently and quietly to understand how the client will measure success against the agreed objectives. Then make sure you deliver precisely to satisfy those requirements. Use technology to drive efficient delivery of operational outcomes to clients The use of technology should be focused on streamlining and personalising the services delivered to the client. [page 12] Establish a culture of discipline, thought and action within your advisory team Focus this culture on the entrepreneurial pursuit of the business goals of the team including excellent client service and reliable service

delivery that meets the fiscal and personal expectations of the client.

THE FIRST STEP — DELIVERING THE ESTATE SITUATION REVIEW What is the current situation of the client? 1.14 Following completion of the client engagement formalities that are required by the primary professional disciplinary requirements of an estates practitioner,10 the next task is to understand the current situation of the client. We call this step the estate situation review. It is in the course of undertaking this review that the adviser has the opportunity of establishing with the client not only the scope of the client’s expectations of the engagement, but also the snapshot of the client’s affairs that will form the foundation knowledge on which the subsequent delivery of advisory and transactional services will be based. This review is driven by a set of concepts and questions and is organised by the estate planning consulting process. The adviser needs first to draw from the client sufficient qualitative and quantitative information in order to be able to advise the client appropriately. Any lack of response or knowledge on any of the following matters needs to be reflected by appropriate qualification of the advice delivered. Fact finders are generally the instrument that is used to capture the information required in an estate situation review. A sample fact finder is included in this book as Appendix C to Chapter 2 and can be used to benchmark for the extent of inquiry needed for particular types of clients.

Issue 1 — Who am I? 1.15 This is a deceptively simple question in this era of multicultural Australia. Client identity is a function of religious and social upbringing, not just legal process and principles. It is necessary for estates practitioners to understand not only the legal but also the cultural background of their client. Religious beliefs, for instance, may generate in a client as compelling

an estate accountability as conventional constitutional law sourced obligations. For clients with indigenous heritage, customary tribal law may impose obligations on them and their property to which national law must take account and respond if the wishes and intent of the client are to be given full force and effect. [page 13] For instance, the laws of the Northern Territory and Queensland give limited recognition to the ability of indigenous tribes to impose control over tribal custodial property in the possession of a member of the tribe. Just taking an inventory of a client’s estate will not uncover these rights. Similar issues arise in the case of people of Māori descent who may have inherited interests in traditional Māori ‘iwi’ land. Such rights can only pass to another tribe or ‘iwi’ member. Any attempt to impose national law on these inherited tribal rights will be ineffectual.11 Advisers need to establish the provenance of all valuable assets in an estate and all rights that attach to such assets. This cannot occur without first establishing the identity of a client with sufficient certainty that all property legally or beneficially owned by that person can then be identified and brought under management. 1.16 Cultural, customary and native title law is catalysing the emergence of a jurisprudence of custodial property and extended kinship to which estate planning practice needs to respond. A client may also hold legal or contractual representational capacity on behalf of other people, such as under a relationship of trusteeship, power of attorney, bailment or agency. As a result, clients may hold property in their name that is actually owned by others. Thus, all the capacities in which clients operate must be apparent before you can understand whether the property they possess is actually their own, alienable property. 1.17 It is also instructive to discuss with a client, ‘Who aren’t you?’ For example, s 4(1) of the Married Persons (Equality of Status) Act 1996 (NSW)

makes it clear that the fact of marriage has no impact on the separate legal personality and status of each spouse. Moreover, a marriage does not give rise to any separate legal personality attaching to the marriage itself. As a result, a married person has an action in tort against his or her spouse and is entitled to civil and criminal redress against them for protection of property. The traditional agency of a spouse to pledge the credit or act as the agent of his or her spouse for necessaries is prohibited by the Act. As a result, one spouse is not automatically the agent nor has inherent contractual or representational capacity on behalf of the other spouse. It is for this reason that wills, powers of attorney and guardianship are key instruments in establishing any scheme of private representation and management of a person and their family’s affairs. The fact of marriage does not in and of itself create any legally enforceable representation rights by or on behalf of a party to a marriage or domestic relationship. [page 14] 1.18 Adequate identification of your client is an essential prerequisite to discharging your legal and professional responsibilities for client engagement. Client engagement processes must normally deal with all regulatory responsibilities affecting both the practitioner and the client. These requirements can include anti-money laundering laws,12 financial reporting laws and dealing with the consequences of a client being connected with multiple legal jurisdictions whether through citizenship, domicile, residence, investment, asset ownership or otherwise.

Issue 2 — To whom am I accountable? 1.19 People do not live in a vacuum. As our constitutional law is Westminster-based, we have as one foundation of Australian law the concept of the nuclear family. While adults have broad rights of contract, property ownership and testamentary freedom in Australia, the law does impose a range of accountabilities on how they deal with their property. A person should not alienate property through their estate administration without

regard to the full range of accountabilities that the law imposes on them. The laws of particular cultures, indigenous communities or customary law may result in extended kinship and custodial property accountability also being enforced against an estate. These accountabilities may also create enforceable rights attaching to the property in the possession of a client, notwithstanding the client’s actual legal ownership of the property. When considering a client’s kinship obligations and accountability, it is wisest first to examine who can make a claim for provision out of the estate, as of right, as a consequence of their relationship with a person. The right to make a claim will vary depending on the citizenship, domicile or place of residence of the client and the claimant. Where more than one legal jurisdiction is involved with a client’s affairs, appropriate advice from professionals in each jurisdiction may be needed.

The myth of testamentary freedom 1.20 As a consequence of the Westminster legal sources of Australian law, this country inherited the common law presumption of testamentary freedom. This means that subject only to the laws relating to family provision, a will-maker, on death, can direct provision from their estate to any person or charitable cause. Unlike many civil law countries, there is no forced heirship in Australia. As a result, the normal position is that absent legislated rights on intestacy, no estate claimant in this country can enforce a right to a particular share of a person’s estate. [page 15] Every jurisdiction in Australia provides certain classes of people with defined connections to a client with rights to call for adjustment of a person’s estate following death in favour of the claimant if reasonable provision for them has not been made. This subject is given fuller treatment in Chapter 3. It is this legislated accountability that erodes the ideal of testamentary freedom in this country. Depending on the extent of a client’s estate and the

nature of beneficiary claims, there may not be in fact any testamentary freedom really available to a client unless the client is deliberately trying to provoke an estate claim or wishes to make a will contrary to estate provision rights held by people with whom they are connected and accountable. In making their will, it is therefore necessary that every client consider to whom they are accountable, the nature of the benefit they wish to provide to their beneficiaries and the reason for such provision. Reasonable provision does not necessarily equate to equal division. Intestacy can be seen as a default or statutory will that applies when a person does not leave a valid will on their death. This statutory will may not bear any relationship to the actual intention of a client. An estate planner’s initial focus is therefore to establish the client’s intent in relation to their will. This intent will normally need to cover at least the following matters: Who is to be the client’s representative (executor) who will take charge of their estate after death? Who is to be the client’s trustee who will take charge of their estate after death? What gifts need to be made as a result of the client’s death? What trusts need to be established as a result of the client’s death? What is the nature and extent of the benefit to be delivered to the estate beneficiaries as a result of the operation of the will or estate plan? (See also Hill v Van Erp [1997] HCA 9; Katz v Grossman [2005] NSWSC 934 and Howe v Fischer [2014] NSWCA 286 (26 August 2014) for examples of where this element of will-making became critically important.) What particular administrative powers and directions may be needed to support the practical operation of the will? How is the property of the client that is not within the immediate jurisdiction of the will to be treated? The following issues may be relevant to resolving this question: A client’s:

capacity; citizenship; domicile; [page 16] residence; migration status; form of ownership of their property; and form of control and location of their property. A will that does not implement the actual intention of the client is not legally effective. The starting point of all will-making assignments must therefore be to first define how the client intends their estate to be dealt with following their death. This is the will-making component of documenting the client’s situation. In many situations, estates advisers such as accountants, tax advisers and financial planners will hold information relevant to the client’s will-making intention; all such information must be collected and considered in the estate situation review process. It is then the lawyer’s role to prepare appropriate documents that implement the client’s intention for the postdeath succession to their property. The testamentary freedom of the client is qualified by their legislated accountability to estate claimants. The identity of estate claimants is in turn defined by the nature and extent of the social relationships and commitments of a client. These in turn can be classified as: purely social relationships; de facto domestic relationships; marriages; other registered civil domestic relationships. Clearly, after death the most difficult estate claims are from estranged

family members, non-residential carers and children of de facto and marital domestic relationships. Some heart needs to be taken from the commencement in Tasmania in January 2004 of the operation of the Relationships Act 2003 (Tas). This Act allows parties that are in significant or caring relationships and are not related by bloodline to register their relationships and thus confer property rights in each other’s estate to the parties in the registered relationship. The passing of the Tasmanian legislation signalled we are reaching a point of legislative maturity in Australia in which Australian residents are being allowed to identify and manage with identical rules all the social models that underpin family and domestic relations existing in this country. As a result Australians can, within the constraints of the law of the state in which they are domiciled, ensure that their core domestic relationships receive adequate legal recognition, property claim support and participation in estate succession management. See now the Relationships Register Act 2010 (NSW)13 that provides in s 3 ‘for the legal recognition of persons in a relationship as a couple, [page 17] regardless of their sex, by registration of the relationship’ and its counterparts in some other states and territories.14 These counterpart Acts comprise as at October 2014: the Civil Partnerships Act 2008 (ACT); the Relationships Act 2011 (Qld); the Relationships Act 2003 (Tas); and the Relationships Act 2008 (Vic).

The reality of family, kinship and connection 1.21 Once the idea of testamentary freedom is accepted, then the need to understand the social context of the client and the nature of their connections to people, causes, legal jurisdictions and legal entities is

recognised as a key requirement in comprehending the current situation of the client. The question to be answered at the point of initial engagement is: in the event of your death or incapacity, who should be provided for in the administration of your estate? This question needs then to be followed up by a further question: has any person to whom you are legally or otherwise connected or accountable been excluded from your initial list of persons who are to be provided for by you? 1.22 It is only by examining who is included and excluded for provision from an estate that you can consider authoritatively the extent of estate claim risk and conflict presented by a client’s initial estate administration requirements. Family, social and emotional relationships can all provide factors that bring substantial complexity to an estate plan. Understanding the current position of these factors is essential in completing an estate situation review. 1.23 Implicit in this review is the need to observe whether there is sufficient functionality in the operation of the social connections of the client and their associates to allow the client’s estate administration intentions to operate. For example, if the client’s wife suffers manic depression and is under substantial medication, she may not have the legal capacity to carry out a representative role for her husband such as being an attorney, executor or trustee for him. Family estrangement may mean not only that the children of a client may not be trustworthy representatives of a client but also that multi-generation wealth management strategies based on testamentary discretionary trusts may be inappropriate for the circumstances of a family. 1.24 Where clients already have their wealth structured using entities such as companies and trusts, consideration needs to be given to the issues of how management succession and ongoing decision-making is aligned to the ongoing needs of a client’s successors. [page 18]

1.25 When presented with clients of substantial social complexity, advisers should consider using a genogram to document the social connections of a client. This tool captures more information about the social and medical context of a client than a conventional family tree. For more information about this tool, see .

Community and social accountability 1.26 The community and social accountability of the client needs to be considered from the particular social and cultural context in which they were born and now currently live. For indigenous Australians, customary law is an additional source of this accountability and must be understood in the context of the client’s tribal connection to identified customary laws. For the remainder of Australians, the extent of our social and community accountability is a function of our voluntary assumption or admission of these responsibilities. While there is an expectation that these activities will be altruistic, there are many commercial situations where philanthropic activities have value in supporting the social or community accountability or other business objectives of an enterprise. In the liquor and gaming industry, for example, social impact assessment and evidence of positive social contribution by the licensed business is increasingly a requirement for the ongoing licensing of liquor businesses. The fundamental architecture of the taxation system in Australia entrenches the right of citizens to make tax deductible contributions to organisations that are deductible gift recipients. This provides a tax-funded process to finance social and community programs in this country. Clients have a choice as to where they spend their tax dollars. It is the responsibility of an estates practitioner to make sure that not only are the client’s social and community objectives being reflected in their estate plan, but the client’s tax payment obligations are being managed constructively to ensure that charitable contributions are being made at an appropriate level having regard to the client’s available tax payment stream. Approached from this perspective, social and community accountability can be maintained from the tax payment stream of the client rather than their post-tax ‘money for

living’.

Establishing the scope of a client’s accountability 1.27 Mindful of the above principles, it is clear that an understanding of the formal accountability of the client cannot proceed without adequate examination of the following characteristics of a client: identity (to appropriate legal standard), citizenship, domicile and residence; current and prior family, de facto and domestic relationships and beneficiary vulnerability; current and historical occupational and commercial liabilities; current and historical contractual, regulatory and equitable obligations; [page 19] current legal compliance profile and solvency; current and historical location of estate assets and whether additional claimant rights may arise from assets which are or have been located in other jurisdictions; and social, cultural, community or philanthropic activities, objectives or intentions that create formal estate accountabilities. These elements need to form part of the investigation for an estate situation review. It is the adviser’s obligation to consider which of these elements are relevant to the situation of the client. If a client refuses to give sufficient information from which these issues can be understood (including the reasons why a client may consider an element to be irrelevant), then responsibility for dealing with this aspect of a client’s estate and intentions must be excluded from the scope of work in this engagement. Advisers need to resolve the impact of any advice or exclusions on their ability to carry out the remainder of an engagement.

Issue 3 — Preserving wealth, property and values Establishing what is the wealth of a client 1.28 In the context of an estate situation review, the concept of wealth can never be confined to the financial dimension of a client’s estate. The definition of a client’s wealth has traditionally followed the definition of their security. Wealth is better understood as having the following elements of capital: financial; family; human; structural; societal; and spiritual. In engaging with clients, estates practitioners need therefore to understand the family and social context of the client, not just their financial affairs. The wealth of a client can be rightfully described as the sum of the relationship and financial capital of a client. It is therefore necessary that an estate situation review encompasses what the client believes their wealth to be by reference to the criteria suggested. Not all wealth elements cited will be relevant to all clients; it is the adviser’s obligation as part of his or her professional role to establish what wealth elements are relevant to an estate situation review and why. The significance of these wealth elements and the various forms of estate capital are further discussed in Chapter 9. The wealth of a client also has to be understood from the perspective of what property is owned by or for the benefit of the client. The legal definition of property and its significance for estate planning will be discussed further in Chapter 5. [page 20]

Establishing representation of the client and thus their estate 1.29 A measure of the endurance of a client’s wealth is the extent to which their vision, values and objectives can be and are adhered to by their legal personal representatives and successors. In selecting the representatives and successors who will operate in this way, substantial assurance for the endurance of the client’s estate administration intentions is established. In completing an estate situation review, material matters for investigation include: Has the client previously appointed representatives? If so, who are they? What triggers, if any, apply to a representative taking office? What third party benefits can a representative give in the course of his or her duties? What third party benefits are necessary for the representative to carry out the support obligations established by the representation? What limitations are appropriate to the representation, if any? In what legal jurisdictions must the representative operate? When does the representation end? 1.30 While clients may aspire to a long life, illness, accident or misadventure can bring to an end their ability to manage their affairs themselves. In considering the consequences of disability, the estates adviser encourages their client to consider how best to assure the endurance of their wishes and intentions. In selecting and appointing their legal personal representatives (LPRs), clients choose who will give voice to their wishes, dreams and objectives for their family, successors and the broader community. In entrenching these wishes in their estate plan, clients take a significant step towards ensuring that their personal, family and social accountabilities are explained and carried out by people who in turn recognise and are motivated or compelled to comply with their appointor’s wishes. Fundamentally, a LPR is a substitute decision-maker for the client and

normally only has the power given to them in the document under which they are appointed. The LPR’s appointment is the client’s opportunity to decide how much direction and guidance should be given to the LPR about the execution of their duties. There may be a current reason to appoint the LPR, such as the client’s departure overseas, or the appointment may be made as a ‘safety net’ to allow the administration of a client’s affairs to continue notwithstanding the fact of the client’s frailty, absence from the jurisdiction, diminished capacity, disability or wish not to act personally in a particular matter. Ensuring an appropriate succession path for a person’s LPR also assists in entrenching the values underpinning the client’s estate plan in subsequent LPRs and the client’s successors. This is, however, an issue better considered as part of the planning phase of the engagement. [page 21] 1.31 A client may act personally as well as on behalf of others. When reviewing a client’s affairs, it is vital that the succession path of all representational roles held by the client be understood and if necessary updated. A client cannot assume that he or she will retain full legal or testamentary capacity at all times, let alone always be able to discharge the representational roles he or she holds concurrently. It is for this reason that the law allows private schemes of estate representation to be implemented. In addition to the normal contractual forms of agency and equitable fiduciary roles, the law allows the following representational roles to be created: Executor operating on and from death; Attorney operating primarily with respect to financial or commercial matters during the life or existence of the donor until revoked. They may exist for both companies and private individuals and are governed by both the general law and, in New South Wales, the Powers of Attorney Act 2003;

Guardianship operating primarily with respect to health, medical and personal care. It exists for private individuals; Partnership operating under the authority of the relevant Partnership Act or a partnership agreement. With each partner having joint and several liability for the acts of the other partners, each partner is effectively the representative of the whole partnership and can act in its name unless otherwise constrained by the partnership agreement. Partnerships can exist between both people and companies; Directors operating under the constitution of any company in which a client is a shareholder. Directors operate under a mandate from shareholders and the representation thereby created needs to be understood from the perspective of the client. Various contracts may be in place creating frameworks for the management of this role. While clients will generally be able to represent themselves for most matters, it is the prospect of longevity while suffering chronic declining capacity or a catastrophic decline in capacity that creates the need to ensure that adequate representation of the client exists. Legal personal representatives need to be not only appointed but also educated in the succession and management policies of the client. The estate administration plan has an important role in explaining and supporting the instruments creating representative roles in the estate and facilitating education that allows the role of the representative to function as the client intends. In an estate situation review, the focus of review is on establishing the representation that the client has granted in the past. It is an element of the estate planning phase that the adviser should consider what representation and operational terms should be necessary to support the operation of a client’s estate administration plan. It is then possible to assess whether [page 22] the terms of current representative appointments are appropriate for the ongoing purposes of the client.

Representation reviews must include, as appropriate: A review of the current state of the capacity of the client having regard to the scope of acts contemplated to be done in, or as a consequence of, the estate review. A review of the scope of representational roles held by the client and the succession arrangements already in place for those roles. An assessment of the adequacy and appropriateness of current representational roles held by the client and the established succession arrangements, if any, of those roles. A review of the need for the client’s personal capacity to be represented and the adequacy of succession arrangements for the representations established for the client’s personal capacity. The establishment of such new or updated representations that are appropriate to the needs and intentions of the client.

Recognising the property within an estate 1.32 As with the scope of a client’s accountability, the property in a person’s estate can be defined differently depending on their circumstances. What a client owns will be initially seen as a matter of what he or she possesses or controls, or what is the source of economic-, financial- or wealthrelated benefits to the client. For family law purposes, the relationship property of the client will be the foundation for defining the relationship estate. As de facto relationships are now also managed by the Family Law Act 1975 (Cth) (FLA), relationship property can now be seen as a uniform code of Commonwealth law for all purposes other than customary law. For testamentary estate purposes we have to identify and manage such of the estate that can come into the possession of an executor or administrator. For testamentary estate purposes, transferability and transmissibility to the executor or administrator become the defining characteristics of estate assets.

What can a client or their representative control?

1.33 In defining the extent of the estate for management, we need to look at property that comprises the estate in the context of the owners, controllers or beneficiaries of that property. The Australian Accounting Standards usefully identify the responsible people for the production of income, the incurring of expenses, the holding of assets and the incurring of liabilities. They are simply described as ‘entities’ that are then defined as ‘any legal, administrative or fiduciary arrangement, organisational structure or other party (including [page 23] a person) having the capacity to deploy scarce resources in order to achieve objectives’. While this is reflected well and supported by the multiplicity of legally recognised structures, arrangements and capacities through which a person can act, we also have to deal with delineating the elements of property that define an estate that the entity can control. Without control of property by entities, the estate has no integrity of ownership. While the Australian Accounting Standards Board defines assets very widely as ‘future economic benefits controlled by the entity as a result of past transactions or other past events’, the breadth of this definition does not aid us in the recognition of assets, for which we really need to turn to the legal definitions of property. For testamentary purposes, the estate is defined by those elements that fall into the following definitions:15 ‘Real estate’ extends to messuages, lands, rents, and hereditaments, of freehold or any other tenure, and whether corporeal, incorporeal or personal, and to any undivided share thereof, and to any estate, right, or interest (other than a chattel interest) therein, and in Part II includes lands held under building leases or any lease for twenty-one years and upwards. ‘Personal estate’, except in Part 2 as hereinbefore mentioned, extends to leasehold estates and other chattels real, and also to moneys, shares of government and other funds, securities for money (not being real

estates), debts, choses in action, rights, credits, goods, and all other property whatsoever, which, prior to the coming into operation of the Real Estates of Intestates Distribution Act of 1862, commonly known as ‘Dr Lang’s Act’, by law devolved upon the executor or administrator, and to any share or interest therein. For non-testamentary purposes, the accounting definitions outlined above provide a useful starting point for recognising things possessed by a person that are comprised in his or her estate; however, such definitions give no assistance in defining the property recognised at law as being owned by the client. 1.34 As a minimum, the extent of a person’s estate can be defined as the interests and value held by them whether in possession or reversion or whether directly or indirectly in the following types of property: active business assets; passively managed investment capital; other jointly or solely owned property; and philanthropically accumulated social capital. While this is a useful high level classification, to give it value, we must drill down further to understand how the elements of this classification are best used.

Active business assets 1.35 While the definition of a capital gains tax (CGT) liable asset gives a picture of the extent of property that comprises taxable assets, the following [page 24] definition of active asset defines those assets used for business rather than passive investment purposes:16 (1) A CGT17 asset is an active asset at a given time if, at that time,

you own it and: (a) use it, or hold it ready for use, in the course of carrying on a business; or (b) it is an intangible asset that is inherently connected with a business that you carry on (for example, goodwill or the benefit of a restrictive covenant); or (c) it is used, or held ready for use, in the course of carrying on a business by: (i) your small business CGT affiliate; or (ii) another entity that is *connected with you. (2) Subsection 392–20(1) is disregarded in determining, for the purposes of subsection (1) of this section, whether an entity is carrying on a business. Note: An entity would be taken to be carrying on a primary production business under subsection 392–20(1) if the business is carried on by a trust and the entity is presently entitled to trust income. (3) A CGT asset is also an active asset at a given time if, at that time, you own it and: (a) it is either a share in a company that is an Australian resident at that time or an interest in a trust that is a resident trust for CGT purposes for the income year in which that time occurs; and (b) the total of: (i) the market values of the active assets of the company or trust; and (ii) any capital proceeds that the company or trust received, during the 2 years before that time, from CGT events happening to its active assets and that the company or trust holds in the form of cash or debt pending the acquisition of new active assets; is 80% or more of the market value of all of the assets of the company or trust.

Note: Paragraph 152–35(b) requires a CGT asset to have been an active asset over a period of time. For a share in an Australian resident company to meet this requirement, the company would have to satisfy the 80% test in this subsection throughout that same period. Exceptions (4) However, the following CGT assets cannot be active assets: (a) interests in an entity that is connected with you, other than shares and interests covered by subsection (3); (b) shares in companies, other than shares covered by subsection (3); (c) interests in trusts, other than interests covered by subsection (3); (d) financial instruments (such as loans, debentures, bonds, promissory notes, futures contracts, forward contracts, currency swap contracts and a right or option in respect of a share, security, loan or contract); (e) an asset whose main use in the course of carrying on the business mentioned in subsection (1) is to derive interest, an annuity, rent, royalties or foreign exchange gains unless: [page 25] (i)

the asset is an intangible asset and has been substantially developed, altered or improved by you so that its market value has been substantially enhanced; or (ii) its main use for deriving rent was only temporary. A company uses a house purely as an investment property and rents it out. The house is not an active asset because the company is not using the house in the course of carrying on a business. If, on the other hand, the company

ran the house as a guest house the house would be an active asset because the company would be using it to carry on a business and not to derive rent. 1.36 By using the above concepts in the analysis of estates, we focus on recognising the value of these interests to a client, irrespective of the entities, structures or arrangements through which such interests are owned or operated. This is the first stage of strategic analysis of the client’s estate and lays a foundation for developing a properly consolidated view of the property elements within an estate. The form of ownership of these assets needs to be understood in order that effective succession and wealth extraction strategies can be created. A knowledge of property law is essential before attempting any ownership verification of an estate. Estates advisers who are not experienced in property law should only attempt this aspect of an estate situation review in conjunction with an appropriately experienced lawyer in all but the simplest of cases (for example, client with cash in bank only and current bank book or statement in hand).

Indirectly owned or managed investment capital — the importance of management rights 1.37 Active business assets are those normally used in the operation of a commercial or not-for-profit enterprise. It is crucial to note that the following activities do not comprise an active business for tax law purposes: receiving rent, dividends or interest, an annuity, royalties or foreign exchange gains; receiving an interest in a superannuation fund, approved deposit fund or life insurance policy defined by s 160ZZI(1) of the Income Tax Assessment Act 1936 (Cth) (ITAA 1936). 1.38 Passive investment capital is generally understood to be that capital that is involved neither in a trading business nor held purely for personal use and enjoyment and is used in the expectation of providing an investment return to its owner. While it is possible for individuals to own and manage these types of assets, it is also normal for structures such as superannuation funds, family trusts and investment companies to be used to manage these assets for the

long-term benefit of a person and their broader personal or family interests. Where assets are managed by structures such as trusts and companies, the assets under their management will not normally form part of the direct testamentary estate of a person. Arrangements in addition to a will need to be made if succession [page 26] to the control of these structures is to be expressly managed through an estate plan. Where capital is held as part of a superannuation fund, the impact of the relevant legislation on the intentions of the client needs to be understood. Normally, the succession to governance of structures such as family trusts and investment companies needs to be implemented as a distinct part of an estate planning engagement. This is in addition to any will or other form of personal estate representation. This approach is necessary because of the independent legal personality or distinct contractual or legal relationships that govern estate structures. As a first step, in an estate situation review it is necessary that all management and governance rights operating to control the management and succession of entities within a person’s estate need to be identified. Whether those rights adequately respond to the personal or estate accountability intended by a client is a matter for review in the planning phase of the engagement.

Other jointly or solely owned property 1.39 In this asset class we are dealing with property that is directly owned by one or more people. While partnership, trust documents and ownership agreements may be used to regulate the relationship between co-owners, generally these assets will be directly owned by one or more people without the benefit of any additional ownership agreements. Normally all these assets, other than joint tenancy property, will form part of the testamentary estate of a person.

Philanthropic social capital 1.40 In this class we deal with the capital that is accumulated in structures such as Private Ancillary Funds (PAFs) and foundation accounts (FA) through which social accountability programs are operated. Taxpayers are given a choice whether to pay tax accrued on the income they generate or to use the money that would otherwise be paid in tax for further tax deductible purposes. This is generally a choice to spend some or all of the money otherwise due to the Australian Taxation Office on recognised business expenses, an appropriate contribution to superannuation or a donation to a deductible gift recipient (normally a charity or private foundation). These structures have perpetual succession and, in the case of PAFs, may be operated by a family and require a succession plan of their own. These vehicles can also be testamentary beneficiaries and should be taken account of in the drafting of a client’s will.

Establishing the net worth of a client 1.41 As with estate assets, liabilities must first be recognised before they can be controlled. You cannot understand the net wealth of a client without understanding to what liabilities they are subject. A distinction needs to be made between financial liabilities and what can be generally termed ‘life risks’ which can diminish the value of an estate in the future. [page 27] 1.42 Economic liabilities A liability in an economic sense is generally seen as a financial loss, expense or payment. The Australian Accounting Standards Board defines liability as ‘future sacrifices of economic benefits that the entity is presently obliged to make to other entities as a result of past transactions or other past events’. They may be created by contract, voluntary conduct or operation of law. The result of a liability is a diminution of the

value of an estate. Liabilities can include: debts; guarantees; sureties; indemnities; agreements and promises; and the result of creating damage to another person. 1.43 Life risks An estate can be diminished by factors outside the control of an individual, as well as matters in the control of third parties. Liabilities traditionally included in this category are: insurable risks such as death, sickness, accident and trauma; occupational risks such as the key man risk in a business that is dependent on the personality and skills of one or more key people who cannot be replaced. For example, the risk to a specialist surgeon who only sells personal skills; that income will not survive death or incapacity. In such cases, absent insurance, the only extractable wealth for the specialist surgeon is the income from undertaking his or her daily occupation; individuals not behaving as we expect them to act or as they otherwise agree to act. For example, an undocumented expectation that the remaining business partners will buy out the interest of a deceased or incapacitated partner at a full and fair value or at all may not be fulfilled, thus diminishing the estate of the departing partner; divorce and personal relationship breakdown; and diminishing legal and testamentary capacity and cognition. Once all relevant risks are identified, then a strategy and actions may be put in place to minimise the impact of these risks on the estate. The objective of an estate situation review is to first obtain an understanding of the liabilities and life risks to which the client believes they are subject. A consideration of whether the client’s understanding of these matters and

their assessment of their net distributable wealth is accurate is part of the planning phase of the engagement.

Issue 4 — Estate management — how is this to be effected? Recognising the client’s role and allocating responsibility 1.44 In an estate situation review it must be recognised that the client retains full management responsibility for their affairs until they lose legal capacity or alternate representation and management roles are created by the client. [page 28] Advisers must in their initial engagement with the client establish what level of management the client expects to have in their affairs and what level of assistance a client is seeking in carrying out the management of their affairs. A client’s expectations about this issue are a critical part of any estate situation review. 1.45 It must be remembered that management roles can be created informally by the undocumented expectations of clients about the role and function of their advisers. A common misconception occurs about the adviser’s role when a client asks ‘what would you do in my situation?’ 1.46 The Macquarie Dictionary defines management as ‘the act or manner of managing; handling direction or control’. Estate management should always be founded on an appropriate estate administration plan. Estate administration needs to be approached separately from the strategysetting function of estate planning. Improved estate administration is a measure of successful estate planning. The operation of the estate administration plan includes the responsibility for its ongoing review and retuning. It is in this review function that the adviser’s skill in managing the consequences of life changes of significance to the client can first be valued and appreciated.

Where one person owns and controls an estate in its entirety, these distinctions can seem theoretical until that person loses the capacity to manage his or her affairs. As estates grow in size and complexity, so does the management role within the operation of the estate. As soon as a person contributes to an occupational superannuation plan, they are sharing the management of their estate with a superannuation trustee. If persons act to ring fence their inheritance by having their parents use a testamentary trust, then they are sharing the management of their estate with their parents’ executor or trustee. 1.47 Once the accountability of the client is understood and a snapshot is taken of the current position of an estate, it is straightforward to recognise the span of beneficial ownership that controls estate assets. Once this is documented, the issues surrounding asset owner representation, succession management and private capital governance policy can then be approached. Some key questions that need to be asked in relation to these issues are: What class of assets should the manager control? What performance and conduct policies should be enforced against the manager, if that person is not the asset owner? How should community and social accountability be drawn into the mandate of the manager, if any? How should the client balance the trans-generational interests within their estate, in relation to the manager’s mandate? How should the incapacity or death of the manager be handled? For what outcomes is the estate being managed? What scope of professional advice is needed in order to manage the estate? [page 29] How should the estate advisory team be constituted and managed? 1.48

Where management of an estate is spread across multiple parties, a

scheme of estate governance needs to be established if the estate is to respond in an orderly fashion to the death or incapacity of a manager. For this to occur, a level of collaboration needs to be established between the client, the relevant estate managers and their professional advisers. This collaboration needs to extend to: commitment between the client, estate managers and advisers that they will all serve the common cause of the client; all stakeholders having equity in the client service relationship; appropriate trust being established between all parties working within the framework of the estate plan, including commitments to timely communication; establishing relevant action plans and mandates to implement the agreed goals of the estate plan; and periodic review of the progress of the execution of the estate plan and the appropriateness of the plan to the ongoing needs of the client. It is in defining the delegation of management from the client that the role and function of legal personal representatives such as executors and attorneys and other estate fiduciaries and managers are determined. 1.49 The focus of the initial estate representation review discussion is to ask the following questions: ‘Who assists you in the management of your affairs?’, ‘Who have you appointed as an attorney, executor, guardian or trustee to date?’ and ‘What do you see as the foreseeable limits on your ability to manage your affairs?’. With answers to these questions to hand, consideration can then be given to how management rights in a client’s estate should be distributed between the client and others and on what terms this should occur.

Constraints on estate management and operations Client and family ability and capacity 1.50 Client ability to manage their affairs can be influenced as much by attitude, education level and commitment as medical, social or psychological factors. The reality from an estate management perspective is

that, irrespective of these factors, clients retain management responsibility for their affairs until they delegate part or all of that responsibility to another person, formally or informally. 1.51 Assessing the capacity of clients is part of the engagement management responsibilities of all professionals. 1.52 Professional risk management requirements often mean advisers are directed not to take on estate management roles in order that they remain solely advisers to the client. In this situation, it is the professional role of the adviser that constrains the range of functions that can be performed for the client. It is a necessary part of engagement management that this limitation must form part of the initial disclosures by the adviser to their client. [page 30] 1.53 Vulnerability and incapacity of family members and dysfunction between a client and their family or kinship group can constrain the ability of the family or kinship group to become a self-sustaining social and economic entity. Incapacity in this context includes insolvency of a person or company or receivership of an economic entity such as a trust, partnership or joint venture. 1.54 The legal capacity of the client, legal personal representatives or other people involved in the client’s affairs will always constrain how that person may be able to respond to a client’s estate administration plan. 1.55 An estate situation review gives the adviser an opportunity to assess whether any of these factors exist. The existence of these constraints will have a normative impact on how the adviser approaches the planning phase of the engagement.

Client territorial connections 1.56 The location of a person in any particular legal jurisdiction does not determine the full span of law to which their estate must respond. In Australia, the differing state and federal taxation, property and succession

laws create a patchwork which does not allow uniform management of a person’s estate under a single jurisdiction. The holding of assets or the undertaking of business in offshore jurisdictions provides additional complexity for the representation and management of a person’s interests including the selection of representatives and the management of taxation obligations. In this rapidly globalising world, the estates practitioner needs to establish the jurisdictional footprint of the estate as soon as possible in their engagement. The following key factors will primarily determine the territorial scope of an estate: the domicile and residence of the client; the domicile and residence of all relevant family members and estate claimants; the location of estate assets and liabilities; the nature of the entities or financial resources through which assets and liabilities are managed for a person; the manner in which central management and control of the client’s affairs is asserted and operated; the legal compliance profile of a person in all relevant jurisdictions; the jurisdiction in which estate assets and liabilities are acquired, created or managed; and the jurisdictions in which a person operates a business or otherwise has a permanent establishment for taxation purposes. Estate plans must respond to the territoriality of both the person and their assets. Succession to control of assets and the response of those assets to liability claims, including taxation in the jurisdiction of location, must be considered on a case-by-case basis. [page 31]

ESTATE SUCCESSION PLANS Introduction 1.57 The estate situation review is the initial service that delivers either the first measure of understanding and control of the client’s estate, or the reassurance to the client that sufficient and adequate control is currently operating in the estate. While passing on a client’s financial capital may be seen primarily as a simple process of property transfer, passing on the relationship capital and values is a more complex challenge. In discussing their values, clients provide a storehouse of their concerns, beliefs and aspirations for themselves, the world and their successors. This may be expressed in a number of forms, but here are some of the more easily recognised drivers which define personal and family values: personal and family behaviours; beliefs; financial potential; talents; and passion and social accountability. These drivers may in turn be expressed in a number of ways, some of which include: investments; family owned business; career; relationships; life balance; and philanthropy. Estate analysis at this level only produces a series of inputs and outputs of estate activity. It fails to provide any insight or control over how clients produce these outcomes.

Passing on your values 1.58 Clients transfer their values to others largely as a function of the level of care they show for themselves, their family, their community and their successors. While there are a multitude of operational examples, here are some threshold questions that assist in establishing a framework to manage the succession of a client’s values and not just their capital: Who do you trust to represent you, during your life (whether incapacitated or not) and on your death? To whom are you accountable? What impact do you want to have on society and your community? How will your beneficiaries cope with their inheritance? [page 32] What people other than you have rights that attach to property that you possess? What promises, warranties, indemnities or contracts that you have made will survive your death? Do you wish to provide fixed or flexible interests in your estate? Are there disabled or disadvantaged people in the group of people to whom you consider yourself accountable in the management of your estate? If so, do you have a view on how best to deal with their interests? How do you plan to extract the value of equity you have invested in your business interests or other estate capital management structures? What life and financial risks are you under and how do you intend to minimise those risks? Should the estate management documents of you and your spouse or partner become the estate planning platform of your descendants? How concerned are you about all the risks to which your spouse,

partner and descendants are subject? Do you consider your inheritance path and tax payment obligation as financial resources? How do you expect your family to operate in the event of your incapacity, disability or death? 1.59 Depending on the answers to these questions and the objectives of a client, a number of activities can then be undertaken to carry out the intentions of the client. These activities normally include, as appropriate: the making of a will to express the scope of care and accountability a person has to the network of associations to whom they hold themselves accountable; the making of a power of attorney or guardianship to express the trust that care will be extended to the client by others; the establishment of appropriate trusts or other structures to provide a long-term capital management vehicle for a family or other range of beneficiaries; the establishment of private foundations to ensure the client has the social and community impact they want during their life and after their death; the making of business succession arrangements which not only express the care a client has for the transfer and ongoing success of their business but also the self-interest a person has in ensuring the endurance of the business and appropriate wealth extraction and income for that person from the business; the establishment of formal governance programs for long-term capital management structures of a client such as trusts and companies; the establishment of formal mentoring and education activities within families and a client’s relevant social networks that assist a client, their representatives and beneficiaries to establish a common framework [page 33]

of values and objectives from which an appropriate estate governance program can be agreed and operated; the establishment of memoranda of wishes to guide the administration of discretions and powers that a person grants to their representatives as a result of their estate planning; and the creation of histories and the maintenance of records that explain the heritage and culture of a person, their family and broader community. Asset value is only one component in the determination of an appropriate estate management plan for a client. Taking the values approach outlined above gives the estates practitioner a firm base of instructions from which a client’s objectives and intentions can be dealt with comprehensively. Over the years, many estate disputes have occurred because there is insufficient communication within families about the issues summarised above. Congruence of values within families and beneficiary groups aids in the preservation of capital as, through commonly held and discussed values, common objectives can most rapidly be agreed. The establishment of an effective estate management plan that has the support of clients’ beneficiaries and congruence with their values can eliminate the source of beneficiary dissention that results in family disputes and estate litigation.

Passing on your capital 1.60 The fundamental choice in structuring an estate administration plan is whether to use direct asset ownership or indirect, structure-based asset ownership approaches, or a combination of both. Traditional will-making assumes all of a person’s assets will be personally owned by them at the time of death and it is appropriate for that ownership to be passed directly to the named beneficiaries of the will-maker. The will operates as the instrument of conveyance of ownership of estate assets, or their value, subject only to the terms of the will and the law. In current times, having regard to the longevity of people and the life risks to which they may be subject, it is these traditional assumptions that need to

be revisited by the estates practitioner. Longevity produces more overlapping in later life stages between generations. We expect this to drive more dynastic thinking within families who are concerned to preserve their capital to support their successors. Even if parents remain committed to spending their kids’ inheritance, ensuring that capital growth is maintained by clients in retirement is key to preserving the real (inflation adjusted) value of their estate for the full extent of their lives. Inheritance value preservation is a by-product of this process. The result is that a person needs to consider the wisdom, in their circumstances, of separating the legal ownership of capital from its use in order [page 34] to enhance the preservation of that capital for the long-term benefit of himself or herself, their successors and broader interests. 1.61 Some of the key issues that need to be considered by a client include: Do you own all the rights in all the assets you possess? Can all the elements of the estate you currently possess be transferred to your successors? What is the extent of rights and assets that cannot be transferred to your successors? What assets in your estate are beyond the testamentary jurisdiction of your will and how are such assets to be controlled? What will be more valuable to your beneficiaries: passing over legal ownership of assets without sale, their net value after sale or the income stream to be generated by those assets over the life of an extended will trust? In reviewing a client’s answers to these questions, a picture can be formed as to whether an immediately vesting will, longer term will trust or other

estate-structuring approach is appropriate.

CONCLUSION 1.62 Estate planning provides a method for managing both the social and financial dimensions of a client’s life. The estate situation review is the foundation service of the estates practitioner, on which estate management, operations and reviews can then be based. Estate planning provides a mechanism to establish the current situation of the client’s estate. With that in hand, the client can plan to deal appropriately with the desired consequences of their accountability, longevity, diminished capacity, disability or death. In the following chapters we build on these conceptual foundations by first laying out the professional service framework and formal law that underpins undertaking an estate review and the management and operation of estate plans. We then apply the concepts underpinning the estate review and the law as we examine a number of common estate advisory issues. The estate founder issues diagram at the end of this chapter sets out a simple topic framework that can be applied to guide initial estate review interviews and the client reporting from those interviews. 1.63 Estates practice is an inherently multi-disciplinary activity that, for the more complex cases, requires close collaboration between advisers, clients and estate managers. In the simplest estates, this will be a straightforward conversation with the client because these roles are all held by one person and, therefore, the discussion may be confined to one adviser. However, with estates of greater complexity, the estates practitioner will have to enlarge the scope of estate services to deal with the complexities concerned, including teaming with other advisers where required. This will in turn require all professional advisers to define carefully the boundary point of their services in trusts and estate engagements. [page 35]

As we approach estate planning in this context, we recognise that it is primarily a relationally focused client-centred service based on the effective understanding and representation of the risks to which a client is exposed and the intent and interests held by a client. Carrying out the estate situation review and then establishing the estate administration plan delivers the necessary feedback to a client that facilitates the administration of a client’s affairs being improved and more closely aligned to their intentions. The diagram at the end of this chapter and those included as Appendices to this chapter provide a visual summary of the approach and process of work that is carried out in the initial phase of an estate planning engagement. Coordination of estate management outcomes will remain the role of the client and any lead or other adviser with whom the client chooses to work. Professional estates advisers and managers will always be required to fulfil the mandate of the client. In this book we set out what we consider are appropriate practices that should guide the delivery of various estate services to clients. In our view, all clients should receive an appropriate measure of estate planning as it is only by that process that we come to know the client and their affairs sufficiently to enable appropriate professional services to be delivered. What clients then do as a consequence of the planning can be tailored through recognition of the characteristics of their estate, their priorities, interests and objectives.

REVISION QUESTIONS 1. 2. 3.

Which dimensions of a client’s life need to be initially understood before proceeding with an estate situation review? Compare and contrast the role of an estate situation review with an estate administration plan and an estate succession plan. When creating an estate strategy, what is the difference between

4. 5. 6.

7.

8.

an estate liability and a life risk? Which principles and concepts define the nature and extent of a person’s estate? How can a person pass on their values through their estate planning and administration? How might a client’s wishes for their estate administration be constrained by influences outside the immediate control of the client? What are the distinguishing characteristics of the professionals who may normally be appointed to an estate planning engagement and the range of services they may provide? What are the elements of a client’s wealth? Describe these elements and provide examples.

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1 2 3

See . See . See, for example, the occupational categories in the member search function at . See the references at and . See the information at . See the information at then search for 1370.0 — Measures of Australia’s Progress, 2010. See . See . For more information about quiet leadership, see the information at . For example, lawyers acting as estates practitioners will be primarily regulated by their professional rules of conduct. For a discussion of the issue of how ideas of collective tribal property have evolved, see . See also . See . See , Relationships Register Regulation 2010 (NSW) reg 4. See s 3 of the Probate and Administration Act 1898 (NSW). See . Compare and contrast the definition at . A CGT asset comprises property. In this book the term property is used in its technical legal sense. This is explained further in Chapter 5.

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CHAPTER 2 ESTABLISHING AND MANAGING THE ENGAGEMENT INTRODUCTION 2.1 In Chapter 1 we introduced the idea that a situation review is the first step in analysing the complexity or not of a client’s affairs. The results of the situation review can then be used as a filter which helps set the scope of an estate advisory engagement. It is the completion of the client’s estate situation review that grounds the overall estate planning assignment in the current reality of the client. A measure of successful estate planning is the establishment of an operating plan for the administration of a client’s estate that fulfils their wealth preservation and transfer objectives. In this chapter we shift focus from considering the current situation of the client to issues an adviser needs to consider about how their professional responsibility to the client determines: how they approach completing the work requested by the client; the normal process that should be taken to organise and complete that work; how a professional practice is best organised and operated to facilitate the completion of estate planning work; and how the practitioner sees and explains how their professional role operates as part of the broad field of estates practice.

In Chapter 9 we will provide examples of how this estate planning approach provides a service platform that facilitates the production of an estate administration plan that in turn guides the ongoing administration of a client’s estate. 2.2 At the point of initial engagement with the client, the estates practitioner needs to establish (normally as a matter of contract) who is responsible to manage: the professional boundaries of all professional advisers engaged by the client in an estate services assignment; and the professional engagement mandate of those advisers. By default, these matters are a responsibility left with the client who may not be well equipped to integrate the advice from multiple professionals or [page 38] service providers. If this is in fact the reality of the engagement, we believe that the practitioner has a tortious1 obligation to warn their client of the extent of responsibility the client retains in an engagement. A professional adviser who takes a lead adviser role is normally able to improve the efficiency, effectiveness and experience of their client in an estate services engagement, but only to the extent to which the client permits this role to emerge in the management of their affairs. Estates practitioners are normally expected to deliver this service in addition to those services enabled by their primary professional or occupational discipline. We will now focus on issues that flow from a client’s selection of their adviser including common law duties in the relationship. We then deal with the general professional regulatory landscape for trust and estates practice and a number of matters of practical application to managing professional responsibility in estates practice.

CLIENT CHOICE — WHAT KIND OF

ADVISER DO I NEED? 2.3 Clients often define the value of their advisers in terms of the work product they produce, for example, an investment policy, will, power of attorney, trust deed, family constitution, accounts or tax returns. No one professional can produce all the transactional services needed by a client to facilitate their estate administration. At the point of initial engagement with an estates practitioner, the client needs to be challenged by that person and be required as part of their engagement to consider the extent of responsibility and accountability they expect from their adviser. The ability, competence and resources available to the estates practitioner will determine the scope of services the practitioner can in fact deliver to the client. For financial advisers, at the risk of not complying with their obligations under the Corporations Act 2001 (Cth), they must also adhere to the following prescription in s 961B(2)(d) of that Act: (d) assessed whether the provider has the expertise required to provide the client advice on the subject matter sought and, if not, declined to provide the advice; 2.4 As a result of this engagement management process, a client’s requests for assistance may need to be refused if they fall outside the skill, ability or competence of the practitioner or the resources available to that practitioner through their firm. 2.5 The first obligation of a practitioner is therefore to establish the fact that they are a suitable fit for the client and have appropriate capability that enables the practitioner to deliver the value or advantage their client seeks from their engagement with the practitioner. [page 39] The concomitant responsibility of the client is to select an adviser who is competent to deliver the outcome sought by the client. Just because the

client and practitioner may have some historical dealings does not mean that makes the practitioner suitable for the estate planning engagement let alone the follow-on estate administration services that may result from the client establishing, through the planning process, a revised plan for the administration of their estate. 2.6 There is no single modality of professional practice. The better view is that professional practice is expressed as a continuum of practice methods that includes the following key archetypes:2 An adversarial advocate or transactional specialist advocates or is the agent of the client’s interest above all else other than a duty to the rule of law; pursues the result desired by the client with minimal regard to the impact of that result on others; focuses on delivering the transactional result desired by the client; and has the primary focus that they ‘are going to bat for the client’. A ‘responsible’ adviser is a guardian of the professional knowledge represented by the adviser; shows dispassion and autonomy from clients and private interests; is set above or distinctly from the personal interest of individual clients; and is often authoritarian in their approach to clients. A moral activist is an agent for social justice in the administration of the client’s affairs; and promotes social and political justice through their professional activities. A relational adviser practises the ethics of care;

takes responsibility for people, communities and relationships in the administration and management of the client’s affairs; serves the best interests of clients and others in a holistic way that incorporates moral, emotional and relational dimensions of a problem into appropriate professional solutions; and responds with empathy and professionalism to requests from clients such as the following questions: ‘I want my money to last to give to my grandchildren.’ [page 40] ‘I am a business owner and am concerned in this downturn about being sued; how can I protect my capital and provide security for my family?’ ‘I am spending my money on my wife and myself; the kids can simply have whatever is left over when we are gone; just break up what’s left evenly between the kids as simply as possible. Please help us have a fun and fulfilling life, for as long as it may last.’ ‘I have spent all my life building up the family business. Times have been good to us. My children are running the business but my wife and I still own all the shares. How do we balance the interest of ourselves and our children? How do we manage our estate for ourselves and our bloodline?’ ‘My affairs are in a mess, can you help sort me out?’ ‘I am getting old and do not know who to trust, can you help me manage my affairs?’ 2.7 The main modalities of estates practice that flow from the activities of these practitioner archetypes are: Relational practice — client interest-based advising in which the practitioner engages in the practice of the ethics of care. In this mode, the practitioner is engaged to assist the client effect a change in their

affairs that enables a particular objective to be met, for example, the preservation of an asset for a purpose, the delivery of support for a family member at a future point of time on terms the client wants to determine or the preservation of control of a business inside a family. This modality requires the adviser to take a stewardship role in the client’s affairs and that in turn will often require the practitioner to manage the identification and completion of multiple aspects of an assignment that normally will require the services of more than one contributing professional. Transactional practice — where the professional is engaged only to produce a defined service result, for example, for a lawyer, the production of a contract or other document or the acquisition or disposal of an asset. For a financial planner this may result in the production of an investment strategy, the delivery of portfolio management services or identifying the consequences of the acquisition or disposal of particular financial products or services. For an accountant it may be the production of accounts or tax returns. For a tax adviser it may be identifying the tax effects of a particular strategy or the tax consequences of a particular action. Dispute resolution practice — where one or more parties in conflict seek the assistance of an advocate or adviser to work with them to resolve a dispute. This may involve using a range of dispute resolution processes and techniques that may be either adviser or curial led. [page 41] Clients need to be educated in what adviser type is available for the range of objectives they may have. For professionals, the ethical and legal requirements to which they may be subject including fiduciary duty and the obligation to act in the interest of the client means that, as part of their client engagement process, the professional must establish that they have the relevant skills to assist the client in the assignment. The interests of both client and professional are best served by ensuring that client needs and

adviser ability are appropriately meshed. It is the manner in which the professional follows the initial client engagement process that enables this to occur. The suitability of the adviser for the proposed work can be communicated to the client simply through statements such as ‘I believe I can help you because …’ or ‘I have the following experience (knowledge) that is needed to solve the problem you have outlined …’. 2.8 While it is possible for an adviser to develop competency at more than one modality of practice, at a specialist level of practice, in our experience, it is normal that a maximum of two modalities per practitioner are followed. In developing specialist competencies, professionals need to reflect on how their own character may dispose them towards these practice modalities. Estate planning is normally considered to be primarily a relational professional practice. Managing family dysfunction, conflict and dispute may engage dispute resolution practice skills. Estate planning is not normally considered a transactional undertaking. All professional practice modalities are valid and potentially appropriate for an assignment. It is in the meshing of client need and adviser ability that a high quality service outcome for the client is assured.

CLIENT DUTY — AN OBLIGATION TO COMMUNICATE 2.9 In this age of consumer rights it is vital to remember that clients have substantial responsibility when employing a professional. The passive client who does not engage fully with a professional represents a substantial commercial and professional risk, which may be sufficient to reject a request for services. In Esanda Finance Corporation Ltd v Peat Marwick Hungerford (Esanda) [1997] HCA 8, the High Court, in approving the decision of Caparo Industries plc v Dickman (1990) 2 AC 605, set out the following tests to gauge whether a duty of care would be imposed on a particular professional relationship: that the information or advice would be communicated to the

aggrieved person either individually or as a member of a recognised class of people; that the communication of information and advice was for a purpose (not necessarily exclusively) that would be very likely to lead the aggrieved person to enter into a transaction of the kind that gave rise to a complaint or claim of damages; [page 42] that it would be very likely that the plaintiff would enter into such a transaction in reliance on the information given; and that the information was so acted on to the detriment of the aggrieved person. In the Esanda case it was also held that a client request was not necessary to initiate a duty of care. Where an adviser holds out information which people can reasonably expect to rely on, then a duty of care can also be attracted. This passage from Gummow J in the Esanda case illustrates the point: However, San Sebastian3 is not authority for the proposition that the necessary duty of care can only be found in a negligent misstatement case if the statement is made in response to a request for information or advice or made with an intention of the nature discussed above. The range of relevant circumstances is indicated in the following passage from the joint judgment in San Sebastian: The maker of a statement may come under a duty to take care through a combination of circumstances or in various ways, in the absence of a request by the recipient. The author, though volunteering information or advice, may be known to possess, or profess to possess, skill and competence in the area which is the subject of the communication. He may warrant the correctness of what he says or assume responsibility for its correctness. He may invite the recipient to act on the basis of the information or advice, or intend to induce the recipient to act in a particular way. He may actually have an interest in the recipient so acting.

2.10 As advisers adapt their service offerings from relational into transactional or commodity forms of delivery, great care needs to be taken when defining and managing the extent of the adviser’s duty of care. A commodity services offering will always be based on a limited set of facts. One size cannot fit all. Irrespective of the fact that a commodity solution may be proposed, the adviser has a duty of care to ensure that the selection of that solution is appropriate for the needs and objectives of their client. In order for both the client and professional to know the extent of the duty of care the client is owed, it is necessary there is absolute clarity about the needs or expectations of the client and the extent to which the professional is engaged to fulfil them. In our view, clients have an implied duty to be truthful to their advisers and to disclose all information requested by the adviser so that the extent of the adviser’s duty of care can be understood at the point of initial engagement. This duty is in addition to the legislated requirements for identity disclosure in the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth).4 The adviser has a counterpart duty to make the relevant inquiries of the client in order to understand the duty of care to which the client engagement must respond. The clarity of communication concerning these matters is the factor that will determine the extent to which compliance with legal duties at the point of initial client engagement, at least for consumer, [page 43] tort, fiduciary and anti money-laundering law based responsibility, in fact occurs.

Can these questions be answered at the point of initial engagement with a client, or immediately after the first meeting with the client? 1. What advantage does my client seek by using my services? Am I in the business of delivering this advantage? Why am I being

2. 3.

4.

5.

6.

engaged? What does the client expect of me? Am I in the business of providing this product or service at the price requested? Do I have the skills and resources to meet the client’s expectations? What is my core competence and how does this fit the expectations and needs of my client? Has my client imposed limits on this engagement which reduce my ability to assist the client? If so, how is this to be resolved with the client? If there are identified needs of the client I cannot fulfil, how is this to be dealt with? Responsibility can be passed back to the client to resolve or on to another professional if the client agrees. Are there particular characteristics of the client or their problem that make me unsuitable to take on this work?

It is the responses to these questions that will shape the opening communication with the client. The first test of whether an engagement should proceed is by asking the question ‘Do I know how I will create a satisfied client by carrying out this engagement?’ Being able to confidently answer this question may require a number of meetings with a client. At that point the initial engagement is actually to define the job, and the commercial terms for that task should be set. If this discipline is not adhered to, advisers can be caught in substantial ‘preengagement’ phases that incur very expensive resource costs to their firms.

CLIENT RESPONSIBILITY — AN ABILITY TO COMMUNICATE 2.11 Implicit in this discussion of the obligation of the client to communicate is the expectation that the client and professional

communicate as peers. Often that is not the case and the imbalance of power that results can dramatically alter the professional’s approach to discharging their duty of care. 2.12 Client vulnerability can be caused by not only a medical crisis or deteriorating health but also by a lack of education and other language, cultural, social or psychological factors. Advisers must not assume their client has the inherent ability to understand their advice. Clients equally cannot assume that if they cannot understand what their adviser is saying their interests will be inherently protected. [page 44] 2.13 Clear and well understood communication between adviser and client is essential for the adviser to discharge their duty to their client whether that duty is created by: the law of equity, including fiduciary obligations; the law of torts; the law of contract; legislation including: Corporations Act; and Australian Consumer Law.5 This responsibility to communicate rests equally on both client and practitioner. Feedback is essential as communication proceeds. Any lack of understanding must be clearly communicated between client and practitioner and then resolved to their mutual satisfaction. Clients who fail to adhere to this communication responsibility represent a threat to the practitioner’s ability to discharge their duty of care to the client. 2.14 Since the decisions of Commercial Bank of Australia v Amadio (1983) 151 CLR 447 and Garcia v National Australia Bank Ltd [1998] HCA 48 (Garcia), we have authority for the proposition that where one party in a relationship has a special disadvantage then the other party has a heightened

duty of care to them. It is necessary for advisers to consider how a special disadvantage might be created. In Garcia’s case (at [102]), the court cited the following passages from Blomley v Ryan6 with approval: The circumstances adversely affecting a party, which may induce a court of equity either to refuse its aid or to set a transaction aside, are of great variety and can hardly be satisfactorily classified. Among them are poverty or need of any kind, sickness, age, sex, infirmity of body or mind, drunkenness, illiteracy or lack of education, lack of assistance or explanation where assistance or explanation is necessary. The common characteristic seems to be that they have the effect of placing one party at a serious disadvantage vis-à-vis the other. This is a well-known head of equity. It applies whenever one party to a transaction is at a special disadvantage in dealing with the other party because illness, ignorance, inexperience, impaired faculties, financial need or other circumstances affect his ability to conserve his own interests, and the other party unconscientiously takes advantage of the opportunity thus placed in his hands. While the Australia of 1954 (the time of the Blomley v Ryan decision) was in some respects a simpler time and culture, reflecting on these comments from [page 45] our current perspective reminds us that the cases of diminished capacity and disadvantage in clients remain remarkably constant over time. The majority judgment in the Garcia case held (at [83]): The result to which I have come flows not from the fact that Mrs Garcia was a married woman in need of special protection, as such, from the law of equity. It flows from a broader doctrine by which

equity protects the vulnerable parties in a relationship and ensures that in proper cases they have full information and, where necessary, independent advice before they volunteer to put at risk the major asset of their relationship for the primary advantage of those to whose pressure they may be specially vulnerable. 2.15 It is therefore necessary when engaging with clients that advisers determine whether there is any vulnerability or disadvantage held by the client that should alter the way in which they approach the management of their duty of care. Factors to consider include, in addition to those cited: the ability of the client to communicate; the educational level required in order to understand the solutions recommended by an adviser; the cultural or social background of the client which may limit their ability to understand the options they have under Australian law or commerce, for example, a person from a civil law jurisdiction does not have the background to understand the concept of a trust; and the legal or testamentary capacity of the client. In response to these factors advisers may find themselves acting as follows: not proceeding with a particular recommendation; procuring independent advisers for one or more parties; educating clients about the reasons why certain options exist and evaluating the results of that education before placing any recommendations before them for decision; and requiring evidence of capacity or legal personal representation before proceeding with an engagement. Advisers need to remember that communication is about what the client understands, not what the adviser intends. If the adviser intends to change the client’s understanding about their affairs in a way that will endure over time, then the adviser needs to determine how those educational values will be delivered, and assessed as being delivered, if client satisfaction in the

engagement is to be maximised and professional duty discharged. If the adviser is unable to communicate with their client in a way that the client can understand and then evaluate and respond, it may be necessary for the adviser to deal only with the legal personal representatives of that client. The appointment of those persons may be required before the substantive assignment can proceed. [page 46]

CLIENT RESPONSIBILITY — AN ABILITY TO DECIDE 2.16 Even with a commitment and ability to communicate and no special vulnerability or disadvantage, a client nonetheless may become overwhelmed by the consequences of a decision and therefore be unable to proceed further. This may delay the completion of an engagement for some time. To cater for this risk, the contractual terms between adviser and client need to clearly make the following points: It is the role of the adviser to present options for evaluation and decision. The client remains the primary decision-maker in the engagement unless they introduce a properly appointed legal personal representative to make a decision on their behalf. It is not the role of an adviser to make decisions on behalf of a client. The client must disclose to the adviser any legal jurisdiction other than Australia to which they or the management of their affairs is connected and any limit that may place on their ability to make decisions about their affairs in Australia. The adviser may terminate the retainer where a client cannot make decisions vital to its progression within a reasonable period.

The adviser is entitled to be paid as work is completed and billed, preferably monthly or at termination of the matter by either party. Where the adviser is dealing with the collective interest of more than one person, the impact of governance and the decision-making risk of the group interest needs to be expressly dealt with as a condition of the engagement. Where a client is engaged to a group interest or alternate decisionmaker such as an attorney, the client’s understanding of how financial abuse risk is to be managed in their affairs needs to be understood by all advisers and people otherwise engaged to the management of those affairs. Key choices about managing financial abuse risk include: doing nothing and relying on the right thinking and conduct of the group or alternate decision-maker; conditioning the appointment to reduce the perceived financial abuse risk; and providing formal mechanisms for the oversight or termination of the decision-making function of concern. Where, for example, a discretionary testamentary trust is to be recommended, it is necessary for the client to consider whether succeeding controllers of the trustee decision-making power will exercise their powers as the client expects or requires. If this does not occur, then the financial benefit the client is contemplating may not in fact be delivered to their successors. For an example of this, see Katz v Grossman [2005] NSWSC 934. [page 47] 2.17 Where estrangement is already present in family decision-making, then the impact of that on the representation, estate management and succession strategies must be considered. This will require the adviser to consider the extent to which, in the engagement, any of the following characteristics are being shown by clients or interested parties in any critical

issue of concern:7 hardening of position; debates and polemics; focus on actions not words; concern about images and coalitions; concern about loss of face; presenting strategies of threats; receiving limited destructive blows; focus on fragmentation of the enemy; and commitment to proceed together into the abyss. 2.18 It is necessary for advisers to realistically assess the ability of their clients and their alternate decision-makers and successors to operate any strategy or solution they present for the planning period concerned. With the increasing longevity of clients and their families, it is vital that client and adviser agree the prospective time span over which an estate planning strategy needs to operate and how any consequential impact on continuity of decision-making and management is to be handled in the estate administration plan of the client. The functional ability of the client and their alternate decision-makers will create a normative limit on the longevity of any strategy or solution produced by an estate planner. Identifying those limits as early as practical in an engagement is part of the fundamental professional responsibility of an estates practitioner. Escalating differences that are proving not amenable to the normal operations of the enterprise and the need to provide mechanisms to assess the most appropriate path to deal with the difference before it hardens into a matter that is only amenable to adviser or curial led dispute resolution processes is a necessary part of the estate planning process. A necessary part of both estate planning and estate administration is recognising the extent of the embedded level of conflict in a family or decision-maker’s situation and deciding what technique, resolution process or combination of both is most suitable for the situation at hand. If a client is

not responsive to the significance of these issues in their situation, limitation of the estate administration strategy or solution approach advocated by the estates adviser may be needed. In extreme cases, the presence of irreconcilable conflicts within the family may bring the estate planning engagement to an end. [page 48]

PRACTITIONER RESPONSIBILITY AT INITIAL ENGAGEMENT 2.19 In response to these client duties and responsibilities, at the start of an engagement it is necessary for the practitioner, to the extent allowed by their professional or occupational competence: to act in accordance with their general legal, legislated and professional duties and responsibilities; to listen to the client and discern their needs, objectives, concerns and questions; to determine a focus for initial action and response to the client that proposes to deliver to the client the advantage the client seeks from their adviser; to establish any limitations on the engagement whether determined by the client or any feature of their situation; and finally to determine whether to proceed with the engagement in accordance with the constraints contained in the first point above.

STATEMENTS REASONABLY RELIED ON — GENERAL DUTY OF CARE

2.20 Resolving the above duties and responsibilities of the client in an engagement will normally also produce the situation of reliance from which the adviser’s duty of care to the client flows. In Hedley Byrne & Co Ltd v Heller & Partners Ltd (1964) AC 465, the parameters of tortious (legal wrong) responsibility for statements reasonably relied on were developed. The principles of that case have been described as follows:8 Where a person is so placed that others could reasonably rely upon his judgment or his skill or upon his ability to make careful inquiry, and a person takes it upon himself to give information or advice to, or allows his information or advice to be passed on to, another person who, as he knows or should know, will place reliance upon it, then a duty of care will arise. In the context of estate planning, this rule needs to be considered in the light of s 961E of the Corporations Act 2001 (Cth)9 that states: It would reasonably be regarded as in the best interests of the client to take a step, if a person with a reasonable level of expertise in the subject matter of the advice that has been sought by the client, exercising care and objectively assessing the client’s relevant circumstances, would regard it as in the best interests of the client, given the client’s relevant circumstances, to take that step. [page 49] Irrespective of whether fiduciary duty applies to the client/adviser relationship, all professional advisers have a tortious duty of care to their clients (liability for which may be found at least in the law of negligence) that arises out of the reasonable reliance a client can have on the statements of their advisers. In discharging this duty of care, it is vital therefore that advisers establish both the advantage and (if relevant) the threat their advice

represents to their client. It is for the client to decide whether any threats or disadvantage posed by a recommendation from an adviser outweigh the advantage to be gained by the client from following the tendered advice. 2.21 A key purpose of engagement management in professional service firms is to provide a procedural framework for the undertaking of professional work through which the duty of care established by the engagement is discharged. Professional bodies within the trust and estates field provide various codes of conduct that articulate each body’s approach to this issue.10 For example, the Financial Planning Association of Australia Ltd (FPA) sets out the following expectations of its members in its code of ethics:11 place the client’s interest first; provide professional services with integrity; provide professional services objectively; be fair and reasonable in all professional relationships; act in a manner that demonstrates exemplary professional conduct; maintain the abilities, skills and knowledge necessary to provide professional services competently; protect the confidentiality of all client information; and provide professional services diligently. In comparison, the Tax Practitioners Board recognises the following core principles of operation in its practitioner code of conduct:12 honesty and integrity; independence; confidentiality; competence; other responsibilities. You must not knowingly obstruct the proper administration of the taxation laws.

You must advise your client of the client’s rights and obligations under the taxation laws that are materially related to the tax agent services you provide. [page 50] You must maintain the professional indemnity insurance that the Board requires you to maintain. You must respond to requests and directions from the Board in a timely, responsible and reasonable manner. These principles reflect what is expected of the tax practitioner’s conduct. While fidelity to the client is a large and significant duty, it is clear that duties to the law, professional bodies and regulators have a substantial impact on the scope of responsibility of a professional adviser and how they operate. The practice systems of the firm in which the estates adviser operates must codify and conveniently make available the terms on which the firm operates so that the client can assess the suitability of that firm for their purposes. The terms of engagement of the firm need thus to also reflect the way in which the firm holds itself accountable to: the law; legislated requirements; and professional bodies with oversight of its operations directly or through employment by that firm of members of the professional body. 2.22 The manner of the adviser’s professional operation is further expanded by the applicable code of conduct of the professional body with oversight of the adviser and their firm. For example, the Financial Planning Association of Australia (FPA) Code of Conduct requires the following procedural elements be adhered to by advisers when performing their work: establish engagement; collect client information;

analyse and assess client situation; develop suitable strategies and recommendations; implement recommendations as decided by client; and review and re-evaluate estate administration plan. These six steps are not unique to the FPA, but rather reflect the FPA’s adoption of broader professional practice standards. While these approaches are useful, in order to determine whether a duty of care is sufficiently discharged by an engagement the adviser must first define the duty assumed in the engagement (the purpose of the engagement) and then evidence why and how his or her actions discharge that duty. It is a fundamental responsibility of professional advisers to operate their practice in a way that inherently responds to and resolves the duty of care raised and discharged in the course of normal client engagements. 2.23 Once advisers are clear about how they discharge this common law duty to their clients, attention can then be given to the rigour of legislative and professional body compliance requirements. To whom an adviser owes a duty of care may sometimes be difficult to determine. The case of Hill v Van Erp [1997] HCA 9 at 3 discusses this point as follows: [page 51] … the undertaking of a specialist task pursuant to a contract between A and B may be the occasion that gives rise to a duty of care owed to C who may be damaged if the task is carelessly performed.13 Where a client wishes to create a benefit for a third party and engages a professional adviser to assist in that work, the adviser is liable to not just the original client but also to that third party for the delivery of the intended benefit. Managing this liability means there must be great clarity between the adviser and the primary client about the intended scope of the adviser’s role in the overall engagement. Advisers need to continually challenge themselves to be able to resolve whether, for any given engagement, they

have an objective measure of when the engagement is complete and the expectations of the client satisfied. 2.24 The case of Howe v Fischer [2014] NSWCA 286 (26 August 2014) is a timely reminder of the normative effect the initial scope of engagement has on the extent of a practitioner’s professional liability. The following extract from the judgment (at [73]–[77]) is of particular note: Breach? The primary judge concluded that there was a breach of the retainer as she had formulated it (that is, a retainer to give legal effect to Mrs Fischer’s testamentary intentions and not merely to prepare a formal will and arrange for its later execution) because the appellant did not ‘procure’ the execution by Mrs Fischer of an informal will. On that view of matters, the retainer required that the solicitor prepare on the spot (or immediately afterwards) a handwritten document setting out Mrs Fischer’s wishes as communicated (presumably with no nomination of an executor but an implicit expectation that a grant of administration would be sought by a person with a clear interest) and then ‘procure’ the signing of that document by Mrs Fischer. Even if the judge’s formulation of the retainer is accepted (which, as I have said, it should not be), the most that could have been required of the appellant was the exercise of reasonable care in advising Mrs Fischer that it was possible for her to sign virtually immediately a statement of testamentary intentions in the expectation that, if she died or lost capacity in the relevant period of about two weeks, the Supreme Court might be expected to make a positive decision in relation to it under s 8(2)(a) of the Succession Act, thereby causing the document to be treated as her will. There could not have been any duty to ‘procure’ that Mrs Fischer do anything in response to that advice. On the formulation of the retainer that I consider to be required by the evidence, however, any duty to call attention to the possibility of making an informal will would have arisen only if the appellant was aware that some factor was at work that, as a matter of reasonable

foresight, might cause to be frustrated Mrs Fischer’s objective of making effective testamentary dispositions by means of a formal will in about two weeks time. The only such factor that could have been relevant was awareness, entertained as a matter of reasonable foresight, [page 52] that Mrs Fischer might be expected to die or lose testamentary capacity in the relevant period of about two weeks. For reasons discussed at [55]–[61] above, I am of the opinion that there was no basis on which the appellant should have been held to be so aware, as a matter of reasonable foresight. There was accordingly no breach of retainer. Conclusion Since there was no failure on the part of the appellant to perform his retainer, there was no breach by him of the duty of care he owed the respondent. It is therefore essential that the retainer established at the start of the matter set out clearly what actions need to be performed in order that not only the client receives the benefits initially sought but also the manner of carrying out that work minimises professional liability risks to the practitioner and their firm.

THE PROFESSIONAL LANDSCAPE OF ESTATES PRACTICE 2.25 No one profession or professional body controls all aspects of estates practice. The Society of Trust and Estate Practitioners (STEP)14 at best reflects an aggregation of single disciplinary practitioners involved in a single

but complex multi-disciplinary field of practice described as family inheritance and succession.15 The business of estates practice is in advising and assisting clients about wealth preservation and transfer for themselves, their successors and the causes they want to support. STEP is also a point of focus for the creation and dissemination of knowledge and practice derived from the experience of the operation of this field across disciplines and legal jurisdictions. 2.26 Estates practice is comprised of a complex tapestry of professional associations and regulation. We set out below a summary of that professional landscape so practitioners and clients alike can consider how much help may be needed to solve any particular problem that arises in the course of the administration of their affairs. The interest of the client is in making sure they have the right person for the right job. The interest of the practitioner is in making sure they are focusing the operation of their business on their core skills, competencies and experience, thus maximising their profits and minimising their professional liability. Value to the client often is created by the services of a lead adviser who synthesises the contributions of a number of providers to deliver to the client a comprehensive, quality assured estate administration solution that meets the objectives of the client. [page 53]

Professions — definition and regulation 2.27 While there is no single authoritative definition of ‘profession’, the term is generally accepted to mean those occupations that have the following features: They are founded on the mastery of a settled domain of specialist knowledge. They require the application of that specialist knowledge to be carried

out as a public service that may include activities in both the public and private sectors of the economy. There is self-regulation and autonomy in the carrying out of the profession. While traditional professions such as law, teaching and medicine are easy to recognise, the development of the market economy has brought into existence increasing numbers of specialist bodies of knowledge that have allowed the numbers of recognised professions to steadily expand. This section focuses particularly on identifying the recognised professional disciplines that normally become involved in a person’s estate and the schemes by which they are regulated.

Professional Standards Councils16 2.28 The Professional Standards Councils provides a national framework17 to allow professional bodies not only to establish schemes of self-regulation of a consistent quality but also to administer a program of professional liability capping that allows members of the professional scheme to limit their professional liability to their insurance indemnity cap. There are as at October 2014, 20 schemes operated under the Professional Standards Councils managed arrangements for capped liability schemes.18

Professional body regulation 2.29 Accountants, lawyers, tax practitioners and financial advisers also have a range of professional organisations that operate to regulate professional conduct. The scope of operation of such organisations is necessarily on defining the primary operational role of the professional. As yet, a unified scheme for managing the conduct of professionals in trust and estate multi-disciplinary engagements has not emerged. With the advent of incorporated legal practices and multi-disciplinary partnerships, we expect the legal profession to lead other professionals in the formulation of appropriate practice standards for trust and estates practice informed as appropriate by international competency defining bodies such as STEP.

[page 54]

Why are estate services linked to the financial service industry? 2.30 The financial service industry is defined by the Australian Bureau of Statistics19 to include those businesses that are ‘mainly engaged in the provision of finance, in investing money in predominantly financial assets, in providing services to lenders, borrowers and investors, in providing insurance cover of all types, and in providing services to insurance underwriters and to people or organisations seeking insurance’. The Australian and New Zealand Standard Industrial Classification Codes (ANZSIC) code structure for industrial classifications in Australia further describes participants in the industry to include: Finance 731 Central Bank 732 Deposit Taking Financiers 733 Other Financiers 734 Financial Asset Investors Insurance 741 Life Insurance and Superannuation Funds 742 Other Insurance Services to Finance and Insurance 751 Services to Finance and Investment 752 Services to Insurance 2.31 In this chapter the focus of our discussion extends to the role and responsibility of financial product and service advisers that are regulated by the Australian Securities and Investments Commission (ASIC) and how they can work in professional engagements with other professionals. The role of these ASIC regulated advisers is within the general ANZSIC area of Services

to Finance and Insurance. That said, trusts and estates practice is larger than this area. In practice the accountability of financial service operatives to the product provider or investor client must be clearly and transparently identified and managed in estate planning and administration focused engagements.

Financial adviser and evolution of professional aspects of their duties 2.32 The introduction of the Future of Financial Advice (FOFA) reforms20 as a policy direction of government has redefined the role of financial product advisers who are now being viewed as representatives of the interests of the [page 55] financial product consumer, not the financial product provider. This tension between being an agent of the consumer and an agent of the product or service vendor is not present in relation to other professions and occupations that operate within the financial services commercial sector. Those sector participants reflect their own unique business model and mode of operation and have not had the experience of the financial planners being developed first over the previous 25 years as a distribution channel for financial products and services. A combination of community sentiment, government policy and regulatory changes with FOFA and commercial realities mean that there is a clear segment of financial planners who aspire to be a recognised profession and source of client- rather than product-focused advice. In the pursuit of their clients’ objectives, the estates practitioners concerned need to be focused on the system, processes and methods by which they attain these objectives while also meeting the black letter of legal compliance and the ‘greyer’ objectives of professional risk management.

ASIC scope of regulation 2.33

ASIC has the responsibility to administer the following laws:

Corporations Act 2001 (Cth); Australian Securities and Investments Commission Act 2001 (Cth); Insurance Contracts Act 1984 (Cth); Superannuation (Resolution of Complaints) Act 1993 (Cth); Superannuation Industry (Supervision) Act 1993 (Cth); Retirement Savings Accounts Act 1997 (Cth); Life Insurance Act 1995 (Cth); and Medical Indemnity (Prudential Supervision and Product Standards) Act 2003 (Cth). ASIC also currently has the responsibility to administer compliance with these laws through the administration of: The regulatory system of consumer protection for: general insurance; life insurance; superannuation; retirement savings accounts; managed investments; securities (ie, shares and debentures); derivatives (ie, futures contracts); foreign exchange contracts; credit; and deposit-taking activities, eg transactions or savings accounts. [page 56]

The following industry codes of practice: Code of Banking Practice; Building Society Code of Practice; Credit Union Code of Practice; Electronic Funds Transfer Code of Practice; General Insurance Code of Practice; General Insurance Brokers’ Code of Practice; Financial Planners Code of Ethics and Rules of Professional Conduct; Internet Code of Conduct; and Consumer Credit Code. 2.34 From the above summaries it is clear that there is no one scheme of professional regulation that encompasses all the professionals that interact with a client and their estate. Nonetheless, due to the operation of ASIC and the Professional Standards Councils in the trusts and estates professional service sector there is a lack of coherence in the administration of professional standards that we expect will create demand for the rationalisation and normalisation of community expectations of professionals operating as trust and estates practitioners. In describing estates practice as a discrete multi-disciplinary profession, we are advocating the harmonisation of the knowledge required to administer the many aspects of a client’s estate. These administration requirements draw from a range of professional and other service inputs many of which aspire to professional status. We live in the age of occupational specialisation. Estates practice is fundamentally a specialisation of private wealth management that is focused on first defining the client’s estate service requirements and then carrying out the work necessary to manage not only the client’s estate but also the variety of occupations and disciplines that are required to assist the client in the administration of their estate.

International approach to describing estates practice

2.35 The constitution of STEP21 describes ‘estates practice’ as being followed by ‘individuals drawn from the legal, accountancy, corporate trust and other professions whose occupation includes a significant involvement, at specialist level, with any of the planning, creation, management of and accounting for, trusts and estates, executorship, administration and related taxes’. It is clear from this description that estates practice is inherently a multi-disciplinary activity that requires multi-disciplinary collaboration in order to operate as a discrete and identifiable profession. It is necessary for the estates practitioner to work continually with financial industry members, including financial product advisers. It is the common themes of professional responsibility, consumer protection and professional [page 57] service business competition that recur in the interaction of professionals in the common cause of the client. We will now focus on how estates practitioners and the financial advisory profession team fit together in an estate services engagement. Such a situation is an example of the professional responsibility challenges faced by lawyers, accountants, tax practitioners and financial product advisers as they work together in the common cause of the client.

Recognising professions are a business 2.36 The professions, except in so far as they relate directly to the financial service, education or health sectors, are generally recognised as part of the business service ANZSIC codes as follows: Business Services 781 Scientific Research 782 Technical Services 783 Computer Services 784 Legal and Accounting Services

785 Marketing and Business Management Services 786 Other Business Services It is in the pursuit of the business outcomes of profit and business sustainability that all professionals have a conflict with their responsibility to deliver the required outcomes of the client. The coalface for the resolution of this conflict is in the management of the initial engagement with the client. This is the time to define the goals, objectives and outcomes to satisfy the client, not just the price of the service to be delivered. While there is a professional duty to a clients, there is also the self-interest of the commercial entity serving the client in its profit. Resolving this conflict is best managed by optimising the operation of the client service business for the attraction and retention of clients rather than merely maximising the profitability of the sale of its products and services. It is the linkage between professional responsibility to clients, the need to attract and retain clients and the consequential need for profit to provide sustainability to the professional firm that shapes the enduring culture of professional services businesses and makes them amenable to oversight by professional bodies. Traditional sales-focused financial planning organisations continue to transform themselves into relational-based, advice-led businesses in response to the FOFA reforms. Business models focused on the profitable provision of client-led advice are starting to counterbalance traditional business models focused on the accumulation of funds under management for the financial services industry. It is the continuation of this trend that will drive the professionalisation of the financial planning sector. [page 58]

PROFESSIONALISM RISKS FOR ESTATES PRACTITIONERS

2.37 In managing professional practices, common themes emerge in relation to the areas of risk that a multi-disciplinary practice poses for both clients and professionals. These risk areas may be summarised from the perspective of the legal profession as: Governance concerns unauthorised practice; disciplinary jurisdiction over non-lawyers; self-regulation of the legal profession; advertising and solicitation; assessment of fees; insurance and compensation funds; trust accounts; and disbarred persons. Independence concerns the independence of legal advice; outside interests and ancillary businesses; fee splitting; and steering. Confidentiality concerns confidentiality; privilege; and conflict of interest. 2.38 Lawyers have had a special status within common law jurisdictions because of their role in the administration of justice, their formal function as officers of the court and the public policy requirement of according privilege to the communications between solicitor and client in order to foster candour in that professional relationship that results in the most effective advocacy of the client’s interests in the adversarial judicial processes that characterise common law jurisdictions. The Statement of Ethics released by

the Law Society of New South Wales serves as a good example of the professional focus of the legal profession:22 The true profession of law is based on an ideal of honourable service. We acknowledge the role of our profession in serving our community in the administration of justice. We recognise that the law should protect the rights and freedoms of members of society. We understand that we are responsible to our community to observe high standards of conduct and behaviour when we perform our duties to the courts, our clients and our fellow practitioners. [page 59] Our conduct and behaviour should reflect the character we aspire to have as a profession. This means that as individuals engaged in the profession and as a profession: We primarily serve the interests of justice. We act competently and diligently in the service of our clients. We advance our clients’ interests above our own. We act confidentially and in the protection of all client information. We act together for the mutual benefit of our profession. We avoid any conflict of interest and duties. We observe strictly our duty to the Court of which we are officers to ensure the proper and efficient administration of justice. We seek to maintain the highest standards of integrity, honesty and fairness in all our dealings. By contrast, the APES 110 Code of Ethics for Professional Accountants

issued by the Accounting Professional and Ethical Standards Board (APESB) provides the following fundamental principles at pp 12 and 13: (a) Integrity — to be straightforward and honest in all professional and business relationships. (b) Objectivity — to not allow bias, conflict of interest or undue influence of others to override professional or business judgments. (c) Professional competence and due care — to maintain professional knowledge and skill at the level required to ensure that a client or employer receives competent Professional Services based on current developments in practice, legislation and techniques and act diligently and in accordance with applicable technical and professional standards. (d) Confidentiality — to respect the confidentiality of information acquired as a result of professional and business relationships and, therefore, not disclose any such information to third parties without proper and specific authority, unless there is a legal or professional right or duty to disclose, nor use the information for the personal advantage of the Member or third parties. (e) Professional behaviour — to comply with relevant laws and regulations and avoid any action that discredits the profession. 2.39 A review of the above statements of ethics from the legal and accounting professional bodies displays both a convergence of client responsibility themes and particular differences that highlight the specific focus of each profession. It is these tensions that need to be managed in any professional service engagement. There is simply no settled way to absolutely reconcile the tensions between the range of responsibilities that these ethics statements illustrate. Professionals working together need to be mindful of the risk areas set out above as well as the particular code of professional ethics to which they are

[page 60] primarily responsible. The APESB provides the following guidance about dealing with these threats to the client/adviser relationship:23 100.7 When a Member identifies threats to compliance with the fundamental principles and, based on an evaluation of those threats, determines that they are not at an Acceptable Level, the Member shall determine whether appropriate safeguards are available and can be applied to eliminate the threats or reduce them to an Acceptable Level. In making that determination, the Member shall exercise professional judgment and take into account whether a reasonable and informed third party, weighing all the specific facts and circumstances available to the Member at the time, would be likely to conclude that the threats would be eliminated or reduced to an Acceptable Level by the application of the safeguards, such that compliance with the fundamental principles is not compromised. Perceived conflicts of interest or duty should be discussed first with the client and then with the other professionals in the engagement. It is the common allegiance of all professionals to the cause of the client that should provide the normative framework for communication between professionals in an estate services engagement. It is this proposition that we shall now further explore.

ASPECTS OF THE CLIENT/ADVISER RELATIONSHIP 2.40 It is impossible to prescribe all the circumstances that give rise to a client engagement. Nonetheless, the relationship of client and adviser creates a number of roles for the adviser that need to be identified and managed. The specification of this is part of the initial engagement management with the client. Examples of roles that need to be identified

and managed include the following.

Adviser as agent 2.41 The professional adviser is often engaged to undertake tasks on behalf of a client. In this role the client is the principal and the adviser is the agent. The law of agency prescribes that the agent must act within the scope of the authority that he or she has been granted. Breach of this rule will attract not only the possibility of a damages claim from the principal but also personal liability on the adviser for the act undertaken. Following this relationship model, it may be said that as the adviser is the agent of the client, it is for the client to define for themselves the outcomes they seek and, in the absence of procedural or legal compliance issues, those objectives must be followed. This position becomes blurred when the client asks the adviser to assist them in determining what the best outcome is for the client. It is in this ‘shared work’ role that advisers must be alert to the pressures for them to take on the moral and ethical position of the client and in this context the potential for the moral and ethical position of the adviser to conflict [page 61] with that of the client. As we will see, it is this duty to avoid conflict with the client that is arguably the primary responsibility of the adviser.

Adviser as fiduciary 2.42 The law imposes the highest standards of responsibility on personal relationships that are held to require the performance of fiduciary duties. The standard of care prescribed for fiduciary duties is higher than the normal contractual or tortious duties of care and includes a rebuttable presumption that the adviser has an undue influence over the client. It is the adviser therefore who bears the onus of proof that the terms of their engagement and remuneration do not conflict with the fiduciary duty to his

or her client. 2.43 Fiduciary duty is primarily a duty of fidelity and loyalty that requires the fiduciary to place the interest of the beneficiary of the duty ahead of their own. Implicit in this concept is a positive obligation on the fiduciary to avoid conflict between their interests and those of the beneficiary of the duty. Rather than prescribing positive obligations on fiduciaries to act, Australian law is focused on setting out the conduct that fiduciaries should not undertake in order that they avoid an allegation that their fiduciary duty has been breached. The fundamental duties of a fiduciary are therefore summarised as follows: A fiduciary must not place themselves in a situation where their interest will conflict with that of the client, without the client’s express, informed consent. A fiduciary must not make a profit out of the relationship without the client’s express, informed consent. 2.44 Professional advisers are generally recognised to owe fiduciary duties to their clients. Implicit in this concept is that an adviser can only have one client. In the case of an adviser being engaged concurrently by more than one person in a common cause, the professional duty is to the common cause of the clients engaging him or her and in the event of a conflict of interest developing between the clients sharing that cause, then they are entitled to personal representation independent of the initial adviser. In estate engagements where there are elements of collective interest (whether driven by family, social or community or tribal accountabilities), it is critical that advisers actively manage the common interest of all persons they are engaged to represent in the common cause of the client.

Adviser as a business proprietor 2.45 Estates advisers, in addition to the above matters, must nevertheless always remember that their professions are also businesses that are regulated by trade practices, commercial, corporate and consumer protection laws. While they have special duties in managing their client relationships,

advisers must also ensure that they conduct their business in accordance with all applicable laws. [page 62]

CLIENT INTEREST-BASED ADVISING — A REFLECTION ON THE DUTY OF CARE 2.46 It is the underlying responsibility of the professional to put the client’s interests ahead of their own. It is our view that this obligation should be the primary point of unification of the professional responsibilities of estates practitioners who practise in other professions complementary to estates practice. It is a common understanding of both the cause of the client and the limits of their professional function which unifies the services of each professional in an estate services engagement. The idea of the cause of the client may be further broken down into the following dimensions: the competence of the client to act; the family and other responsibilities to which the client holds themselves accountable; the needs, requirements and objectives of the client; and the procedural actions and legal compliance risks that flow out of fulfilling the goals and objectives of the client. In defining the client’s causes it is important to understand not only the family and personal accountability of the client, but also the scope of their broader social and economic objectives. The accountability of legal practitioners to the court and the public policy role they fulfil in the administration of justice are the factors that create the

majority of tensions between the above ethical frameworks and the client’s objectives of what they want to achieve in an estate services engagement. In order to illustrate the allocation of tasks that may arise in a client engagement, it is useful to look at the definition of the primary work areas of a lawyer and a financial product adviser.

The fundamental obligation to know your client 2.47 In RG146, its policy statement on training, knowledge and skill requirements of financial product advisers, ASIC has prescribed the following basic skill set for client advisory engagements. This skill set is in addition to the specialist knowledge that is relevant to the undertaking of financial product and service advice activities regulated under the Corporations Act. We recognise the general processes and skills set out in the following checklist can apply to all professionals undertaking an estate planning engagement:24 Establish relationship with client This may include: explaining the adviser’s role; establishing knowledge level of the client; explaining the services offered; [page 63] identifying the licensee responsible for the representative’s conduct; explaining fee and charging methodology; explaining the procedures for complaints handling. Identify client objectives, needs, and financial situation This may include collection of the following types of information from the client:

relevant personal, financial and business details; client objectives and goals; risk profile of the client; cash flows (required and projected); relevant taxation obligations. Analyse client objectives, needs, financial situation and risk profile This may include: analysing all relevant information; assessing if specialist advice is required; assessing the client’s risk profile. Develop appropriate strategies and solutions This may include: identifying and assessing available options via the above analysis; conducting relevant research/analysis/modelling; drafting plan/policy/transaction for presentation to the client; ability to underwrite and accept the transfer of risk.

Establishing a consistent method to discuss the relevant elements of this checklist with a client at the point of engagement assists the adviser to discharge his or her common law duty of care to the client as well as legislated and professional obligations.

Defining the scope of the regulated work of the adviser 2.48 This varies across the types of professionals who may become involved in an estate services engagement. We will focus our comments on

lawyers and financial advisers as these engagements, while common, have many overlapping functions that require careful management of both client expectations as well as service boundary points.

The authority of a lawyer 2.49 that:

Section 14 of the Legal Profession Act 2004 (NSW) (LPA) provides

14 Prohibition on engaging in legal practice when not entitled (1) A person must not engage in legal practice in this jurisdiction unless the person is an Australian legal practitioner. Maximum penalty: 200 penalty units. [page 64] This definition is deceptive in its simplicity. The breadth of application is underscored by the ASIC determination that legal services, by definition, are not financial services. This means that the roles of financial planner and lawyer are mutually exclusive. This challenges both professional groups to define efficient methods of professional interaction that serve the cause of the client. The regulation of lawyers is focused on service outcomes and needs to be distinguished from the regulation of financial services, which is task oriented. The Law Society of New South Wales provided further clarity on this matter by the release of supervised legal practice guidelines in December 2007 which stated:25 Legal services occur in four categories: assistance with analysis and interpretation of legal and factual issues; assistance with the enforcement of legal rights and obligations; assistance with the authentication and assurance of title to

property of any type; and assistance with the planning and management of a client’s legal affairs. Following these guidelines legal practice can in turn be defined as work: performed by a solicitor or barrister or their staff; involving the application of legal knowledge and skills; to the delivery of legal services; in the context of a solicitor/client relationship. The actual work of the lawyer can in turn be classified as follows: Giving Advice — the function of being an authoritative source of legal knowledge; the interpretation and application of laws and legal principles. Transactions — the function of authentication and assurance of title to property of any type. Representation — the function of representing the rights and interests of clients, particularly in situations of conflict. Design — the function of planning and designing structures, strategies and arrangements which regulate legal rights between parties. Clearly, more than legal knowledge and skills may be involved in the course of providing legal services to clients. Characterising and managing the provision of legal and non-legal services to the client provides the practical challenges to performing estate services engagements. In any other than the simplest of cases, clients may not be best equipped to manage the synthesis of all sources of advice. This is certainly the role of the estates adviser.

The authority of a financial adviser 2.50 Under the Corporations Act there is substantial regulation of the activities of both the financial adviser and the client in relation to a client

being able to access financial products, services and related advice. ASIC is [page 65] responsible for policing the occupational competencies of financial advisers and has prescribed the skill and knowledge requirements that must exist in order for licensees to meet their licence requirements. While the accounting, tax and legal professions are based on well-settled bodies of knowledge and have well understood competency testing, in relation to financial advisers, ASIC has historically had to take a ‘soup to nuts’ approach of developing training, compliance and licensing codes in order to establish standard occupational competencies in the financial service industry. 2.51 The responsibility and supervision of financial adviser training and education is now being recast as a result of the FOFA reforms of the Corporations Act.26 These reforms have not changed the fact that financial advisers are primarily engaged in mediating a client’s access to financial products27 and services.28 This responsibility is only one dimension of a client’s estate service requirements. Financial advisers who are engaged in estates practice must actively manage those aspects of their operations that are regulated by the Corporations Act in accordance with that Act separately but synergistically with the remaining aspects of their business that may be regulated under other laws or rules. Acting in the client’s best interest remains the golden thread that assists advisers to reconcile these tensions in their advisory role with their client. 2.52 It is the lawyer’s role to create the documents and instruments that affect the property and rights of the client. It is for the financial adviser to deal with the regulated activities that occur as a consequence of the use or exercise of the rights or property of the client. In the case of superannuation, for example, the superannuation fund is constituted by a trust deed that normally would be created by a lawyer. The trustee incurs legal compliance obligations by virtue of being a trustee and needs legal advice in relation to those obligations. The operation of the

superannuation fund is a business that has normal legal service requirements in its operation. The fund also undertakes activities that are regulated by the Corporations Act. It is in the last area of activity that lawyers and the financial service industry members must collaborate. To continue with this example, in relation to the interests of members in the superannuation fund the estate planning process can be used as a bridge to reconcile and coordinate the services of financial services and legal professionals. Explaining the rights of a member under the trust deed and the obligations of the trustee to the member is normally considered legal advice. The appropriateness of the possible benefit streams payable by the trustee to [page 66] a member to the particular financial needs of the client is financial advice. The family accountability protection of superannuation, its special status as exempt property under the Bankruptcy Act 1966 (Cth) and the relevance of superannuation in estate protection strategies is legal advice. From this basis, estate planning can be seen as a foundation discipline that is grounded in the lawyer’s primary role of defining and explaining the existence of the property (including rights) of a client. 2.53 From the perspective of non-legal practitioners, estate planning can also be seen as: 1. a method by which they provide their services to assist their client to identify, preserve and manage their capital and values for themselves, their family, their successors and the community; and 2. the procedural and professional framework for collaboration between professional service providers engaged concurrently in estate services engagements.

Multi-disciplinary engagement

2.54 While the formation of a multi-disciplinary firm to vertically integrate the operations of estates service practitioners into one business may be attractive, the most common form of estates service collaboration is the service or client-centred alliance. In our experience, the most robust alliances exist where there is clear definition of the following matters in the course of an engagement. The areas outlined below need to be adequately delineated in an engagement in order to achieve a successful collaboration between professionals: the lead adviser of the client whose responsibility is to define the requirements of the client and manage the process of delivery of the professional services that fulfil those objectives whether actually delivered by the lead adviser or other professionals; the professional competencies, roles and responsibilities of each adviser in an engagement; the remuneration of each adviser and the basis of the value exchange that underpins the adviser’s engagement; and an action plan that defines the activities within an engagement.

Getting the terms of engagement clearly specified 2.55 Lawyers in New South Wales have to be particularly careful that irrespective of the informality used by the retainers of other professionals with whom they work, their client arrangements have to comply with the provisions of the Legal Professional Act 2004 (NSW)29 (LPA). Propagation of the national scheme for legal professional regulation means that national scheme provisions will be largely [page 67] operable in many states and territories of Australia. Non-lawyer professionals working in estate planning engagements must understand the constraints on the lawyers’ engagement process, which include the following controls and provisions in New South Wales and counterpart provisions in other states:

LPA s 309 Disclosure of costs to clients (1) A law practice must disclose to a client in accordance with this Division: (a) the basis on which legal costs will be calculated, including whether a fixed costs provision applies to any of the legal costs, and (b) the client’s right to: (i) negotiate a costs agreement with the law practice, and (ii) receive a bill from the law practice, and (iii) request an itemised bill after receipt of a lump sum bill, and (iv) be notified under section 316 of any substantial change to the matters disclosed under this section, and (c) an estimate of the total legal costs if reasonably practicable or, if that is not reasonably practicable, a range of estimates of the total legal costs and an explanation of the major variables that will affect the calculation of those costs, and (d) details of the intervals (if any) at which the client will be billed, and (e) the rate of interest (if any), whether a specific rate or a benchmark rate, that the law practice charges on overdue legal costs, whether that rate is a specific rate of interest or is a benchmark rate of interest (as referred to in subsection (1A)), and (f) if the matter is a litigious matter, an estimate of: (i) the range of costs that may be recovered if the client is successful in the litigation, and (ii) the range of costs the client may be ordered to pay if the client is unsuccessful, and (g) the client’s right to progress reports in accordance with section 318, and

(h) details of the person whom the client may contact to discuss the legal costs, and (i) the following avenues that are open to the client in the event of a dispute in relation to legal costs: (i) costs assessment under Division 11, (ii) the setting aside of a costs agreement or a provision of a costs agreement under section 328 (Setting aside costs agreements or provisions of costs agreements), (iii) mediation under Division 8, and (j) any time limits that apply to the taking of any action referred to in paragraph (i), and (k) that the law of this jurisdiction applies to legal costs in relation to the matter, and (l) information about the client’s right: (i) to accept under a corresponding law a written offer to enter into an agreement with the law practice that the corresponding provisions of the corresponding law apply to the matter, or (ii) to notify under a corresponding law (and within the time allowed by the corresponding law) the law practice in writing that the client requires the corresponding provisions of the corresponding law to apply to the matter. [page 68] Note: The client’s right to sign an agreement or give a notification as mentioned in paragraph (l) will be under provisions of the law of the other jurisdiction that correspond to section 304 (Part also applies by agreement or at client’s election).

(1A) For the purposes of subsection (1)(e), a benchmark rate of interest is a rate of interest for the time being equal to or calculated by reference to a rate of interest that is specified or determined from time to time by an ADI or another body or organisation, or by or under other legislation, and that is publicly available. (1B) The regulations may make provision for or with respect to the use of benchmark rates of interest, and in particular for or with respect to permitting, regulating or preventing the use of particular benchmark rates or particular kinds of benchmark rates. (2) For the purposes of subsection (1)(f), the disclosure must include: (a) a statement that an order by a court for the payment of costs in favour of the client will not necessarily cover the whole of the client’s legal costs, and (b) if applicable, a statement that disbursements may be payable by the client even if the client enters a conditional costs agreement. (3) A law practice may disclose any or all of the details referred to in subsection (1)(b) (i)–(iii), (g), (i), (j) and (l) in or to the effect of a form prescribed by the regulations for the purposes of this subsection, and if it does so at the time the other details are disclosed as required by this section the practice is taken to have complied with this section in relation to the details so disclosed. This provision clearly highlights the primacy of the client in the professional relationship. The manner of the costs agreement is then regulated as follows: 322 Making costs agreements (1) A costs agreement may be made: (a) between a client and a law practice retained by the client,

or (b) between a client and a law practice retained on behalf of the client by another law practice, or (c) between a law practice and another law practice that retained that law practice on behalf of a client, or (d) between a law practice and an associated third party payer. (2) A costs agreement must be written or evidenced in writing. (3) A costs agreement may consist of a written offer in accordance with subsection (4) that is accepted in writing or by other conduct. Note: Acceptance by other conduct is not permitted for conditional costs agreements—see section 323(3)(c)(i). (4) The offer must clearly state: (a) that it is an offer to enter into a costs agreement, and (b) that the client may accept it in writing or by other conduct, and (c) the type of conduct that will constitute acceptance. (5) Except as provided by section 395A, a costs agreement cannot provide that the legal costs to which it relates are not subject to costs assessment under Division 11. Note: If it attempts to do so, the costs agreement will be void—see section 327(1). (6) A reference in section 328 and in any prescribed provisions of this Part to a client is, in relation to a costs agreement that is entered into between a [page 69] law practice and an associated third party payer as referred to in subsection (1)(d) and to which a client of the law practice is not

a party, a reference to the associated third party payer. 2.56 While there is certainly robust discussion about the death of the billable hour and the role of value billing in relation to the provision of legal services, the following provisions provide further impetus to these discussions: 323 Conditional costs agreements (1) A costs agreement may provide that the payment of some or all of the legal costs is conditional on the successful outcome of the matter to which those costs relate. (2) A conditional costs agreement may relate to any matter, except a matter that involves criminal proceedings or proceedings under the Family Law Act 1975 of the Commonwealth. (3) A conditional costs agreement: (a) must set out the circumstances that constitute the successful outcome of the matter to which it relates, and (b) may provide for disbursements to be paid irrespective of the outcome of the matter, and (c) must be: (i) in writing, and (ii) in clear plain language, and (iii) signed by the client, and (d) must contain a statement that the client has been informed of the client’s right to seek independent legal advice before entering into the agreement, and (e) must contain a cooling-off period of not less than 5 clear business days during which the client, by written notice, may terminate the agreement. (4) Subsection (3)(c)(iii), (d) and (e) do not apply to a conditional costs agreement made under section 322(1)(c) (Costs agreements between law practices).

(4A) Subsection (3)(c)(iii), (d) and (e) do not apply to a conditional costs agreement if disclosure under: (a) section 309 (Disclosure of costs to clients), or (b) section 310(1) (Disclosure if another law practice is to be retained), in relation to the agreement was not or would not be required in the circumstances referred to in section 312(1)(c) or (d) (Exceptions to requirement for disclosure). (4B) Subsection (3)(c)(iii), (d) and (e) do not apply to a conditional costs agreement made with a sophisticated client. (5) If a client terminates an agreement within the period referred to in subsection (3)(e), the law practice: (a) may recover only those legal costs in respect of legal services performed for the client before that termination that were performed on the instructions of the client and with the client’s knowledge that the legal services would be performed during that period, and (b) without affecting the generality of paragraph (a), may not recover the uplift fee (if any). [page 70] 324 Conditional costs agreements involving uplift fees (1) A law practice must not enter into a conditional costs agreement in relation to a claim for damages that provides for the payment of an uplift fee on the successful outcome of the claim to which the fee relates. (2) Except as provided by subsection (1), a conditional costs agreement may provide for the payment of an uplift fee. (3) The basis of calculation of the uplift fee must be separately identified in the agreement.

(4) The agreement must contain an estimate of the uplift fee or, if that is not reasonably practicable: (a) a range of estimates of the uplift fee, and (b) an explanation of the major variables that will affect the calculation of the uplift fee. (5) If a conditional costs agreement relates to a litigious matter, the uplift fee must not exceed 25% of the legal costs (excluding disbursements) otherwise payable. (6) A law practice must not enter into a costs agreement in contravention of this section. Maximum penalty: 100 penalty units. Notwithstanding the contractual framework for general legal work, lawyers are still price regulated in relation to the following work areas: 329 Regulations to provide for fixed costs (1) The regulations may make provision for or with respect to the following: (a) fixing fair and reasonable costs for legal services provided in any workers compensation matter, (b) fixing the costs payable for legal services provided in connection with any claim for personal injury damages (within the meaning of the Civil Liability Act 2002), (c) fixing the costs payable for the enforcement of a lump sum debt or liquidated sum for damages, (d) fixing the costs payable for the enforcement of a judgment by a judgment creditor, (e) fixing the costs payable for legal services provided in respect of probate or the administration of estates, (f) fixing an amount of costs for a matter that is not a legal service but is related to proceedings (for example, expenses for witnesses).

(2) A law practice is not entitled to be paid or recover for a legal service an amount that exceeds the fair and reasonable cost fixed for the service by the regulations under this section. 330 Provisions relating to regulations generally (1) The regulations may fix a cost under this Division for a particular legal service, for a class of legal services or for any part of a legal service. (2) The regulations may fix a cost under this Division: (a) as a gross amount for legal services, or (b) as an amount for specified elements in the legal services provided (for example, documents prepared), or (c) in any other manner. [page 71] Lawyers have learned to live with these provisions and the outcome is a general method of operation of client engagements in which successful lawyers adopt substantial relationship and project management disciplines. In establishing multi-disciplinary alliances and engagements, all professionals serving the client need to normalise their engagement and charging practices (but not necessarily their service pricing) if they are to work efficiently on a regular basis. 2.57 As new pricing and service models are developed for estates practice it is likely that lawyers will learn from the product disclosure statement provisions of the Corporations Act in order to deliver meaningful descriptions of foreshadowed services. Financial product advisers who are moving to a professional fee for service charging model will, on the other hand, learn from the well-settled client engagement documentation and costs estimates. Each profession has much to gain from cross-discipline collaboration. 2.58 Irrespective of government action in relation to competition between

members of the professional service sector, all professionals engaged in estates practice can expect that the broadly advocated consumer right for a settled scope of engagement and fee charging regime that is known at the start of a professional services engagement will become a common requirement for all professionals undertaking trusts and estates engagements.

MOVING FROM ESTATE PLANNING TO ADMINISTRATION 2.59 Successful estates practitioners excel at the professional collaboration this work process implies. In Chapter 10 we have included a description of the estate administration process of a person who has died. The process of deceased estate administration draws heavily on the financial knowledge accumulated as part of the estate planning process. By effectively applying the information and management processes established for the client in relation to the ongoing operation of their affairs, estates practitioners provide an enduring framework to manage a client’s values, intentions and assets across the generations of their family and the community with which they are associated. Other illustrations of this approach are set out in Chapters 9 and 10.

COMPLIANCE, MANAGEMENT AND OPERATIONS Introduction 2.60 In operating an estate services practice, cooperation and coordination are required between the professional disciplines associated with a client’s estate planning and administration. The practitioner’s approach to client-interest-driven estate planning needs to reflect not only the estates practitioner’s commitment to client care, but also the operating policies and systems in force in the practitioner’s place of work.

[page 72] This section of the chapter examines the operation of estate service engagements from the perspective of the underlying business organisation of which the practitioner is part. It is the business of the practitioner that is responsible for the practice management systems and processes on which foundations all estate services must be built. It is by managing the congruent operation of client engagement, matter and firm management processes as well as the adviser’s client accountability that a high quality, professional relationship between the estates practitioner and their client is assured. The systems, processes and standards we describe are the product of the authors’ experiences in operating the estate service practices of law firms. They should not be seen as prescriptive norms but rather a reflection of our experience. As the professional community of trust and estates practitioners grows in Australia we expect more work to be done in defining procedural norms for the practice of trust and estates professionals which will be uniformly accepted by the governing bodies of the legal, accounting, tax and financial planning professions. The following sections outline the key management and operational considerations for organisations implementing professional estate services such as estate planning. How particular practitioners respond to these issues will be a matter of system and process development for each practitioner or their firm and the practitioner’s professional body. For estate planning to flourish as a professional practice, it must function with organisations that operate with appropriate ethics, compliance systems, business models and professional modalities, not just organisational processes.

COMPLIANCE REGIME ACCOUNTABILITY 2.61

Estate planning is conducted by a range of professionals and other

advisers who are subject to a range of legislative, professional and commercial regulatory regimes. It is necessary for estate planning to be conducted by reference to these normative standards. It is beyond the scope of this text to comprehensively deal with the compliance regimes applicable to every person who may be engaged in an estate planning related task. The examples given should be treated as illustrative of broad principles and the detailed application of these principles and examples to the situation of a particular adviser and the firm in which he or she operates must occur on a case-by-case basis. 2.62 STEP operates both across professions and national jurisdictions. It has attempted to normalise professional compliance obligations for its members by requiring in its Code of Professional Conduct30 the following: [page 73] 1.1. Observing the Law A Member shall at all times ensure that his or her actions comply with the laws and regulations of any jurisdiction to which he or she is subject. 1.2. Assisting in a Breach of Law No Member shall knowingly assist his or her client to breach, nor shall he or she knowingly acquiesce in the breach of, the laws and regulations of any jurisdiction to which the Member is subject, and no Member shall knowingly provide active assistance to his or her client to breach the laws and regulations of any jurisdiction to which the client is subject. Professionals will generally be subject to compliance regimes at a legislated, common law and professional body level. Business systems must respond to compliance risk within these three domains of accountability as appropriate to each professional discipline engaged in the operation of their business.

Ignorance of the law is no excuse.31 The approach of this book is to provide knowledge of the law (legal literacy) to assist non-legal professionals and their clients to become aware of their legal rights and obligations. For lawyers, this book provides an estates practice context for the application of their detailed legal knowledge.

Legislative compliance 2.63 Certain occupations cannot be undertaken by anyone other than a person authorised by legislation. Key examples of this are set out in Table 2.1 below: TABLE 2.1: SOURCES OF REGULATORY LAW OCCUPATION Lawyer

LEGISLATION e.g. Legal Profession Act 2004 (NSW) s 1432

JURISDICTION State

Financial adviser / authorised representative

Corporations Act 2001 ss 911A, 912A, 917B, 766B

Commonwealth

Tax agent and tax practitioner

Tax Agent Services Act 200933

Commonwealth

Real estate agent

e.g. Property, Stock and Business Agents Act 2002 (NSW)

State

Trustee companies

Corporations Act 2001 Ch State and 5D and e.g. Trustee Commonwealth Companies Act 1964 (NSW) [page 74]

It is significant that accountants are absent from this list. Accounting is a profession recognised by the Professional Standards Councils,34 but the

regulation of that profession is left entirely to market forces and the relevant professional bodies such as CPA Australia, the Institute of Chartered Accountants or the National Institute of Accountants. Irrespective of this layer of legislated regulation, professionals are also regulated by more general laws such as those relating to anti-money laundering (AML) and counter-terrorism financing or taxation scheme regulation under Pt IVA of the Income Tax Assessment Act 1936 (Cth).35 Following the federal government focus on people smuggling, as at the writing of this book, it is proposed that the AML legislation has been extended by the Combating the Financing of People Smuggling and Other Measures Act 2011 (Cth) (see http://www.comlaw.gov.au/Details/C2011A00060). We have to expect that professional life will become increasingly controlled by state and Commonwealth legislation. It is necessary that all professional practices develop and maintain a legal compliance program that assists in the mitigation of this risk. Standards such as AS/NZS ISO 31000:200936 can assist in the development of appropriate compliance systems.

Common law legal compliance 2.64 Australia is a country that implements the rule of law, and both the common law and law of equity impose general legal obligations on members of society. These include legal obligations to comply with contracts validly formed to which a person is a party, comply with promises and representations on which others rely to their detriment, respect the fiduciary obligations you assume and not to harm others through your negligence. Particular relationships between people will also give rise automatically to particular legal obligations. Fiduciary relationships are recognised by the law of equity as imposing substantial obligations on a fiduciary simply by virtue of the existence of the relationship. Examples of these relationships are: solicitor and client; company and director; trustee and beneficiary;

employee and employer; and agent and principal. The case of Hospital Products Ltd v United States Surgical Corp (1984) 156 CLR 41, reminds us that the list of fiduciary relationships is not closed and fiduciary obligations can flow from commercial relationships that are essentially contractual in nature. [page 75] 2.65 Both professionals and their clients need a clear appreciation of the extent to which they are subject to common law obligations. The engagement of lawyers to the management of the client’s affairs is as much for this purpose as for the undertaking of particular legal service transactions. For both clients and advisers, these obligations flow from voluntarily assumed relationships. Neither adviser nor client is obliged to engage with one another. It is in the management of the engagement process that both the benefits and threats the client and adviser pose to each other are resolved by entering into written terms of engagement. It is in this process that the adviser must ensure that their professional duty is not damaged by their selfinterest. Evidencing this lack of self-interest and client interest advocacy is an important purpose of written terms of engagement. Clients must be able to clearly understand how a professional will profit from his or her relationship with the client. Clients must have the opportunity to reject the professional’s terms of engagement. That said, once the terms are accepted, those terms may apply to an ongoing relationship that is not restricted to a particular time. If that is the case, the client must be clearly notified about how the relationship can be terminated and the client’s obligation to pay for the services of the professional brought to an end.

Professional body compliance 2.66 It is in the very nature of professions that they are organised into communities. Cheetham and Chivers in 200537 set out the following

characteristics of a profession: A profession, they say: » confers status within society » organises itself into some sort of professional body » is learned — i.e., requires prolonged and specialised training and education » is altruistic (orientated towards service rather than profit) » offers autonomy within the job role » is informed by an ethical code of some kind » is non-commercial » has collective influence within society » is self-regulatory » is collegial » is client-focused.38 It is in the act of complying with these tenets that a professional community is created. Business compliance systems must not impede professionals adhering to the tenets of their profession. To do so erodes the value of the professional’s operation within the business. Professional bodies codify the relevant conduct [page 76] expectation of their members into codes of conduct that are then administered by the body. Business compliance systems must respond to the operation of these codes on their employees when they have engaged employees in their business who have professional obligations. 2.67 Compliance systems may cause tension between the commercial interests of the employer and the professional obligations of the employee. Where such tensions exist, mechanisms must be created for their

reconciliation if that class of employee is to be retained in the business. One solution approach is provided by the Legal Profession Act 2004 (NSW) which states at s 143 that: (1) An Australian legal practitioner who provides legal services on behalf of an incorporated legal practice in the capacity of an officer or employee of the practice: (a) is not excused from compliance with professional obligations as an Australian legal practitioner, or any obligations as an Australian legal practitioner under any law, and (b) does not lose the professional privileges of an Australian legal practitioner. The corporate personality of the incorporated legal practice therefore does not interfere with the operation of the professional obligations of the legal practitioner employed by the practice. 2.68 From the perspective of estates practitioners generally, in any service team there needs to be a unified view of the client responsibility of all advisers in the team. The formulation in the Hospital Products case at [68] is instructive:39 The critical feature of these relationships is that the fiduciary undertakes or agrees to act for or on behalf of or in the interests of another person in the exercise of a power or discretion which will affect the interests of that other person in a legal or practical sense. The relationship between the parties is therefore one which gives the fiduciary a special opportunity to exercise the power or discretion to the detriment of that other person who is accordingly vulnerable to abuse by the fiduciary of his position. The potential for any adviser in an estate planning engagement to be unable to discharge this obligation has to be dealt with at the point of initial client engagement. Compliance systems focused on the professional

obligations of employees provide tools to practitioners that assist in the assessment of the extent to which the role or function of an adviser in an engagement may threaten the rights or wellbeing of a client. Processes must then be adopted to resolve this threat in favour of the client. 2.69 The Tax Practitioners Board has proposed the following core obligations between a tax agent and their client: you must act lawfully in the best interests of your client; unless you have a legal duty to do so, you must not disclose any information relating to a client’s affairs to a third party without your client’s permission; [page 77] you must ensure that a tax agent service that you provide, or that is provided on your behalf, is provided competently; you must take reasonable care in ascertaining a client’s state of affairs, to the extent that ascertaining the state of those affairs is relevant to a statement you are making or a thing you are doing on behalf of the client; and you must advise your client of the client’s rights and obligations under the taxation laws that are materially related to the tax agent services you provide.40 It remains to be seen if these principles will be developed further in relation to the fiduciary duty of financial planners. All estates practitioners and allied professionals in the private wealth management field will need to have regard to the evolution of legislated and professional standards that are occurring as the changes initiated by the Future of Financial Advice Reforms (FOFA) are implemented. These changes, while foreshadowed in 2011, remain a work in progress. Notwithstanding these uncertainties, it is clear that business compliance systems must respond to professional body duty when defining the criteria for compliant conduct of professionals

employed within the business.

IMPACT OF BUSINESS MODELS ON PROFESSIONAL PRACTICE 2.70 The business model of the commercial enterprise in which a professional is engaged can also determine whether that business can successfully maintain professionals as operating elements of that business. History is littered with examples of failed estate planning initiatives in financial services organisations due to insufficient consideration being given to the cultural imperatives required for the successful development of estates practice competency and service focus within a financial planner’s business. This is one reason why estate planning has historically been an occupation of lawyers and accountants. Transactional business management culture provides similar challenges to estate services adoption within the legal and accounting professions. In the January–February 2010 edition of Harvard Business Review, in an article titled ‘The Age of Customer Capitalism’, Roger Martin makes the following comments: To create shareholder value, as I will show, you should instead aim to maximize customer satisfaction. In other words — and nobody should be surprised by this — Peter Drucker had it right when he said that the primary purpose of a business is to acquire and keep customers. Wait a minute, you might say, why not have a dual objective of maximizing both customer satisfaction and shareholder value? Unfortunately, as optimization theory maintains, there is no way to simultaneously optimize two [page 78]

different things — that is, to maximize two desirable variables or minimize two undesirable variables. It is possible to maximize shareholder value given a minimum hurdle for customer satisfaction, or to maximize customer satisfaction given a minimum hurdle for shareholder value appreciation, but you can’t maximize both. 2.71 The employers of estate planners need to decide: what is the primary purpose of their business organisation? Estate planning will not flourish as a professional competency or service in a business organisation whose primary organisational value is only to maximise the profit per unit sold to a client or customer of goods or services supplied by the organisation. It is in the pursuit of the acquisition and retention of customers that the primary organisational value of estate planning is to be found. Estate services such as estate planning will flourish in business organisations where professionals are engaged as relational focused practitioners who: practise the ethics of care; take responsibility for people, communities and relationships in the administration and management of the client’s affairs; and service the best interests of clients and others in a holistic way that incorporates the moral, emotional and relational dimensions of a problem into appropriate professional solutions. 2.72 The business model of the firm is the framework that outlines the way in which this occupation will be followed and which will result in the profit and sustainability of the organisation. Estate planning is rightfully seen as an occupation within relational professional practice. It must be distinguished from the remaining modalities of professional practice which are as follows: An adversarial advocate or transactional specialist: is the advocate or agent of the client’s interest above all else other than a duty to the rule of law; pursues the result desired by the client with minimal regard to the impact of that result on others;

focuses on delivering the transactional result desired by the client; and has the primary focus that they ‘are going to bat for the client’. A ‘responsible’ adviser: is a guardian of the professional knowledge represented by the adviser; shows dispassion and autonomy from clients and private interests; is set above or distinct from the personal interest of individual clients; and is often authoritarian in their approach to clients. A moral activist: is an agent for social justice in the administration of the client’s affairs; and [page 79] promotes social and political justice through their professional activities. In operating the business model of the firm, managers must authorise the use of the most appropriate professional modality for the professional’s operational task at hand. The business models, systems and processes of the firm need to authorise employees to engage in the most appropriate method of operation that is consistent with their delivery of the most appropriate outcome for the client and complies with their professional code of conduct. Meshing adviser ability with both professional body and client expectations as well as the desired service outcome is the operational challenge of producing high quality service results in any estate services based professional practice. 2.73 Implementation of estate planning as an available service within a business will fail where it is practised by staff of inappropriate professional culture and background or if the business organisation does not adapt its

operational culture and processes to suit the requirements of operating a relational professional practice model. The most common factors contributing to the failure of estate planning initiatives in commercial or professional organisations are: not optimising the business operating the estate planning service for the attraction and retention of clients, but rather focusing purely on profit per unit sold of transactional service (following HBR article about customer driven capitalism from January–February edition 2010);41 not optimising links between staff assessment and workplace behaviour; not implementing estates advisory practice as a professional service; not providing estates advisory services with their own revenue line and profit accountability; not recognising estate advice is about delivering relevant change to a client’s life, not just products and services. The value of this needs to be sold to clients. Estate planning is not a unitary service; it is shaped by the focus and needs of the client; and not supporting that estates practice needs to be recognised as a discrete employable professional competency within your company. It is not just another Continuing Professional Development (CPD) knowledge area. Implementing estate planning requires support in the specification of job roles, worker competencies and education.

BUSINESS PROCESS — CLIENT ENGAGEMENT Know your professional focus and boundaries 2.74 Estate planning is a process that can be applied by any wealth management professional to the situation of their client. The primary professional domain of an adviser will necessarily create a bias in the initial

[page 80] client situation review. As a result, the successful estate planner has been described as ‘a jack of all trades and master of one’.42 Estate planners need to have sufficient education in the expertise and roles of all main estate disciplines to be able to recognise where the services of additional professionals may be required. We will discuss this further in Chapter 10. Estate planning is normally delivered by a lead adviser recognised by the client who is given the job of becoming the principal expert in the situation of the client. This person’s knowledge then establishes an appropriate context not only for the delivery of the lead adviser’s service, but also the services of other professionals required, as necessary, to deal with particular needs of the client. These other professionals can use the information initially collected to focus their professional skills on further developing and considering this information. This means that these other advisers’ skills are more efficiently focused on the situation of the client. The lead adviser in this style of engagement needs to have excellent project management and communication skills. The client, of course, may seek to limit their relationship and work scope to the skill area of a single professional. It is then necessary for that professional to appropriately restrict the extent of their engagement to reflect that limited service role. 2.75 Where the primary professional relationship is based on a transactional service experience (for example, where a client says, ‘my lawyer is the person who last completed a commercial contract or conveyance for me’ or ‘my accountant is the person who prepares my tax returns’), the client may have no basis to understand how their normal adviser may be able to assist them with the specialist service of estate planning. Where practitioners want to introduce estate planning to their practice and firm, they need to first consider how they will gain the knowledge, skills and experience to deliver estate services to the highest level of professional competence. Just because a client starts out thinking they have simple requirements does not mean their affairs are not in fact complex (because of, for example, social,

family or beneficiary situation issues). All clients must be approached with nothing less than the highest quality professional practice. Each practitioner is challenged to identify appropriate sources of truth from which they derive their knowledge of professional practice. Professional and academic bodies alike provide sources of this knowledge. 2.76 With this in mind, estates practitioners need to know their limitations and develop collaborative professional relationships that can be efficiently brought to bear on the common ground of the client’s situation. A means to bring this to focus is to review the definition of authorised business in the practitioner’s professional indemnity (PI) policy. If there is doubt about the link between a professional’s authorised area of practice and estate services such as estate [page 81] planning, then this matter should be discussed first with the practitioner’s PI insurer. The professional society of the estates practitioner should also be able to assist in resolving these professional boundary point issues. Estates practitioners need to know the primary professional community to which they belong such as: financial planning; accounting; tax; law; family business consulting; psychology; management; organisational development and change; and family dynamics, operations and dispute resolution. Professional bodies that support these professional communities include:43

the Society of Trust and Estate Practitioners (STEP); the Family Firm Institute (FFI); the constituent member bodies of the Financial Planning Standards Board (FPSB); and the accounting, taxation and legal professional bodies operating in national legal jurisdictions. 2.77 Practices that clearly define and manage the interrelationship of estates professionals in multi-disciplinary engagements still remain a work in progress. As long-term wealth management (either within or across generations) becomes a common requirement of estate planning and family enterprise management, the impetus for these developments will occur in the professional organisations committed to working with the multidisciplinary aspects of wealth management advice in the operation of their professional constituencies. It is expected that the STEP, FFI and FPSB will take the lead in this work. In the meantime, individual firms and advisers will have to resolve these matters for themselves and work with their professional bodies to develop more broadly recognised practices.

Objective of the engagement 2.78 In order that clients receive appropriate and considered advice, all advisers engaged by the client must, subject only to their professional duty to their client, work to a common goal of ensuring their client receives either complete advice or an understanding of both the limited advice being sought and the general impact of such limitations on the client. As a result, all estates [page 82] advisers engaged to a particular client must have a common understanding (as far as relevant to the engagement) of: the advantage being sought by the client in the engagement;

any limitation that may exist on any adviser meeting a fiduciary standard of duty in the engagement; any engagement limitation imposed by the client; any engagement limitation imposed by an adviser; the role and function of advisers in being able to contribute to the advantage being sought by the client in the engagement; the overall budget of the client; the overall work requirement of the client; the charging and pricing model of all advisers; an accurate cost plus model for the overall work that allows project contribution profitability to be managed; and the process by which work is to be completed in the engagement and delivered to the client. The responses to these expectations need to be documented not only with the client, but as relevant between advisers contributing to the engagement. 2.79 A client’s estates advisers need to determine collectively how best they will both manage and deliver the following functions in order to provide the estate solution their client needs These functions are further discussed in Chapter 10:44 Coordination — there must be a lead adviser of the client who has overall responsibility for the coordination of deliverables to the client. Cooperation — client focused cooperation must be seen as a unifying cultural element between the professional practices cooperating around the needs of a client. The people closest to the client must have the authority to act directly in response to a client’s need. Capability — the team of professionals has to be built by combining the comprehensive knowledge of customer needs with a client service team leader who has deep technical knowledge in a number of services and the multi-domain knowledge to traverse organisational and professional boundaries to assemble the full range of capabilities to meet a client’s requirements.

Connection — we must achieve tight, functional connections between cooperating professionals in order to cost-effectively and efficiently deliver the full range of services a client requires.

Client responsibility in the engagement 2.80 The purpose of the client engagement process is also to enrol the client in the process through which the work of the engagement is to be managed and [page 83] delivered. This necessarily includes requesting the client to make disclosures about their situation. This information will include: the identity of the client; the family environment of the client; the extent and form of direct and indirect property ownership of the client; risks laid off by the client to insurance; the nature and extent of the accountability and representation of the client; the management strategies applied to the inheritance path and tax payment obligations of the client; the extent and nature of the estate administration and succession objectives of the client; and the extent and nature of the maintenance and support requirements of the client, their household, dependants and successors. While a client may wish to limit the operational scope of an engagement or the extent of information disclosures that will occur, the impact of those disclosures on the ability of an adviser to deliver the advantage sought by the client must be considered. If an adviser believes that the extent of

engagement limitation will prevent him or her from delivering the advantage sought by the client, then the ability of the adviser to proceed with the engagement must be evaluated at that point. An adviser’s professional responsibility may prevent an engagement proceeding. The efficacy of the professional community of which an adviser forms part in fact depends on such effects occurring whenever justified in a professional adviser’s practice.

Adviser responsibility in the engagement 2.81 In establishing a regime of collaborative management of an estate engagement around the needs of a common client, all professionals engaged by the client should have a commonly held view on how they address the following matters consistently in the services they deliver to the client:45 efficient, honest and fair service provision; service provider resources and competence; compliance and risk management practices; and initial and ongoing disclosure to clients about the provision of: the nature and extent of advisory and transactional services to be delivered; financial and transaction record-keeping; [page 84] access by retail clients to internal and external dispute resolution services; and limits and exclusions to the scope of work being performed.

Who is my client? 2.82 With the passing into law of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth),46 Australia has aligned itself to international standards47 which recognise that identity fraud is an increasing problem for our rapidly globalising society. While it is easy to

relate to the idea of a client as an individual person, it is the tracking of the other incarnations of clients that poses the greatest challenge to advisers. A client may be one natural person. A client may also be a group of legal persons who, irrespective of their individual identity, form a collective client for the purpose of a matter. The legal concept of beneficial interest has been adopted by the FATF48 as the basis on which identity needs to be resolved authoritatively to establish what activities are traceable to a given person.49 Beneficial interest is also used as a unifying concept in estate services from which a consolidated view of a person’s direct and indirect estate may be derived. 2.83 Where a collective client is being engaged, the scope of the engagement must be carefully formed having regard to the relevant professional practice rules of the practitioner. As a general rule, collective clients introduce the prospect of conflict of interest and should not be represented without some assessment of the potential for conflict of interest between the persons comprising the collective client and the adviser. In representing the collective client, an adviser should only act within the scope of the agreed and common interest of the persons comprising the collective client. This restriction should be pointed out to the client and the consequences of non-compliance with this condition discussed and agreed. 2.84 Client identity must be distinguished from client capacity or their role in an office, for example, executor, attorney, agent, official manager, trustee, director, partner or venturer, whether such role is a direct appointment or as a consequence of a legal personal representative appointment. It is essential that the capacity in which a client is acting be identified at the inception of the engagement and any conflict between that capacity and that of the personal capacity of the client also be identified and resolved.

Establishing adviser accountability to their client 2.85 Client identity, role and capacity in turn need to be understood and related to the relevant relationships and accountabilities between the client

[page 85] and other persons to whom he/she/it is legally responsible, such as beneficiaries in the case of an executor or trustee, a donor in the case of an attorney, or shareholders and subsidiaries in the case of a company director. A client may also have a number of additional characters or dimensions to their relationship with the firm, such as an individual client with exclusive rights of access to certain documents (for example, a will), a debtor or as a taxpayer. It is these secondary relationships which lead to the greatest complexities in the handling of estate engagements as they generally relate directly to the following areas: safe custody document archive, storage and control; accountability under the client engagement for the matter we are instructed to perform; the client’s accountability for professional fees; the manner in which we record the flow of funds we receive from or on behalf of a client; conflict of interest reporting; and statutory reporting obligations which we must now discharge whether for cash transaction reporting, financial institution accountability or the firm’s risk management processes. It is therefore vital to recognise all significant relationships between groups of clients, individual clients, the practitioner and his or her firm. This is of course distinct from managing the expected relationships between clients and matters.

Managing the engagement 2.86 By satisfactorily recognising these relationships, the practitioner and his or her firm are able to satisfy their statutory obligations more easily than otherwise would be the case and also ensure that they deliver the highest quality service to clients. As all the above matters form part of our primary

engagement, the burden of satisfactorily identifying clients falls initially on the practitioner taking instructions at the time those instructions are received. In establishing adequate management control over the estate services engagement, it is necessary to manage more than just client identity. The following objectives list, while prepared for incorporated law firms by the New South Wales Office of the Legal Services Commissioner (OLSC), is relevant as an issues checklist for establishing effective management control of estate services engagements across all professional disciplines:50 (1) Negligence (providing for competent work practices); (2) Communication (providing for effective, timely and courteous communication); (3) Delay (providing for timely review, delivery and follow-up of legal services); [page 86] (4) Liens/file transfers (providing for timely resolution of document/file transfers); (5) Cost disclosure/billing practices/termination of retainer (providing for shared understanding and appropriate documentation on commencement and termination of retainer along with appropriate billing practices during the retainer); (6) Conflict of interests (providing for timely identification and resolution of ‘conflict of interests’, including when acting for both parties or acting against previous clients as well as potential conflicts which may arise in relationships with debt collectors and mercantile agencies, or conducting another business, referral fees and commissions etc); (7) Records management (minimising the likelihood of loss or destruction of correspondence and documents through

appropriate document retention, filing, archiving etc and providing for compliance with requirements regarding registers of files, safe custody, financial interests); (8) Undertakings (providing for undertakings to be given, monitoring of compliance and timely compliance with notices, orders, rulings, directions or other requirements of regulatory authorities such as the OLSC, courts, costs assessors); (9) Supervision of practice and staff (providing for compliance with statutory obligations covering licence and practising certificate conditions, employment of persons and providing for proper quality assurance of work outputs and performance of legal, paralegal and non-legal staff involved in the delivery of legal services); (10) Trust account regulations (providing for compliance with Pt 3.1 Div 2 of the Legal Profession Act and proper accounting procedures). All staff of the estates practitioner’s firm must manage their roles in the firm to comply with all relevant management policies and systems of the firm. All professionals working around a client must have commonly understood views on how the above 10 matters are handled by each advisory firm. Any operational inadequacies must be reported to the firm for rectification and any necessary compliance action.

Engagement pricing and budget expectations 2.87 The basis of pricing of the services being delivered needs to be included in the scoping phase of the engagement. The normal charging models are: the fixed fee, where the precise services can be defined and the scope of the engagement can be foreseen with reasonable certainty; the contingent fee, where some or all of the fee is based on the results obtained; the hourly fee, based on the time or number of hours spent by the

practitioner; the retrospective fee, based on value, which differs in that the fee is determined on a subjective basis after all work has been done on the basis of actual value delivered to the client; and commission calculated by an agreed formula. [page 87] The charging model agreed for a particular engagement should be evidenced in writing and all applicable professional practice rules on fee disclosure must be adhered to by the practitioner.

Use an appropriate fact finder form to ensure consistency in taking a client’s instructions. Record the relevant client information needed to comply with the relevant standards, processes and compliance obligations of the practitioner and the firm. Establish that the client has the legal capacity, authority and resources to instruct and pay for the services requested. Settle the preferred description and contact details of the client and the preferred name to be used in the matter. Verify the identity of all new clients against appropriate identity documents such as a driver’s licence. Consistency in the use of client names is a necessary part of establishing appropriate accountability and reporting to the client. It also makes filing easier and makes losing files and documents less frequent. Check spelling carefully. Note associations carefully. Be careful to establish the preferred identity of those women who use ‘Ms’ as well as married women who work under their maiden name. The formal identity of the client may be an individual person or a corporation or some

other entity. Generally, if an individual person or company is operating under a business name, it is the person or corporation who is the client and not the business. Where a company is a client, identify from where in the company the instructions flow and to whom in the company the practitioner and firm are accountable. If the retainer does not flow from a board of directors, the authority of the person to honour the retainer must be established. The client identity for the matter should be used as the default billing identity for the firm’s debtors system unless you make specific arrangements to the contrary with the firm’s management.

Doing the initial work 2.88 Wherever possible, practitioners want to become known for expertise in their core areas of practice. Trust between practitioner and client is created by each building up appropriate knowledge of the other. This must occur through exchanges of information in the course of their relationship. Clarity of communication has to be a hallmark of the successful estates practitioner. All too often both practitioners and clients, in an effort to be expedient in the delivery of the practitioner’s services, define the client’s requirements in terms of [page 88] a transactional deliverable (such as a will) and not in terms of a client’s needs or objectives (such as to provide for my wife but protect my children’s inheritance). As the professional objective of the estates practitioner must be to ensure the delivery of client-appropriate advice and outcomes, some effort needs to

be allocated to the process of establishing a client’s needs and the agreed tasks to fulfil those needs or deliver the agreed outcomes. We recommend this be achieved by dividing the estate services engagement into the following phases: estate situation review; estate management plan proposal and adoption; and estate management plan implementation and review. Budgets can be allocated to these phases and activities managed within each phase. Using this approach is consistent with implementing case management software systems and generally results in a consistent activity plan being adopted for estate engagements with the following actions:51 identifying the issues; gathering information about assets and liabilities and the form of their ownership; having clients share their interests, objectives and goals; establishing the relevant property ownership and division principles that govern the estate; generating advisory options consistent with the client’s interests, objectives and goals; consulting with the client to assist in the selection by the client of their best option; considering the next best alternatives and confirming the final solution selection; implementing the solution, including all necessary other advisers; and establishing a review process for the solution, including other advisers as appropriate.

Client fact finding — initial estate situation review 2.89 The engagement establishment methodology set out above should be supported by the use of appropriate checklists and fact finders that allow the capture of all information needed to support the engagement.

Standard fact finders act as the means to acquire a comprehensive picture of a client’s position so that an accurate assessment may be made of the work required to respond to the stated needs of the client. [page 89] Having regard to the need for all practitioners to manage the professional risks of their practice, informal instruction taking should be discouraged and treated as an unwelcome exception to the day-to-day practice operations. The template fact finder in Appendix C of this chapter can be used to benchmark existing practice systems. It is intended to be an aid to taking initial instructions and profiling the current situation of the client’s estate. Both simpler and more complex variants may be needed to cater to particular client requirements and modes of practice. The use of a fact finder with this level of detail is also necessary to establish a scope of understanding by the client of his or her affairs, so that the practitioner may make a meaningful and informed assessment of the likely legal and testamentary capacity of the client. 2.90 In taking instructions, the practitioner should request that the client provide copies of any existing wills, powers of attorney or guardianship and any advance care directives in order that the existing scope of the client’s estate planning, management and control can be established. This knowledge allows the significance of any proposed changes to the client’s estate plan to be assessed. Where non-testamentary estate structures exist, the client, with copies of the relevant constitution, should also brief the practitioner about the governance control documents for each estate entity concerned, for example, a company, trust, superannuation fund, partnership or joint venture, in order that management succession of that structure can be considered as part of the estate review process. Where such non-testamentary structures (for example, a company) also comprise a testamentary estate asset (for example, a share in the company)

then the estate review process needs to be extended to identify the wealth extraction and succession requirements of the client for that asset.

Using a fact finder is only an aid to taking consistent instructions and not a substitute for complete understanding of a client’s estate. Establish with your client if there are any matters of relevance not covered by the fact finder. Do not engage in work beyond your competence. Refer the client or align yourself with other appropriately skilled advisers who can deal with the aspects of the client’s retainer that you are not capable of dealing with directly. Beware of clients who wish to control the engagement primarily on the agreed price of the service requested. Ensure that you establish the expected scope of service for the price being sought by the client. Where relevant, narrow the client’s expectations of the engagement to a focus in which you can confidently deliver a [page 90] service at the price point demanded by the client, having regard to the costing and pricing policies of the firm. Adhere to any relevant loss prevention and risk management policies of the firm as you develop the scope of the engagement. Establish the full extent of information you need from the client in order to deliver the full service you are expected by the client to deliver. Where only partial information is initially tendered, make sure you establish with the client that an ‘information gathering’ or ‘fact finding’ phase is a necessary part of the engagement that will have to be appropriately costed. Identify issues of difficulty or complexity early in the engagement. Ensure that these issues are adequately taken into account in settling the cost estimates tendered to the client.

Ensure that you understand the actual intent of the client and the outcomes actually being sought. A useful question to ask the client is, ‘What do I have to deliver to you in order to complete this engagement?’ Where you want to provide interim bills to the client in the course of the engagement, make sure you obtain the client’s express agreement to this. Use written fee agreements in all cases. Establish the appropriate reporting cycle and key milestones for the matter with the client. Use fact finders, checklists and precedents to make taking complete instructions from clients as efficient as possible.

Initial client reporting — understanding the client’s current situation 2.91 In an estate planning engagement, the first service deliverable is to give the client feedback about the adviser’s understanding of their situation and objectives. In providing this review, we must challenge our clients to consider to whom they are accountable and the nature of the advantage or benefit they want to create out of the administration of their affairs. If adviser and client cannot come to a shared understanding of the client’s current situation and objectives, then it is unlikely that the advantage being sought by the client in the engagement can be delivered by the adviser.

Advantage to be created 2.92 This must initially be defined in the client’s terms. Is the client simply demanding the provision of a transactional service or is something else required? Client advice is about presenting choices capable of ready evaluation that the client can use to improve their situation or meet an objective. The role and responsibility of an adviser to deliver this outcome must be contrasted to the qualification of client need in order to justify the sale of a particular product and service to a client. The client will normally be responsible for integrating the result of the sale into the ongoing

management of their affairs. In an advisory engagement, the adviser [page 91] will normally be involved to the extent of assisting the client to integrate the result of the advice into the ongoing management of their affairs. The advantage to accrue to a client from an engagement can then be summarised as either: enabling access to products or services that the client could not otherwise access themselves; or enabling the simplification or empowerment of the client’s management of their affairs through engagement with the adviser. The discovery of the intent of the client is the most important aspect of the estate planning engagement. The benefits to be created may be both financial and non-financial. This subject will be further explored in Chapter 9.

Accountability to which client needs to respond 2.93 Clients must come to terms with the impact on their affairs of the rights of those people to whom they are legally or morally accountable. The drivers for determining accountability may be generally summarised as: legal responsibility (whether by legislation, common or customary law); family and similar interdependency relationships; other relationships and accountabilities including: corporate and commercial responsibility; social and community responsibility; and voluntary accountabilities; and estate liabilities, life risks and contingencies.

Representation roles and responsibilities to be created 2.94 The most common estate administration risk of concern to a client is their personal representation and succession. Legal personal representatives necessarily respond to the accountability of clients to third parties. The responsible operation of these representative roles will depend on the adequate identification of client accountabilities and the provision of sufficient power in the instruments creating the representation to enable that accountability to be discharged.

Desired beneficiaries or successor outcomes 2.95 A client can nominate any person (whether natural or legal) as a beneficiary of their estate. This right of voluntary alienation of property is subject to a number of public policy issues such as: family provision rights; contractual and equitable obligations that can be embedded in representations made or property disposed to a third party; de facto and civil relationship rights; and foreign law to which the client may be subject. [page 92]

Situation reporting approach 2.96 Client situation reporting needs to adopt a consistent structure if it is to be meaningful in creating shared understanding across family members. The following report elements need to be populated by the results of the initial client investigation. The relevant investigation actions are noted. No one ‘single discipline estates professional’52 can deliver all elements of the review criteria set out:53 client, beneficiary and other party identity: determine the role, function and responsibility of each person

affected by an estate plan; client territorial connections: determine the territorial scope and function of an estate plan; family structure and members: determine estate planning priorities between the client and their successors and estate claimants; determine the nature and extent of financial and social accountability between the client, family members and other estate claimants and beneficiaries; determine the extent of multi-generation accountability in the estate plan and incorporate appropriate strategies in the estate plan to support the operation of the estate plan across generations in a family where this objective is desired; and determine relevant beneficiary and estate claimant needs and implement strategies to respond to those needs in the estate plan; financial and estate management: determine client appointments for financial management and personal representation by attorneys, guardians, trustees, common law agents and informal representatives; determine the role, functions and accountability of the client’s estate and financial managers to the client’s family and estate beneficiaries; and determine and recommend funding sources for estate strategies; asset ownership and control: determine estate administration strategies within the estate plan that respond to the actual state of asset ownership and established constraints on that ownership (for example, assets owned by a trustee but held in part or whole for the client’s benefit); [page 93]

risk and requirements management: develop risk management strategies that respond to the identified risks, concerns and risk tolerances of the client; determine the requirements of the client and specify the expected activities and costs (where possible) to achieve those requirements; and determine client willingness to manage identified risks. 2.97 At this level of investigation and reporting, the adviser is establishing which of the following risks or areas of consideration are of concern to the client. The adviser’s full response to these matters will be covered by the estate administration plan that is produced following the client’s comments on the initial situation review. The risk and concern areas for initial assessment are: property ownership and control: determines the extent of all property whether legally or beneficially owned by or for the client; identifies all financial resources of the client; identifies all sources of benefit to the client material to the estate under management; and identifies all estate asset management structures; business ownership and control: equity issues; family governance and control; family dynamics in business; family business leadership; business governance; management issues; and alignment of interests; business strategy; operations issues; and

business operations; wealth preservation and enhancement: investment goals and objectives; asset diversification; manager selection; investment performance; ownership exposure for private equity; and private equity distressed situations; [page 94] family continuity and governance: family legacy; family governance and decision-making; family relationships; family reputation and public image; philanthropic legacy; personal security and privacy; personal health and wellness; personal ownership responsibilities; and collective ownership responsibilities; financial security and compliance: legal exposure; fiduciary exposure; wealth transfer exposure; physical asset protection; financial leverage; financial oversight;

financial reporting and compliance; and family group oversight and accountability; representation planning: determines who shall act for the client in the administration of their affairs and under what conditions, if any, that representation will occur; develops strategies to guide the operation of representatives in the administration of the client’s estate; and develops strategies to mitigate financial abuse risk in the management of a person’s estate by their representatives; wealth preservation planning: determines for whom and on what conditions wealth is to be preserved; develops strategies and estate asset management structures through which the wealth preservation objectives of the client can be achieved; determines impediments to the wealth preservation objectives of the client; and develops strategies to mitigate or avoid the effect of identified wealth transfer impediments; wealth transfer planning: determines the extent, nature and form of ownership of all property of the client; and [page 95] develops strategies to transfer the property or an interest in the property to particular beneficiaries at particular times in accordance with rules or discretions established by the client or their designated successors or representatives;

taxation planning: includes appropriate strategies in the estate plan to respond to the taxation liabilities and responsibilities of the client; and develops appropriate tax planning strategies; retirement planning: determines appropriate retirement strategies that integrate with the client’s estate planning objectives; and develops appropriate retirement planning strategies; care planning: determines the impact of declining health and capacity of the client and their dependants on the cost of their care and maintenance during their lives; and develops appropriate strategies to deliver the required care to the client. This may require consideration of various forms of medical care delivery and assisted living.

SYSTEMS TO SUPPORT THE ENGAGEMENT Work management system 2.98 In implementing the plan, the practitioner first should establish a management framework for the execution of the plan developed in the estate strategy review phase. We recommend adopting a uniform project and task description framework such as the Uniform Task Based Management System.54 This framework needs appropriate system support within the firm.55 For estates work, we generally find the activity, counselling and project code sets the most useful. These sets recognise the following work elements.

General work undertaken 2.99

These codes represent the core day-to-day activity that is carried out

in the following work phases. These codes should form part of the primary time recording systems of the practice: [page 96] A101 Plan and prepare for; A102 Research; A103 Draft/revise; A104 Review/analyse; A105 Communicate (in firm); A106 Communicate (with client); A107 Communicate (other outside counsel); A108 Communicate (other external); A109 Appear for/attend; A110 Manage data/files; and A111 Other.

General advising and counselling engagement plan 2.100 This is the initial phase of an estate service engagement. A fact finder form is the key resource for this stage of work: C100 Fact gathering This phase includes all initial inquiries, meetings and instructions and the identification and collection of information relevant to the engagement. C200 Researching law This phase includes all legal research tasks, including internal meetings and consultations with those with special expertise, and computer and online research. C300 Analysis and advice This phase includes all tasks associated with analysis of both the facts, law and research performed (under C100 and C200) and communicating related opinions or advice to clients. Written (including electronic documents and message delivery)

communication, meetings, and telephone conversations during which advice is conveyed would all be captured by this phase. C400 Third party communication This phase includes all discussions with third parties not otherwise covered above, such as communications with courts, financial institutions, other advisers or parties to contracts with the client.

General estate engagement management plan 2.101 An estate review should result in a settled set of client objectives, requirements and deliverables. These form the operational focus of the estate engagement and are managed by reference to the following task framework. P100 Project administration This phase focuses on the administrative aspects of the engagement. It includes all engagement capture and matter commencement and maintenance activities including planning, budgeting, and maintenance of documents. The engagement manager [page 97] is expected to develop, negotiate and revise the administrative plan and the budget for an engagement. This phase also includes developing and communicating engagement status reports. Time coded here is to be distinguished from time spent strategising about the engagement, which is included in the P300 code. P200 Fact gathering/due diligence This phase includes all time spent investigating facts, obtaining documents and information, including the results of previous advisory and counselling engagements and activities, completing due diligence and estate reviews and the preparation of related reports and reviews with clients. This phase also includes coordination with third parties (including other advisers) in connection with fact investigation, interviews of

client and non-client personnel, document review performed for purposes of identifying, understanding and analysing facts and issues, and all related communications and correspondence. This phase can be further broken down into the following investigation tasks that may be used depending on the complexity of the estate concerned. P210 Corporate review This task includes all fact investigation/due diligence from corporate, trustee, fiduciary, commercial and business perspectives, such as structural reviews, governance and succession reviews, material contract reviews, ASIC filing reviews, financing document reviews, and industry information reviews. P220 Tax This task includes all steps involved in conducting fact investigation/due diligence from a tax perspective. P230 Environmental This task includes all fact investigation/due diligence from an environmental perspective. P240 Real and personal property This task includes all fact investigation/due diligence from a real and personal property perspective. P250 Employee/labour This task includes all fact investigation/due diligence from an employee benefits and labour perspective. P260 Intellectual property This task includes all fact investigation/due diligence from an intellectual property (patent, trade marks, copyrights) and intangible asset management perspective. P270 Regulatory reviews This task includes fact investigation/due diligence from a regulatory perspective not covered elsewhere. This task also includes review of agency or regulator filings by a party to or the subject of the engagement and consumer credit reviews. P280 Other This task includes all fact investigation/due diligence not captured more specifically in the P200 codes set out above. P300 Structure/strategy/analysis This phase includes all time spent in planning the approach to the engagement. Tasks include all analysis

[page 98] performed for purposes of developing and reassessing the strategy for the engagement, and all steps taken to develop a written outline or description of the structure of the engagement throughout its life.

Completing the agreed work activities 2.102 This phase of activity focuses on the tasks that are necessary to deliver the transactional output required to meet the client’s objectives such as wills, powers of attorney or guardianship, minutes, memoranda of advice, trust deeds, shareholder agreements and buy/sell agreements. P400 Initial document preparation/filing This phase includes all tasks undertaken to prepare transaction documents and opinions prior to their being sent to non-client third parties. It also includes all tasks undertaken to file documents (including regulatory and court filings). All related communications with the client and review of clientgenerated transaction documentation should be coded here. P500 Negotiation/revision/responses This phase includes conducting negotiations, revising the initial (P400) transaction documentation as a result of such negotiations, attendance at meetings, and responses thereto (including communications with clients with respect thereto). The review of documents received from non-client third parties should also be coded here. P600 Completion This phase includes all tasks related to transaction pre-closing and closing and engagement completion including interim and final billing.

Supporting the plan 2.103 It is necessary for the practitioner or his or her firm to decide the type of support and relationship renewal activities that are appropriate for each type of client and engagement being performed. P700 Post-completion This phase includes all post-completion or postclosing tasks such as amendments to final documentation and

resolution of post-closing issues. It also includes all implementation tasks (for example, funds held in trust) and preparation of final archiving, safe custody and similar clerical and administrative actions. This phase would not typically include total or significant restructuring of the transaction which should be considered a new engagement. P800 Maintenance and renewal This phase includes all tasks related to subsequent maintenance and renewal requirements under the terms of the engagement such as monitoring of agreed document review dates, milestone events, lease agreements and comparable events. [page 99]

POLICIES TO SUPPORT ESTATES PRACTICE Establishing the distinctiveness of your estate services 2.104 Why do clients want to work with you? What feature of your practice keeps clients recommending your services to others? It is in answering these questions that practitioners continue to build their personal brand. In the following segment of this chapter we discuss some exemplar elements of successful estates practices.

Being a strategy focused professional practice 2.105 A result of approaching estate planning as a strategic advisory service is that the estates practitioner also needs to apply appropriate strategic management processes to the operation of his or her team or firm. We have found that the balanced scorecard approach advocated by Harvard Professor, Robert S Kaplan and consultant, Robert Norton56 provides an appropriate strategic management framework for the development and operation of estate services practices. In this approach, the strategic focus of the practice is measured across four key dimensions:

financial results; client engagement, management and relationship renewal; internal business processes and operations; and knowledge, learning and growth. The alignment of these points of strategic focus between practitioner and client allows the formation of a powerful, long-term advisory relationship. These alignments are driven by the detail of practitioner and client agreement on the following matters: Estate services engagements have to result in appropriate remuneration to the practitioner as well as agreed value or result delivery to the client. Client service management must be founded on as complete an understanding of the client, their estate and their objectives as is necessary to generate the agreed results for the client. The process and operations essential to deliver the required result to the client need to be as streamlined and efficient as possible. This also means that any work required to be done by the client to brief and support the practitioner’s engagement needs to be completed in an efficient and timely way if the practitioner is to deliver his or her expected efficiencies. Clear communication, timely performance and effective collaboration between client and adviser are the key requirements to completing engagements satisfactorily. [page 100] Sufficient knowledge must be held to deliver the expected result to the client. Additional research and learning may be required in order to complete the client’s engagement. The cost of acquiring this knowledge must be agreed with the client. It may be most efficient for the practitioner to collaborate with other appropriately qualified advisers in the engagement rather than the practitioner or his or her

staff completing the necessary learning. The decision as to which is the appropriate approach will be driven by the practitioner’s understanding of the match between the client’s requirements, his or her core competencies and those competencies available within his or her firm. 2.106 Once the strategic alignment of practitioner and client is achieved, the operational focus of the engagement then turns to the process of value creation as a result of the engagement. The activities that create value for both the practitioner and the client may be summarised as:57 control-centred activities58 (internal to the firm): efficient production and operational processes; appropriate risk management; and appropriate cost efficiency; competition-centred activities (external to the firm): rapid response to client and market requirements; client satisfaction surveys; outsourcing; and mergers, acquisitions, alliances; creation of new services and markets (both external and internal to the firm): disruptive innovation in the products or services of the firm; growing new markets; collaboration-centred activities (both external and internal to the firm): use of collaborative service supply chain focused business networks; and deploying internal programs focused on: leadership development; team culture development; values alignment between staff, firm and client; team-based management of client engagements; and

recognising competency focus and associated limits on the expected span of action and responsibility of a staff member. [page 101] The creation of an initial alignment around the strategic vision of practitioner and client as well as the operational focus on tasks results in real value creation for the client and the firm and is the factor that leads to the formation of a high performance, high quality estate services practice.

Quality branding your services 2.107 Estate services need to be identified and substantially valued by clients if their full worth is to be recouped by the practitioner. The ‘product’ is inextricably linked to the service provided. Therefore, it has to be remembered that: Professional services are short-lived in the minds of clients. Professional services cannot be readily tested for quality until perhaps they end up in court. A client cannot readily compare one piece of advice with another. Professional advisers are generally seen as being not easily accountable. It is hard to demonstrate value in professional services. As a result, in estates practice we need to ensure that our services are well differentiated. This can be achieved by the practitioner and his or her firm adopting: a ‘client first’ attitude; dedication to retaining and enhancing client loyalty; and definition of standards for services delivered to clients in: substantive practice areas; procedures by which services are delivered;

behaviour and attitude of staff and fee earners; and modelling this attitude in the work of practitioners and staff. It is a trite but nonetheless true observation that existing clients will always be the easiest clients from which initially to win new work. Nonetheless, even with existing clients, when you are introducing them to new or additional services to the firm you need to carefully requalify the firm to the client and reinforce the quality of experience of engaging with the firm, even if it is for a marketing, business development or general client information purpose.

Best practice communication 2.108 A practitioner responsible for the maintenance of the client relationship should always be defined for an engagement; they may or may not also be the person responsible for the day-to-day performance of the engagement. A practitioner may delegate responsibility for client communication to certain staff from time to time. Where this occurs, it is vital that the delegating practitioner be kept informed by his or her delegate of all material conversations of the delegate with the client. [page 102] In order to ensure the smooth running of an engagement, planning the course of that engagement and establishing an action plan for its operation (including the communication of the expected timetable and events to occur in the matter to all people involved) will assist in ensuring the matter is completed in a timely and efficient fashion. The case management outline in this chapter gives an example of how the procedures for carrying out an estates practice engagement such as estate planning can be documented in a way that facilitates the service being delivered in a manner that is: 1. replicable; 2. repeatable; 3. reliable.

2.109 Clear English59 needs to be used wherever necessary to aid the simplification of advising and reporting to clients. Any piece of communication needs to be written and assessed having regard to the following objectives: coherence; comprehensiveness; consistency; clarity of expression; and care to ensure, as appropriate, the legal effectiveness of its form and substance. Written advice is becoming more frequently used to deliver primary advice in lieu of a conference or as confirmation of verbal advice given in conference. Use consistent structure and approach in the delivery of such written advice. As a minimum it should follow the following structure: the questions which the letter or memo addresses; a brief statement or summary of the advice; facts and assumptions with any necessary qualifying statement; analysis (discussion) of facts and law; conclusion — detailed statement of advice; and identification of the practitioner taking responsibility for rendering the advice.

We are generally paid to simplify our clients’ lives, empower them or do something that they do not have the knowledge, skill or ability to undertake. We are not paid to baffle them with unnecessary complexity or long reports and documents that only illustrate the academic learning of the practitioner. [page 103]

Practitioners need to take care that they: use appropriate professional quality standards such as Law 9000 in the operation of their practice and firm; report to clients in the terms of the objectives that the practitioner is engaged to address; use language which the client and other parties engaged to the transaction are able to understand; use expressions and language which accurately and effectively reproduce the clients’ intention; and avoid style or usage or language structure which can be interpreted as being confused or muddled.

Operating an estates practice Client work — process and performance standards 2.110 In operating an estates practice, you need to use matter files to manage the individual client engagement. You need to remember that the aim is to ensure that the file speaks for itself! Never assume that you will be the only person who will have contact with a file. A person who picks up any file should never have to ask, ‘What is happening here?’ Client files need to provide an operating environment for the client engagement as well as reflect the actual work performed for the client. Files must provide an accurate record of the engagement for professional risk management and quality assurance purposes. Where an estates practitioner works with staff, the standards set out here provide a foundation for efficient management of the practitioner’s workload and the delivery of high quality, reliable and easily repeatable services for the practitioner’s clients. For new practitioners, these should provide a starting set of guidelines for them to establish their work practices and for more experienced practitioners they should provide a useful checklist against which existing systems and

processes can be benchmarked.

Delegation of work 2.111 If a person, in exercise of the authority of their position, delegates work to another person in the practice, the following must be observed: Where procedural responsibility is delegated to support staff, the practitioner must first establish that the delegate concerned has the current work capacity to accept the delegation. The person delegating the work is entitled to expect the work to be performed as requested, if it is accepted by the delegate. If conflicts of priorities exist between the proposed assignment and current work, [page 104] they must be raised at the point of initial delegation, or when they arise, whichever comes first. The person receiving the work is entitled to be given a sufficient brief in the matter to ensure the work can be performed in the time requested. Any insufficiency of instructions needs to be raised with the delegator on receipt of the work or as soon as the insufficiency is identified, whichever occurs first. The priorities to be applied to a matter are those necessitated by the requirements of the client or the matter, not the personal preferences of the person performing the work. If conflicts of timing result, those conflicts are to be resolved as a separate issue. Effective communication between practitioners and support staff is essential. All staff must cooperate to ensure that effective lines of communication are maintained not only between themselves and their peers in the firm but also between themselves and those they are responsible for. Effective delegation requires: planning of the delegation — if you cannot control it, do not delegate;

selecting the right person for the job; and making the delegation by: taking the time to communicate; explaining why the job is important; delegating in terms of results; and providing training, coaching or backup as required for the delegate.

Performance of work 2.112 All work in a file is to be performed as quickly as possible having regard to the client’s priorities and the scope and terms of the engagement. Urgent correspondence must be dealt with as required by the context of the urgency. Normally, correspondence should be dealt with inside three days of receipt. If correspondence cannot be dealt with inside five days of receipt, this is an alert condition to be reported to that person’s supervisor for remedial action. Reminder and file review systems should be implemented to ensure that extended engagements are managed in accordance with the agreed process and priorities of the engagement. 2.113 Managing your work performance In undertaking your work, you should aim to achieve the following: to have work happen on time; to have work done by the person who is not only appropriately qualified but also represents the lowest resource cost to the firm; [page 105] to avoid duplication of effort and prevent omissions; to amend or eliminate inefficient or unnecessary operations; and to avoid double handling of work by the same person. The aim in managing your workload is to streamline your work processes

as much as possible so that the agreed result for the client is produced at the lowest resource cost for the firm. As professional service firms move from commission-based or time-based engagement pricing, practitioners will need to focus on pricing their work in accordance with the agreed value delivered to the client and ensuring the resource cost of producing the work is below the agreed price for its delivery. 2.114 Organising your workload The status of both a practitioner’s workload and each file within that workload should be easily discoverable by the practitioner’s firm and the team with which the practitioner works. This discoverability must be built on a foundation of file organisation and management. In establishing their physical file management systems, practitioners should ensure that they: only have their immediately active projects on their desk; ensure there is a reason for each file to be on their desk; and use the storage facilities in their immediate vicinity to prioritise work. 2.115 Operating your workload Timely performance of work, especially in team-based practice environments, depends on efficient time management, clear communication and efficient work production systems. As a minimum, practitioners need to ensure that they: use appropriate checklists and case management systems; always record information scheduled in writing and do not rely on memory; schedule around key events and actions having regard to purposes and objectives; group related items and actions wherever possible in planning work execution; build flexibility to cope with unexpected events in their schedule; and keep a record where appropriate of what has been planned versus what has been achieved. 2.116 Cutting knots and problem solving Even with all these steps being undertaken, it is necessary to deal with problem tasks and matters. Generally,

practitioners should ensure the following. If you become stalled in a project or task, write down the problem. Beware of falling into the trap, when faced with a problem, of not seeing the wood for the trees. Take time to stand back from the problem and fully define its cause before you try and determine the solution. [page 106] If you cannot reduce a problem to writing, get someone else involved. Talk to a colleague and try to discuss the problem through to a solution or conclusion. Your professional association may be able to assist. Always leave yourself open to calling for assistance or delegating the work to another person who may be better equipped to ‘cut the knot’.

Managing time and tasks — for practitioners and their team 2.117 Time, knowledge, processes, systems and precedents are the stock in trade of the estates practitioner and their team. Managing available time within work teams as a scarce asset is a key challenge for the practitioner. It is fundamental to achieving a high standard of objective quality in the delivery of estate services that this culture is successfully established in an estate services team. In managing estate services teams, practitioners need to ensure that they clearly distinguish how they manage client engagements (as discrete projects or matters) from how they manage the tasks and resources to complete those engagements. When delegating, it needs to be made clear to the delegate whether they are being given the responsibility to manage the execution of the engagement or just the completion of identified tasks within the engagement.

Guidelines for time management

2.118 As the workplace gets busier and busier, it becomes ever more critical to ensure that work is turned around in a reliably rapid manner. Our clients expect not only a consistent standard of presentation of work but also a consistent speed at which we perform. The priorities to be applied to the management of a matter file are those priorities necessitated by the matter, not by the person performing a service in a matter. When dealing with experienced staff, a high standard of personal work skills is assumed, and normally delivered. We must target the following timewasters for attention, wherever they occur in the practice: lack of communication; unclear objectives or priorities; unreasonably postponed decisions; procrastination; lack of feedback; ineffective performance of repetitive or routine work — boredom; management by crisis; unnecessary interruptions by: telephone calls; clients; and other staff; [page 107] too many meetings with too little effect; ineffective delegation; poor filing practices; mistakes; and ill-considered decisions:

too many ‘snap’ decisions; swapping priorities too much; over-optimism; and lack of managerial tools. 2.119 If you feel your workflow is getting out of control, analyse the time you spend each day using the following guidelines: What went right today? Why? What went wrong today? Why? What time did you start on your top priority task today? Why could you not have started earlier? What was the most and least productive period in your day? Why? Who or what accounted for the majority of interruptions to your work? Can these interruptions be better controlled? What were your three biggest time-wasters today? How might they be fixed? What of your activities need more time? Do you have any tasks that can be delegated? But remember that effective delegation requires: identification of precisely what is being delegated; planning of the delegation — if you cannot control it, do not delegate; providing training, coaching or backup as required for the delegate; selecting the right person for the job; making the delegation. It is at this point that time is required to communicate the task. Ensure that in delegating you: explain why the job is important; delegate in terms of results: ‘Look into this problem and give me all the facts. I will make the decision’; ‘Let me know the options available’;

‘Recommend a course of action for my approval’; ‘Let me know what you intend to do. Delay action until I approve’; and ‘Take action. Let me know what you did. Let me know how it turns out’; [page 108] define the limits to the authority delegated; agree on deadline; ask for feedback; make sure you are available for feedback; follow up the delegation: insist on results not perfection; insist on timely information; reward good performance; and learn from less than optimal performance.

Guidelines for task management 2.120 Date management It is the fact of tracking and reviewing dates which is important, not so much the manner in which the tracking is achieved. What is essential is to maintain clarity of communication between yourself and the next person who may pick up the file you have just been working on: All critical dates for a matter should be identified in a completion checklist or matter action plan. Make sure that the critical dates recorded include the relevant: procedural and milestone events that will occur in this matter; reporting cycle; and billing cycle. Each person must have a diary (electronic or manual) in which he or

she records each day’s meetings and critical events. Firm, team and matter diaries should be implemented as appropriate. Posting of diary events on the relevant client files should occur as part of the risk management process of the firm. A person’s diary, whether manual or electronic, provides a convenient place from which the events of the day may be controlled. Time records for substantial work (for example, research, conferences and drafting), phone calls to be returned, conferences and other attendances booked and ‘to do’ lists may all be controlled through a diary of proper format and then transcribed to the relevant firm system. Modern electronic case management systems minimise transcription and posting effort between the primary date and event management system of a person with the firm’s management and accounting systems. 2.121 Matter event recording The adequate recording of the key events that comprise the work being completed for the client is primarily a client accountability and risk management function within the firm and secondarily a necessary element in the resource costing systems of the firm. As estates practice moves from time-based to value-based service pricing, the business requirements of the firm still require event recording disciplines to be maintained. [page 109] It is the fact of event recording which is important not the manner of it. Each firm has to develop appropriate systems to implement these guidelines. Practitioners and their staff need to ensure that in respect of each matter, the file becomes the authoritative record of all activity, whether billable or not! Matter event recording, diary event recording and critical date recording should be implemented within one event management system in the firm. Where this is not possible, the number of date or event management systems within the firm should be kept to as small a number as possible.

Integrating management of these issues into a practice management system 2.122 The global systems of the firm need to be used to the full extent to implement these standards. Any deficiency in firm systems in supporting these guidelines will require review by the management team of the firm and the materiality of any lack of support assessed having regard to the particular requirements of the firm. The work of the practice is parcelled in discrete engagements, projects or matters (matters) that are established as clients engage the firm. These matters are represented in the physical and electronic files that are created to contain the record of work that results from the client’s engagement of the firm. Each matter has a manager assigned who is responsible for the entire life cycle of the matter in the firm from creation to archiving. Each matter manager may have to manage one or more people as resources within the matter in order to fulfil the terms of the client’s engagement. In managing matters, the following general guidelines should apply: The firm should maintain only one authoritative record of the identity of clients of the firm. The current status of matters needs to be conveniently discoverable within the systems of the firm. Only files which form part of the true work in progress of the firm or support the current operation of the firm should be stored in the active or current physical file storage systems within the office. Each file must become the authoritative record of all effort that is expended by the practice in the performance of a matter for a client. The contents of a matter file, together with the accounting records relating to that matter, enable the convenient billing of that file to its appropriate value and must be maintained in an appropriately auditable fashion. Electronic messaging and case management systems should be used as appropriate to provide a convenient way to ensure that not only is an

attendance memo created for a matter event and placed on the electronic or physical file, but also that the content of the message may be quickly transmitted to all persons concerned with that matter, and [page 110] the message content itself may be used as the commencing point for further instructions to be given to staff in the matter. All communication events that are matter events must be appropriately filed in the physical or electronic file for the matter. Electronic diaries allow for a team member to maintain a personal diary for forward planning purposes and for booking client conferences and recording relevant matter events. All team members may have access to the diary to book meetings with and record appropriate matter events. Diaries (whether physical or electronic) need to interact with resource booking and firm wide event and priority management systems as appropriate. It is for the firm to create and mandate the use of appropriate systems. In addition to these records generated by the fee earner, the matter file also records the following: checklists and other administrative oriented documents as generated to meet the requirements of the matter; disbursements not otherwise recorded by the accounts department; attendance memos from support staff performing fee earning work in the matter; copies of the documents received and generated in the matter; and correspondence received and generated in the matter.

REVISION QUESTIONS

Understanding the client’s world 1. What key issues around the client need an estates practitioner consider as they take on a new engagement? Give examples of particular issues which typify the client’s circumstances as simple, complex, complicated or chaotic. Scoping professional responsibility 2. Compare and contrast the roles of lawyers, tax practitioners, financial planners and financial advisers in estate engagements. 3. Discuss the key risk areas that estates professionals commonly need to manage when engaged by a client. 4. How does the interest of the client provide a focus for the delivery of estate services concurrently to the client? 5. What are the legislative sources of the professional authority of financial planners and lawyers in New South Wales? How do the situations of clients in other states differ from clients in New South Wales? [page 111] Establishing multi-disciplinary collaboration 6. Compare and contrast the principal methods for establishing multi-disciplinary collaboration in estate engagements. 7. Compare and contrast the roles and duties of the key professional constituents of the trust and estates profession. 8. What is relational professional practice and how does this relate to the practice of estate planning? 9. Describe the principal phases and activities of an estate advisory engagement. 10. What key policies and procedures should an estates practice provide to support the operations of its practitioners? 11. What role do the concepts of estate territoriality, accountability,

12. 13. 14. 15. 16.

17.

18.

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client identity and beneficial interest play in the delivery of estate services? What is the difference between an estate asset and a person’s financial resources? What role do fact finders play in estates practice? How do compliance systems contribute to the organisational culture and commercial environment of an estates practice? Describe the principal elements of a report following an estate situation review. Do you agree with the following statement: ‘Estate planning is a multi-disciplinary, relationship and client interest centred professional practice’? Provide reasons and examples for your position. How can the role and function of professional and nonprofessional financial advisers be distinguished? Provide reasons and examples for your position. ‘Fiduciary duty and non-professional advisory roles cannot be reconciled.’ Discuss any aspect of this statement that interests you.

See the definition at . This follows the ethical practice models of the legal professional adapted for estates practice. As cited in the Esanda case. See [1986] HCA 68; (1986) 162 CLR 340 at 357. See information at . For example, and . [1954] HCA 79; (1956) 99 CLR 362 at 405 and 415. As cited in Garcia. Based on the work of Friedrich Glasl. For a commentary on this work, see the article at . As cited at . See . A range of examples are provided in Appendix A to this chapter. For full text, see the information at . See Tax Practitioner Board Explanatory Paper TPB 01/2010 at p 7, and the further information at . See Phillips v Britannia Hygienic Laundry Co [1923] 1 KB 539; Stennett v Hancock [1939] 2 All

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ER 578; Malfroot v Noxal Ltd (1935) 51 TLR 551 as cited in Hill v Van Erp [1997] HCA 9 at 3 and the discussion at this page of the judgment. See . See . See . See . For details about the currently operating schemes, see . See 5220.0.55.002 — Information paper: Gross State Product using the Production approach GSP(P), 2007 cited at . See . See the information at . See