Accountants are great with numbers, so too are financial planners - it’s our safe zone. Cash flow bonus – done and dusted. Bear market ETF's – no problem. Tax-free pension income post age 60 – that’s a given. Numbers, tax returns, statements of advice, and endless amounts of paperwork to do around those numbers. And it takes so much time, every day.
The numbers are our blinkers.
But are really our blinders to what our clients really want.
Over the course of the last five years, I have switched from SMSF technocrat to family wealth protection. To be truthful, I wish I had done it ten or more years ago. I did start dabbling with the concept of a Family Super Fund in the 2000s and it was the right idea but a terrible choice of structure. If I had focused on building discretionary trusts optimised for family wealth protection (with a lineage distribution limitation) I would have been on the money. Super is great for tax, asset protection, and to a lesser extent, estate planning, but it has one huge drawback – access to funds. That is why there is only $800Bn in SMSF compared to the 2021 Productivity Commission report estimating that there will be over $6,000 Billion of family wealth to pass between generations in the next three decades.
So as my grandma, my earliest entrepreneurial mentor once said, “go where the flow of money is.” And with family wealth protection, it is getting bigger every day and there is even an association for advisers who want to specialise in this area The Succession, Asset Protection and Estate Planning Advisers Association – that already has over 100 founding members and many more soon to be certified.
Anyway, let me give you the five reasons that your clients love family wealth protection:
1. They tell me they do. I have surveyed more than 2,000 people, small business owners, professionals, start-up entrepreneurs, wealthy retirees, and good old hardworking Australians on this topic. When I asked them if they want their assets protected and held for the benefit of their lineage – the resounding answer is “YES”. Ask your clients which is more important, family wealth protection, accounts preparation, tax planning, or investment advice and you know what the answer is.
2. The Royal Family, Big Family Offices, and Families do it - so can your clients: If you look at the British Royal Family it is all built around – ready for it, lineage Succession. The line of the throne is Queen Elizabeth, Prince Charles, Prince William, Prince George, and then Princess Charlotte. No messing around and well known in advance. And if you get cut from the family then watch out - look at Prince Andrew’s fire sale of his assets now he is outside the family umbrella. And when the Queen passes do you think King Charles will cut him any slack? In the same vein, family offices are structured in a similar manner and with strong succession and structures. Now, with simple and clever planning, your clients can take full advantage of structured family wealth protection as well.
3. Build a Moat around your client’s Castle: Think of your own family and its wealth – where it is and in what structure. There are some good and bad structures for holding assets. Having a family home in your own name is good for tax purposes but shocking for asset protection. Same with negatively geared investments. All of these investments, businesses, and structures are a family’s castle, but they are all exposed. Whether during life through litigation, creditor petitions, incapacity, or on death from family provisions claims, family wealth is exposed. There is an importance to building a Moat around a client’s family castle – keeping the castle tight, making the Moat tough and ugly so that lawyers cannot breach it without the huge expense and deep strategy. If the Moat is big and filled with crocs and piranhas the lawyers will walk away – particularly the “no win – no fee” lawyers.
4. Assets in the “non-risk” spouse's name are NO answer: I was asked by one of our team today what is wrong with current asset protection strategies used by accountants for clients. And my answer came down to one word “Bosanac”. You may not have heard but late in 2021, the Full Federal Court enabled the Commissioner of Taxation to access a 50% interest in a family home which had been put in the wife’s name. Once a common strategy to put business, investment, and personal assets in a supposed “non-risk” spouse’s name but not anymore. There are better ways. And for anyone finding themselves in this position and needing help feel free to contact us at Abbott & Mourly lawyers via tanamourlis@abbottmourly.com.au
5. It’s early days and great fee revenue: One of my favourite stories was of an accountant up where I live in the Sunshine Coast who completed five Successor Director solutions for a client – a set of minutes and upgrade of a company constitution to enable a person to step in as director of a sole director company in the event of death, incapacity, bankruptcy or retirement. He charged $400 per company (legal firms charge $1,200) and it took him one hour. Now that is a great return for building strong succession planning (as required by ASIC) for client companies. This is one of thirteen “must-do” great fee-earning strategies that I can show you to make your client's structures as bulletproof as is possible under current laws and cases.
To be honest, I could detail another fifteen benefits but if you want to get a taste of what can be done, I have a webinar on Tuesday 1 February 2022 at 12pm ADST to show you how to build a Family Protection Trust for a family’s lineage. To Discover the Family Protection Trust, go to our "events" section on the website to register for our upcoming webinar.
Alternatively, if you would like to know more about advancing your knowledge and skills in this area and would like to attend our next three-day Succession, Asset Protection and Estate Planning Adviser training, get in touch with Talitha from Sales - Talitha@lightyeardocs.com.au
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