How would you briefly describe the current state of estate planning in WA?
I will start by saying that it is a very interesting and continually evolving area of law to advise across. As with other Australian jurisdictions, as well as the trend globally, WA is certainly experiencing an uptick in demand for more complex estate planning services, coupled with a greater awareness amongst the general population as to the importance of estate planning. There is a wave of wealth transfers that have begun from a very industrious generation of business builders, down to the next generation, and in WA, including with our farming Clients, the value of pre-emptive advice has never been greater. As with the global trend, we are also keenly aware of estate planning for digital assets, and this will be an area that only continues to evolve. I note that very recently the Advance Health Directive form in WA underwent a significant update, and it is worth advisers being familiar with the substance of this new form.
What are the key considerations when taking instructions in complex estate planning matters?
When working with Clients whom have multiple associated entities, foreign assets, a SMSF and/or particularly complex family dynamics, I have always found it most helpful to have visibility over the full breadth of assets and liabilities, as well as a detailed understanding of family relationships. These are delicate discussions and certainly require trust and transparency on the part of a Client. The upside however is that optimal advice can then be provided and a considered, robust, and often tax effective structure mapped out, that achieves the Clients estate planning objectives, as well as protects the estate and associated entities as far as possible. In order to provide a rich and full estate plan for Clients, engagement with their other advisers is key and a good working relationship as between accountants, lawyers and financial advisers (both local and foreign), is in my view, the linchpin of many a successful and enduring estate plan.
What are some of the common mistakes that you see being made when taking instructions?
In my experience, assumptions made without a full Client background and/or review of the suite of associated documents, can result in a plan not fully suited to the relevant circumstances (i.e. SMSF documents not reviewed contemporaneously with estate planning; or other trust and company documents, for example, unit/discretionary trust deeds, company constitutions and shareholder agreements, not fully reviewed and/or their implications not well understood). Even where Clients are referred by another legal, accounting or financial adviser colleague, it is incumbent on the solicitor instructed to take their own set of instructions from the Client and reach out for any information not provided up front.
What traps should lawyers be aware of when it comes to family business succession planning?
Family business succession planning is such an interesting area and one fraught with potential difficulties and conflicts. In my view, open communication as between family members and their advisers, is critical in devising a plan that will endure and ideally remain free from conflict. Documenting such discussions is very helpful for future reference by family members and advisers, and such documentation may include a family charter, statement of values and/or a family constitution. So long as advice is taken early enough, there are many structuring options available when passing on control of a family business upon the event of loss of capacity or death. Of course succession planning can also occur without loss of capacity or death, however these are the events that estate planning lawyers will generally encounter.
How real is the threat of disputes when instructions are not properly taken?
Such threat is very real and in fact almost likely. We continue to see a rise in estate litigation across Australia and as this avenue garners greater publicity, so the number of beneficiaries seeking recourse through the Courts multiplies. We live in a very digital age, which perhaps has prompted a rise in such disputes, as communications endure online for far longer than on paper and as such the “paper trail” is much easier to now locate, whether that be in the form of legal communications, beneficiary wishes and/or gift/loan movements between a testator and family member.
Lee-Ann Cartoon is an experienced tax and succession planning lawyer. She has worked throughout Australia and the UK advising clients ranging from global financial institutions and multinational energy and resource companies to high net wealth individuals. Lee-Ann’s experience has given her an appreciation of the importance of approaching any matter commercially, logically and with the client’s end goal front of mind. Lee-Ann has developed a particular interest in the area of complex estate and succession planning and regularly advises and presents across these areas. Connect with Lee-Ann via LinkedIn.