Wealth Management during the COVID-19 Pandemic
The COVID-19 pandemic has highlighted the need for properly documented succession plans. Legislative changes are now in place which enable professional advisors to continue to work with clients to ensure that their succession planning documents are effective, appropriate and validly executed while the COVID-19 pandemic continues.
A new, temporary regulation was made on 22 April 2020 by the NSW Governor which permits wills, powers of attorney and instruments appointing enduring guardians (together with a number of other documents) to be executed using video conferencing technology such as Skype, WhatsApp, FaceTime and Zoom. These changes enable us to now work with clients to execute their succession planning documents while social distancing.
Estate Planning
With the change and uncertainty resulting from the COVID-19 pandemic, it is now more important than ever that we work with our clients to review their existing estate planning documents. Alternatively, this may be a good time for clients to put in place the estate planning documents that they never got around to completing.
Aspects of estate planning documents which may be reconsidered at this time include:
Does the will ensure that assets go to the people who are intended to benefit?
Are the nominated executors appropriate?
Has a guardian been nominated for minor children?
Will the power of attorney continue to be effective if an individual lacks capacity?
When does the power of attorney commence? If it only commences when an individual loses capacity, what does this mean for any period of self-isolation?
Has someone been appointed to make healthcare and lifestyle decisions in the event that your client is unable to do so?
If a spouse has been appointed as an individual's attorney and/or guardian, has an appropriate substitute been appointed?
Is the person who has been nominated as attorney and/or guardian appropriate having regard to social distancing measures that are being adopted? Are they themselves within a group that is deemed to be at risk of COVID-19 and accordingly unlikely to be able to act?
Superannuation
As part of advising on a comprehensive succession plan, it is also important to review arrangements relating to superannuation.
Without being exhaustive, we recommend that professional advisors work with their clients to review the following:
Are binding death benefit nominations required?
Have any binding death benefit nominations lapsed since execution?
If a binding death benefit nomination has not lapsed, is it still appropriate (in particular, be mindful of the age of nominated beneficiaries and the impact this may have on tax treatment)?
Who will manage the self-managed superannuation fund if a member dies or becomes incapacitated?
Are the terms of any pension arrangements still appropriate?
Does the client's current power of attorney specifically authorise the attorney to deal with the client's superannuation including making contributions and making binding death benefit nominations in the event the client loses capacity?
Family Trusts
Professional advisors should also look to integrate strategies for the succession of family trusts into the estate plans of their clients. This should include a review of all documents relating to family trusts (such as the trust deed, financial statements and any shareholder agreements for trustee entities).
The future objectives of family trusts should be considered and in doing so, the following issues may be considered:
Who will control the trust after the death of the current appointor(s)?
Is a separate deed of appointment or provision within an individual's will required to ensure the appropriate control of the trust in the future?
Should a statement of wishes in respect of the ongoing management and administration of any family trusts be included in an individual's will?
What impact do beneficiary loan accounts have on a client's estate planning intentions?
Succession Planning for Business Owners
It is also important that professional advisors work with business owners to ensure that their business succession plans properly document what is to happen in the event that a business owner dies, becomes permanently or temporarily incapacitated or bankrupt.
As part of this review professional advisors may consider with their clients:
whether existing shareholder, unitholder and partnership agreements are current and relevant?
whether a succession planning deed or buy and sell agreement is required?
are corporate powers of attorney required?
if life insurances have been effected, are the values of such policies appropriate?
These are challenging and unprecedented times. While we may be "remote", we are still here to assist you and your clients in any way we can.
The material in this article was correct at the time of publication and has been prepared for information purposes only. It should not be taken to be specific advice or be used in decision-making. All readers are advised to undertake their own research or to seek professional advice to keep abreast of any reforms and developments in the law. Brown Wright Stein Lawyers excludes all liability relating to relying on the information and ideas contained in this article.
contact
Geoff Stein
Partner
E gds@bwslawyers.com.au
P 02 9394 1008
Maria Poniros
Partner
E mxp@bwslawyers.com.au
P 02 9394 1013
Madelaine Inglis
Partner
E mti@bwslawyers.com.au
P 02 9394 1042
Suzie boulous
Partner
E sjb@bwslawyers.com.au
P 02 9394 1083