LICENSEE STANDARDS. Estate Planning & Legal Services

Transcription

1 LICENSEE STANDARDS Estate Planning & Legal Services Version 1.0 October

2 OVERVIEW This document is relevant to advisers who utilise outsourced legal services or have referral relationships with legal professionals. It has been designed to provide guidance to ensure advisers do not cross over the line into legal advice and provide some practical tips when facilitating or project managing legal solutions. ACCREDITATION Advisers who are actively involved in the provision of estate planning advice are required to have the below qualifications: Completed the Diploma of Financial Services (DFS 1 4) or equivalent; and Completed the Estate Planning module towards the Advanced Diploma of Financial Services or equivalent; and Registered with the Tax Practitioners Board as a tax (financial) adviser or tax agent. WHAT IS ESTATE PLANNING ADVICE? Advisers provide estate planning advice and other services in a number of ways. Typically, this includes advice to clients regarding structuring of their investments for tax minimisation and asset protection, including superannuation recommendations and binding death benefit nominations. Advisers may also identify gaps in the client s estate plan and recommend that clients seek professional legal advice to review and update their wills and powers of attorney ( PoA ). WHAT ARE LEGAL SERVICES? Legal services such as legal advice must only be provided by a qualified legal professional such as a solicitor or barrister. In the context of estate planning, legal services include drafting documents such as wills, PoAs, trust deeds that affect a person s legal rights. Legal services also include advising clients in relation to the legal character of these types of documents, especially in relation to the prospects of litigation. In the context of estate planning, it is critically important that financial advisers do not confuse clients understanding of the financial adviser s role, such as by giving an opinion to a client about how to protect their will from being challenged or how to structure their estate to best ensure their assets are bequeathed according to their wishes. Those issues are essentially about the prospects of litigation and therefore the domain of lawyers. Advisers may project manage or facilitate the provision of legal services and give opinions about financial products that need to be considered within estate planning (e.g. super, tax considerations for securities), however advisers may not portray themselves as providing legal advice or services. See the below framework for further details about differences between legal and financial advice. 1

3 FRAMEWORK These guidelines set out scenarios of what advisers are allowed and not allowed to do in relation to Estate Planning and Legal Services. Type Allowed Not allowed Estate Planning Death Benefit Nominations Self-Managed Superannuation Funds (SMSFs) Recommend a client seek professional legal advice to establish or update their will, PoA or trust deed. Recommend structuring their investments for tax minimisation or asset protection purposes. Referring to a legal professional, or utilising an outsourced legal service where the adviser facilitates the client obtaining estate planning documentation. Attending joint meetings or teleconferences with clients and legal professionals where it is clear the legal professional is providing the legal services. Giving information about how certain financial products would be taxed for different beneficiaries upon the client s death. Collection and facilitation of information to be provided to the outsourced provider or legal professional Witnessing a will, PoA or Trust Deed providing appropriate measures are taken (please see below for further details). Recommend a client set up a binding death benefit nomination. Providing general advice on benefits and risks of binding death benefit nominations. Witnessing a death benefit nomination. Recommend establishing an SMSF and advising of the benefits of a corporate trustee compared to an individual trustee. Recommend establishing a Limited Recourse Borrowing Arrangement and advising the trustee that they would need to establish a bare trust. Referring to a legal professional, or utilising an outsourced legal service where the adviser facilitates the information. Giving opinions on which trustee structure may be suitable for investment and/or taxation purposes. Drafting or amending legal documents such as wills, PoAs or trust deeds. Using language that could potentially mislead the client into thinking the adviser is a qualified legal professional. Giving an opinion about how to structure an estate to ensure certain people are bequeathed the assets intended for them. Holding or acting under a PoA for a client. Acting as a trustee or executor for a client. Acting as an attorney for a client Being nominated as a beneficiary for a client s account. Telling the client how they should have their will witnessed or whether they can change how they have been told to have it witnessed. Making a specific recommendation to the client on who should be noted in the binding death benefit nomination. Telling the client how they should have their nomination witnessed. Drafting or amending the trust deed or company constitution. Drafting or amending the bare trust. Using language that could potentially mislead the client into thinking the adviser is a qualified legal professional. Giving opinions on whether another trustee or member of the fund can overrule a death benefit nomination or an executor. Giving opinions on which trustee structure will best achieve the client s estate planning objectives. 2 2

4 UTILISING OUTSOURCED PROVIDERS Many financial advisers will partner with outsourced providers to assist their clients with their legal needs. This could include referring to a legal professional in their local area or utilising an online legal service provider. Centrepoint Alliance has partnered with Topdocs Pty Ltd and Topdocs Legal Pty Ltd to assist our financial advisers to meet their client s estate planning needs by providing complementary legal services to the adviser s own services. Through the Centrepoint Alliance Document Portal, advisers can access a comprehensive range of legal documentation and services for SMSFs, Companies, Trusts, Estate and Succession Planning. Whether financial advisers utilise the Centrepoint Alliance Document Portal or refer to local legal professionals, advisers must ensure that their role in the provision of the legal services to their clients is that of a project manager or facilitator. The financial adviser s role should be to collect the relevant information with the client and to provide this to the outsourced provider. Financial advisers can charge a fee for facilitation of legal and other estate planning services. Where a financial product may be involved in facilitating the client s estate planning needs (such as where the client is a trustee of an SMSF), this facilitation fee should be disclosed within any relevant Statement of Advice. Where no financial products are involved, the fee must still be disclosed to the client in writing before providing those services but need not be within a Statement of Advice. Please also note that Centrepoint s partnership with Topdocs includes an arrangement for Centrepoint financial advisers and their clients to receive discounted (wholesale) prices for Topdocs services, and Centrepoint receives the difference between the wholesale and retail prices. Where the services relate to SMSF (such as establishing an SMSF, amending an SMSF Deed, entering a limited recourse borrowing arrangement), as the rebated fee relates to a financial product the following must be included in the Statement of Advice: Centrepoint Alliance has arrangements with Topdocs Pty Ltd and Topdocs Legal Pty Ltd (Topdocs), where they may receive a payment should you proceed with any legal services or purchase any legal documents through Topdocs. If no Statement of Advice will be used to communicate to the client the services that will be provided or documents to be ordered from Topdocs, the above wording must still be disclosed to the client prior to the services being provided. Understanding the Centrepoint Alliance Document Portal Financial advisers can access the portal by clicking here. When accessing the portal, financial advisers must consent to the terms of use. Financial advisers can use the portal to order various SMSF, company or trust documents or to engage with Topdocs Legal to provide a legal service whilst allowing the financial adviser to control the client relationship at all times. 3 3

5 Order Documents Financial advisers can order documents simply and easily through the Order Documents tab on the home page. A range of documents relating to estate planning needs are available. Financial advisers must first ensure that the client has consented to their information being shared with Topdocs Pty Ltd. Financial advisers should utilised the consent form in Appendix 1 or alternatively add additional specific consents to your current engagement process. Financial advisers must also ensure that the information being collected from the client is update to date and accurate as the information entered will be exactly what is included in the documents. Estate Planning Financial advisers can utilise the estate planning services offered by Topdocs Pty Ltd and Topdocs Legal Pty Ltd. As outlined in the document order process below, financial advisers must ensure that the client has provided express consent for the information they provide to the financial adviser to be disclosed to Topdocs Pty Ltd and Topdocs Legal Pty Ltd prior to sharing that information with Topdocs. The Topdocs estate planning process fundamentally follows these key steps: 1. The financial adviser reviews their client s circumstances to identify their estate planning and succession planning needs, and completes an initial fact find (provided by Topdocs). This fact find includes a privacy consent declaration for the client. 2. The initial fact find is sent to Topdocs for review by a lawyer from Topdocs Legal, who contacts the financial adviser to discuss the options suitable for their client and the costs in the matter. 3. Where a matter is less straight forward than just ordering a standard type of document or where otherwise the Topdocs lawyers will need to have some engagement directly with the client (e.g. to discuss their wishes for their will or another legally produced documents such as a buy-sell agreement or power of attorney), Topdocs Legal will provide a costs agreement for the client to consider before proceeding. This will cover only Topdocs Legal s services. 4. If a facilitation fee is to be charged by the financial adviser, this needs to be disclosed to the client separately. See further below for guidance on how invoicing must be carefully handled where legal services accompany the financial adviser s services. 5. If the client is happy to proceed with the matter, an initial meeting is organised (in person at the adviser s office or by Skype) between the lawyer, the financial adviser and the client to further discuss the client s requirements and the structure of the documentation required. 6. Following the initial meeting, the lawyer prepares drafts of the relevant documents such as Wills, Powers of Attorney and any business succession agreements, and forwards them to the financial adviser for their and their client s review and approval. 7. If required, a further discussion with the financial adviser and/or the client (by telephone or Skype) is arranged following their review of the draft documents to discuss any amendments requested by the client. 4 4

6 8. Once the documents are approved, copies of the documents are sent to the financial adviser s office with step-by-step instructions regarding witnessing and execution of the documents. Alternatively, if required, Topdocs Legal arranges a further meeting with the financial adviser and the client at the adviser s office for execution of the documentation. 9. Where legal advice or legally-produced documents are not required, the documents to be ordered will be produced by Topdocs Pty Ltd not Topdocs Legal Pty Ltd. In those cases, the documents will be required to be paid for by the financial adviser prior to them being produced by Topdocs. The default payment method is via a credit card. 10. However, other payment options are available upon request such as a direct debit facility. Rather than pay as you order, a direct debit arrangement allows financial advisers to process orders and receive invoices at the time of order instead of at the end of the month. Where processed by this method, Topdocs will send the financial adviser an itemised statement and confirm that they will debit the nominated credit card or bank account with the statement total. In practice, this is usually around 10 days into the new month. DOCUMENT REQUIREMENTS Requirements Client Data Form or Fact Find Advice Documents Cash Management Accounts Witnessing Documents Storing Wills and Powers of Attorney Ensure that all information provided to outsourced provider is up to date and accurate. Ensure that the client signs the relevant fact find and consents to: - the sharing of their personal information in accordance with the Australian Privacy Principles (APP). - that they understand that the legal professional is responsible for the legal services being provided. Estate planning recommendations should be included in the relevant advice document. Advisers should personalise the Centrepoint Alliance strategy text when utilising it within their advice documents. When establishing a Cash Management Account (CMA), it is a requirement to disclose any fees that will apply, or commission received. This should be included either within the relevant advice document or alternatively utilising the Cash Management Account/Basic Deposit Product Statement. This is located on the adviser intranet. The manner that estate planning documents (especially wills and death benefit nominations) are witnessed, can affect the contestability of the client s wishes in court. Advisers must NEVER give opinions, guidance or instructions on witnessing estate planning documents. Topdocs provide clear instructions on witnessing. It is essential that adviser s follow these instructions carefully. When using other outsourced providers, advisers should refer the client to the outsourced provider for instructions on witnessing. Advisers should not offer to store wills or other legal documents on behalf of the client. Clients should either store their own wills and legal documents securely, or alternatively they could have them stored by a qualified legal professional. 5 5

7 Charging a facilitation fee Privacy and Record Keeping Conflicts of Interest Advisers may charge a facilitation fee when they are facilitating the legal services. This fee must be disclosed to the client within an engagement letter and/or the relevant advice document. The facilitation fee should be paid to the relevant Australian Financial Services Licensee. The facilitation fee invoice must not represent that the adviser has provided legal advice or is responsible for producing wills, powers of attorney or buy-sell agreements. See below for invoicing where legal services are involved in Advisers must ensure all records related to facilitating the estate planning or legal services are maintained in accordance with the Australian Privacy Principles and the Centrepoint Alliance Privacy Policy. Where an adviser refers a client to a legal professional and receives a benefit such as a referral fee, this must be disclosed to the client prior to the referral and also must be disclosed in relevant advice document. Where the legal professional is a related party, this should also be disclosed within the relevant advice document. OTHER CONSIDERATIONS Invoicing Where documents are produced by or legal services are provided by a law firm, it is important to be very careful to not misrepresent or confuse the client whom provides which services. Law firms are legally required to disclose their fees and costs in costs agreements prior to providing legal services. Invoices from a financial adviser for estate planning services must not confuse the client or contradict the law firm s costs agreements. Topdocs Legal Pty Ltd will take instructions to invoice as follows: 1. The client direct if the financial adviser wishes to have no facilitation or intervention in the process. 2. The client direct if the financial adviser is facilitating and wishes to send their own facilitation fee invoice. 3. The client, care of the financial adviser, and they can then invoice their client our fee plus the adviser facilitation fee. If the financial adviser elects to invoice the client via the third option (where the financial adviser consolidates the invoicing for the client), the fees and/or services must be separated on the single invoice or clearly worded within the invoice to enable the client to clearly and unambiguously understand that Topdocs Legal Pty Ltd has provided the legal advice to the client or produced the legal documentation. To be clear with consolidated invoicing, we recommend using invoice wording such as the following examples: Facilitation of Estate Planning Documentation via Topdocs Legal Pty Ltd - $XXXX Assistance obtaining legal advice from Topdocs Legal Pty Ltd - $XXXX Facilitation fee Will produced by Topdocs Legal Pty Ltd $XXXX $XXXX 6 6

8 Marketing Advisers may wish to promote estate planning and legal services to their clients. Caution must be taken to ensure that any marketing does not mislead the client into believing that the adviser is a qualified legal professional. Advisers should ensure all marketing and promotional material (including website updates) are approved by Professional Standards prior to publication. Please Professionalstandards@cpal.com.au for any marketing approvals or queries. Topdocs offer an estate planning marketing kit. This kit includes client questionnaires, brochures and also includes a client letter that can be personalised. When personalising the client letter, advisers must ensure they do not misrepresent themselves as being a qualified legal professional. Please contact Professional Standards if you have any queries. Business Succession Planning/ Buy-Sell Agreements There are some common issues that often arise when providing business succession advice. Below are some helpful tips to prevent disputes after an event that triggers the buy-sell agreement. Always involve all parties when documenting the succession plan. Always ensure that clients partners are aware of the plans. Do not use templates or try and draft your own agreement. Take positive steps to follow up to ensure the agreements are fully implemented. QUERIES & FURTHER INFORMATION Additional queries should be directed to your local Professional Standards Consultant or you can ProfessionalStandards@cpal.com.au 7 7

9 APPENDIX 1 PRIVACY CONSENT FORM I/We hereby declare that: I/We declare that the information provided is complete and accurate to the best of my/our knowledge (except where I/we have indicated that I/we have chosen not to provide the information). I/We understand and acknowledge that by either, not fully or accurately providing information, that any legal services provided may not be appropriate to my/our estate planning needs. I/We give permission for the information that I/We have provided to be disclosed to and used by the following parties: o my/our financial adviser, o the Australian Financial Services Licensee that has authorised my/our financial adviser to provide financial advice to me/us, o Centrepoint Alliance Limited and any associated companies, o <Topdocs Pty Ltd, Topdocs Legal Pty Ltd> or <name of other legal professional> and any representative or agent of either company, including any lawyer who provides me/us with legal services, and o any company who facilitates the communication of the information to any of the above parties, such as electronic mail services, cloud storage services and/or document creation services, primarily for the purpose of providing me/us with legal services about my/our estate planning needs and for other ancillary purposes including, but not limited to: o secure electronic storage of this information and this Client Fact Find for record-keeping purposes in accordance with the Electronic Transactions Act (1999), o clarifying the accuracy and completeness of my/our financial circumstances, and o retention and use of this information for the preparation of subsequent financial advice to me/us. I/We acknowledge that all legal services will be provided by <Topdocs Legal Pty Ltd> or <name of other legal professional> and that my/our financial adviser is not authorised or qualified to provide legal services. Should I/we have any legal services queries these should be directed to <Topdocs Legal Pty Ltd> or <name of other legal professional> or to another suitably qualified professional. I/We acknowledge that my/our adviser cannot be held liable for any legal services provided. Client Acknowledgement Name Signature Date [XX] / / Name Signature Date [XX] / / 8 8