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Financial Adviser competency in Estate Planning Version 1.6.1 GU
Introduction
CERTIFIED FINANCIAL PLANNER™, CFP® and the CFP Mark are the global
symbol of excellence in financial planning.
The CFP Marks are owned outside the United States by the Financial
Planning Standards Board1 (FPSB). In 1990, the Financial Planning
Association of Australia (FPA) became the first international organisation
to be licensed to award CFP certification. FPA is the sole certification
authority in Australia2.
The FPSB recognizes the following elements of Financial Planner competence:
1. Abilities
2. Knowledge
3. Professional Skills
Recognising Estate Planning as a function of Financial Planners
The FPSB recognizes that Estate Planning is a specialist practice focus for
Financial Planners. Estate Planning is defined in its competency profile as:
“Strategies and techniques for preservation and distribution of accumulated
assets.”
This definition includes the pre and post death estate administration interests of
clients.
The breadth of this definition needs to be contrasted to the ASIC recognized
definition of Estate Planning within RG 146 that states simply:
Estate planning �
theory of estate planning (i.e. allowable investments, enduring and
non-enduring powers of attorney, share purchase agreements)
� management and investment strategies
� relevant taxation laws and regulations
These definitions have to be contrasted to is contrasted to financial planning
which is defined in the FPSB profile as:
“The process of developing strategies to assist clients in managing their
financial affairs to meet life goals.”
Estate Planning is recognised by the FPSB (an American organization familiar
with death duties as a fact of life) as a core ability of financial planners evidenced
1
2
See http://www.fpsb.org/CMS/index.php
See http://www.fpa.asn.au/FPA_Content.aspx?Doc_id=5001
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by the following characteristics of a financial planner in USA located practice:
1.218 Identifies the client’s estate planning objectives
1.219 Identifies family dynamics and business relationships that could impact
estate planning strategies
1.116 Collects legal agreements and documents that impact estate planning
strategies
2.116 Projects net worth at death
2.117 Considers constraints to meeting the client’s estate planning objectives
2.118 Considers potential estate planning strategies
2.216 Calculates potential expenses and taxes owing at death
2.217 Assesses the specific needs of beneficiaries
2.218 Assesses the liquidity of the estate at death
3.121 Develops estate planning strategies
3.122 Evaluates the advantages and disadvantages of each estate planning
strategy
3.123 Optimizes strategies to result in estate planning recommendations
3.124 Prioritizes action steps to assist the client in implementing their estate
planning strategy
The differences between the legal and taxation systems of the USA and Australia
requires that Estate Planning must be redefined within the Australian legal
context , learning as appropriate from these USA driven norms.
This general service approach remains relevant for use in Australia but the
knowledge, education and training that informs these competencies must be
refined to reflect actual client need because inheritance tax is not levied in
Australia. And does not form part of the double tax agreement between Australia
and the United States of America.
The financial planning profession in Australia has responded pragmatically to
the state and focus on professional education and training about estates practice
in general and trust and estate practice across the professions in particular. This
is strongly in evidence with the launch of the AEPS designation by the Financial
Planning Association of Australia.
Major influences on the Australian approach to estate planning are the lack of
inheritance taxes and gift duties in this country and the impact of overseas
interests on the management of the affairs of Australians. Approximately one in
four Australian was not born in this country. Many of those retain legal,
economic and social links to their country of birth. The interactions of these
linkages must be considered when dealing with the affairs of clients connected to
multiple jurisdiction.
Notwithstanding all of these facts, most Australian families earn less than
$75,000 per annum and will be lucky to have sufficient capital to survive what is
now for most workers a 15-25 year retirement. Estate planning for these
Australian normally means ensuring there is orderly and appropriate
management of their affairs in the face of their disability, incapacity or death.
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Multi generation wealth management for these clients is simply passing on by
direct gift whatever is left, to a person’s next generation successors and ensuring
the management of their property is appropriately and competently managed in
the mean time. Even at this level, the social importance of estate planning being
the catalyst of conversations within families about multi-generation support
remain valuable and relevant.
Estate Planning typically responds to client concerns about risks concerned with
particular goals and objectives they hold. These can be summarised as3:
1.
2.
3.
4.
5.
Personal and Family Representation and Succession
Family Continuity, Governance and Legacy
Wealth Preservation, Enhancement and Transfer
Business Ownership and Control
Financial Security and Compliance
Estate Planning focuses on the strategic review of a client’s needs and intentions
about the management, administration and succession to their estate.
Estate Planning is not just for the upper levels of economic strata’s, it provides a
consistent methodology against which the needs of all clients can be tested to
ensure that appropriate services are delivered to meet the actual needs of a
client.
It is necessary that the professions serving the community’s estate service and
private wealth management needs develop efficient and broadly available
solutions for all demographic segments in this country. The laws of intestacy are
an insufficient safety net for the broad segment of the Australian population4 whi
Notwithstanding its recognition as a specialist occupational focus area for
financial planners, there is no recognized body of knowledge for Estate Planning
within the Financial Planner Competence Profile published by the FPSB.
The work of the Estate Planning Experience Assessment Committee hosted by
Estplan Pty Limited5 has been focussed on establishing a recognized body of
knowledge and qualification path within Australia that supports the practice of
estate planning as a functional and specialist occupation of financial planners in
conjunction with complementary professional estate practitioners .
The Committee recognizes the work of the Financial Planning Standards Board,
the Family Firm Institute , the International Association of Collaborative
Following the work of Family Office Exchange and presentations of John
Benavides at the Family Office Congress in Melbourne Australia in December
2008. See papers at
http://www.dealersgroup.com.au/p3_Events.html?&event=1&page=4 (visited
26 April 2009).
4 Anecdotally estimated as 60% of Australians as not having wills.
5 See www.estplan.com.au
3
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Professionals in the USA, STEP Canada and STEP Worldwide6 as the relevant
international bodies contributing to the development of estate planning and its
associated wealth management fields internationally.
It is of concern to trust and estate practitioners in Australia that the legal service
response to estate planning is built on a knowledge of succession, family and tax
law. None of these subjects are taught as a compulsory subject in university law
degrees.
This means that most lawyers do not have the professional knowledge to
provide estate advisory and administration services as they lack primary
training in one or more of succession, elder, retirement, family or tax law.
So whilst we aspire to have a strong body of knowledge supporting the
occupational specialisation of financial planners as estate planners; the
establishment of reciprocal qualification recognition with the legal, accounting
management consulting and other allied professions remains a work in progress.
In this standard we have drawn freely from the FSRB’s Financial Planner
Competence Profile 2007 edition in order to articulate with referential integrity,
the core abilities and competences of estate planning that are synergistic with
already accepted financial planning abilities, knowledge and professional skills.
We have accepted that the CFP professional skill standards are appropriate as an
occupational standard for estate planning subject only to an extension to the
functional scope of estate planning and the ethics components of those skills to
more appropriately control the engagement of planners to, individuals, family
group and comparable multi party client engagements.
The interaction of the professional role of financial planners practicing as estate
planners with other areas of professional practice e.g. law is lightly touched on in
this standard and the subject of continuing development as engagement of the
financial planning profession with estate planning increases.
6
See www.step.org for more information.
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The markers of competence
The FSRB’s Financial Planner Competence Profile makes the following
observations which are also relevant for Australian Financial Planners:
“The effective combination of abilities, skills and knowledge is what defines the financial planning
professional’s performance as competent.”7
“Financial planning professionals who have chosen to specialize or limit the scope of their practice
(e.g., in one or two Financial Planning Components such as Estate Planning or Tax Planning) consider
the entire set of financial planner abilities to identify which Financial Planner Ability to employ during a
client engagement.”
Estate Planning Definition
Estate Planning is focussed on the strategic review of a client’s needs and
intentions about the preservation and distribution of their accumulated assets. It
results in the establishment of an estate administration plan that contains the
agreed steps to implement a client’s estate planning strategy
Such a definition, whilst reflecting the FPSB definition, does not reflect any
richness of meaning from which further understanding of the estate planning
professional role can be gleaned.
Some attempts to establish definitions estate planning definitions with extended
meaning are:
1. The strategies, processes and actions to preserve your capital and
values for yourself, your family and successors.8
2. Estate planning is the deliberate planning for the future management of
your assets if you become unable to manage them for yourself.9
3. Estate planning is the process of disposing of an estate. Estate planning
typically attempts to eliminate uncertainties over the administration
of a probate and maximize the value of the estate by reducing taxes
and other expenses. Guardians are often designated for minor children
and beneficiaries in incapacity10.
It is clear, even from these definitions that estate planning has no single meaning
that is broadly accepted.
It seems logical in the face of this fact that the definition of estate planning
established by the FPSB be retitled as defining “private wealth management
services” and estate planning be in turn recognised as the professional services
focussed on enabling the preservation and transfer of a client’s capital and values
for the client and their designated successors.
7
Page 6 Financial Planner Competency Profile Copyright © 2007, Financial Planning
Standards Board Ltd.
Perkins & Monahan 2nd ed. Chapter 1 para 1.3
9 see
http://www.axa.com.au/axa/axa.nsf/Content/Super_FAQRetEstatePlanning
10 http://en.wikipedia.org/wiki/Estate_planning
8
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Estate Planning is therefore best understood as a professional occupation
focussed on the preservation and transfer of a client’s weal;th for themselves and
their designated successors.
The competencies defined in this standard are intended to support a
professional occupation within financial planning that is focussed on enabling
the preservation and transfer of a client’s capital and values for the client and
their designated successors. It is recognised that such a professional occupation
is responding the following broad concerns of clients11:
1.
2.
3.
4.
5.
Personal and Family Representation and Succession
Family Continuity, Governance and Legacy
Wealth Preservation, Enhancement and Transfer
Business Ownership and Control
Financial Security and Compliance
In addressing these issues the planner is necessarily having to consider and
respond to the following systemic connections of the client:
1.
2.
3.
4.
Family
Business
Property
Social and Community.
The planner typically produces as estate strategy review report that outlines to
the client the planners understanding of the client’s concerns about their:
1. Objectives and Risks
2. Situation
3. Proposed method to meet the identified objectives and risks (the Estate
Administration Plan)
4. Issues for further discussion or delegation to another professional
5. Proposed actions to implement the Estate Administration Plan, if
necessary subject to the input of other professionals.
The report also will detail as appropriate to the engagement
6. Pricing and financial matters
7. Formal engagement terms unless previously delivered
8. Excluded areas of work
9. Areas of responsibility retained by the client.
10. Fundamental limits to the engagement imposed by the client.
The client will retain the responsibility to integrate the result of the estate plan
with the administration of their overall affairs unless that function is delegated
in part to another professional such as their financial planner in a “lead adviser
engagement”.
This follows the work of John Benevides and the Family Office Exchange and is
used with permission of John Benevides. For more information see
https://www.familyoffice.com/ .
11
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Once the plan is approved, the implementation of the plan is normally under the
joint management of the client and as appropriate, their lead adviser and
representatives of the broader family interests of the client.
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Estate Planning Functions
Core Elements of the Function
Collection
The planner gathers information. This includes identifying related facts, making
necessary calculations and arranging client information for analysis
Analysis
The planner identifies and considers issues, performs financial analysis as
appropriate and assesses the resulting information to be able to develop estate
planning strategies for a client. Including subsidiary strategies than refer areas
outside the scope of the financial planners core competency to other
professionals for assistance e.g lawyers, tax advisers, accountants, family
business consultants, family dynamics consultants.
Synthesis
The planner synthesizes information to develop and evaluate strategies to create
an estate plan for evaluation by the client and if appropriate, other advisers.
Core Estate Planning Competencies within the Estate Planning Function
Collection
The planner:
1. Collects quantitative information required to develop an estate plan
2. Collects qualitative information required to develop an estate plan
Analysis
The planner:
1. Considers potential opportunities and constraints to develop estate
planning strategies
2. Assesses information to develop strategies
3. Assesses the role and function of other professionals who are needed to
deal with issues that lie outside the core competency of the financial
planner.
Synthesis
1. The planner develops and evaluates strategies to create an estate plan foe
evaluation by the client and other advisers as appropriate.
2. The planner, if in a lead adviser role to the client and only to the extent
required by the client, assists the client to evaluate choices generated by
other advisers.
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Financial Adviser competency in Estate Planning Version 1.6.1 GU
Fundamental Estate Planning practices
Planner Assessment principles
Knowledge Objectives
Understand basic concepts of estate planning
Understand legal and taxation aspects of wealth preservation and
distribution
Identify applicable legislation and law
Identify key estate planning issues and techniques
Identify multi-disciplinary nature of estate planning and explain normal
scope of advisor roles.
Identify and explain the systems nature of estate planning and
administration as this relates to client affairs management and the impact
of the following systems on the affairs of the client:
1. Property
2. Family
3. Business
4. Social and Community
Skill Objectives
Primary Learning Objectives
Evaluate an individual’s estate planning needs
Formulate estate administration plans including, asset protection, business
succession, retirement, sickness and death, multi jurisdiction asset management,
care ,family interruption and continuity plans
Evaluate when testamentary trusts and life-time trusts are appropriate
Assess estate planning proposals for effect of income and capital gain attribution
rules
Design tax literate estate plans
Evaluate tax consequences of property owned in Australia and foreign
jurisdictions
Identify, evaluate and appropriately resolve ethical dilemmas and professional
responsibility boundaries in estate planning engagements
Understand interface between estate planning, estate administration and
personal succession.
Identify/analyse/advise on estate planning needs, situations and alternatives,
subject to the core competence of the planner.
Applied Skill Objectives
The planner demonstrates the ability to:
1. Integrate core competencies with estate planning service components;
and
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2. Understand and master the interrelationships between the various estate
planning abilities required to carry out the Estate Planning function.
The planner does not review tax, asset protection, superannuation, retirement,
care or estate planning needs in isolation when providing financial planning to a
client.
The planner applies the relevant abilities to the functions they are carrying out in
the planning process concurrently to meet all identified needs of the client in an
engagement.
Core estate planning practices
The planner, as appropriate to the scope of his engagement:
(a)
Identifies the client’s objectives, needs and values that have estate
planning implications
(b)
Identifies information required for the estate plan
(c)
Identifies the client’s legal issues and any other issues outside the core
competence of the financial planner that affect the estate plan and creates a subplans to address those issues.
(d)
Determines the client’s attitudes and level of financial, social and business
sophistication
(e)
Identifies material changes in the client’s personal and financial situation
of concern to the client
(f)
Prepares information to enable analysis
(g)
Conducts analysis and synthesises solutions
(h)
Presents solutions and assists clients to evaluate choices, assisted by
other professionals as needed.
(i)
Once the clients decides on the estate administration plan, the adviser
supports the implementation and review of the plan as appropriate to the case.
The planner uses a consistent process to organise and execute his estate
planning work that has, as a minimum, the following elements:
1. Client and Planner identify the issues and create a sub plan for dealing
with legal, accounting and tax issues they identify.
2. Gather information about assets and liabilities
3. Client share interests and goals
4. Client and Planner develop property ownership, sharing and succession
principles and briefing for complementary estate professionals as needed.
5. Planner generates options and submits these to client.
6. Planner assists client to evaluate options which are consistent with the
principles of the client and estate stakeholders and satisfies appropriately
their common and individual interests.
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7. Clients and Planner consider the alternatives and assists the client to
resolve any conflicting interests and objectives identified in the planning
process.
8. Planner documents any agreement between the parties and the final
strategy selected by the client once all relevant professionals have
contributed to the plan.
9. Planner supports the client to implement estate representation and
management consistent with the estate plan in conjunction with other
relevant professionals.
10. Planner and client periodically review the performance of the plan or as
otherwise required by law. Adjust the performance of the plan as
necessary.
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Financial Adviser competency in Estate Planning Version 1.6.1 GU
Core Estate Planning Competencies and Service Components
1 Collection
Collects the information required to develop an estate plan
Client, beneficiary and other party Identity
Collects sufficient information to identify client, family members are persons to
be incorporated into the estate planning engagement such as attorneys,
guardians, executors, trustees and co-owners of property or enterprises.
Client territorial connections
Collects information identifying the connection of the client to legal and political
jurisdictions other than that of their place of current residence or domicile.
Family structure and members
Collects information about the structure and membership of the clients family
Collects information about dependants and potential estate claimants
Financial and Estate Management
Identifies who carry’s out the client’s financial management and where that is
not the client, the role and function of the person involves in the client’s financial
and estate management.
Asset Ownership & Control
Identifies the form of ownership and control of estate assets.
Collects information sufficient to identify the legal and beneficial ownership of
estate assets
Collects information sufficient to compile a balance sheet of the client’s affairs
that consolidates the view of the balance sheet on all estate assets and liabilities
irrespective of the form of legal ownership of the estate asset.
Risk Management
Collects details of the client’s existing insurance coverage
Identifies potential financial obligations
12Identifies
the relevance of estate risk areas to the interests and objectives of
the client, namely:
Business Ownership and Control
Equity Issues
Family Control
Family Dynamics in Business
Family Business Leadership
12
Following the work of John Benavides and Family Office Exchange. See
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Business Governance
Management Issues
Alignment of interests
Business Strategy
Operations Issues
Business operations
Wealth Preservation and Enhancement
Investment goals and objectives
Asset diversification
Manager selection
Investment performance
Ownership exposure for private equity
Private equity distressed situations
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
Collective ownership responsibilities
Financial Security and Compliance
Legal Exposure
Fiduciary Exposure
Wealth Transfer protection
Physical asset protection
Financial Leverage
Financial Oversight
Financial reporting and Compliance
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Family Group Oversight and accountability
Taxation Planning
Collects detail about current and unrealised taxation in the affairs of the client.
Retirement Planning
Collects details about potential sources of retirement income
Collects details about estimated retirement expenses
Estate Planning
Collects legal agreements and documents that currently implement or impact
estate planning strategies
1.2 Collects the qualitative information required to develop an estate plan
Client, beneficiary and other party Identity
Determine the identity and legal capacity of your client, their representatives,
beneficiaries and people connected with the client’s estate operations.
Determine any conflict of interest between multiple family elements involved in
the planning engagement.
Determine adviser limits to engagement and representation of client
Identify if any other professional skills are required to complete engagement.
Client territorial connections
Determine the nature and extent of client connections with states, territories and
countries.
Family structure and members
Determine structure , membership and client accountability towards family and
any other estate claimants or beneficiaries
Financial and Estate Management
Determine client attitude to financial management and personal representation
by attorneys, guardians, trustees and general agents & representatives.
Determine client attitude to financial management in the event of their disability,
absence from the jurisdiction, inability to act or death.
Asset Ownership & Control
Determines estate planning consequences of actual state of asset ownership and
control within estate.
Determines client family and beneficiary maintenance obligations
Determines client attitude to beneficiary accountability
Determine impact of estate claimant rights on asset ownership and control.
Determine client attitude to asset protection.
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Determine client attitude to personal and family member longevity
Risk Management
Determines the client’s risk management objectives
Determines the client’s tolerance to risk exposure
Determines relevant lifestyle issues impacting a client’s needs and objectives,
including health issues.
Determines client willingness to manage identified risks. Including as
appropriate:
Business Ownership and Control
Equity Issues
Family Control
Family Dynamics in Business
Family Business Leadership
Business Governance
Management Issues
Alignment of interests
Business Strategy
Operations Issues
Business operations
Wealth Preservation and Enhancement
Investment goals and objectives
Asset diversification
Manager selection
Investment performance
Ownership exposure for private equity
Private equity distressed situations
Family Continuity and Governance
Family Legacy
Family Governance and decision making
Family Relationships
Family Reputation and Public Image
Philanthropic Legacy
Personal security and privacy
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Personal health and wellness
Personal Ownership responsibilities
Collective ownership responsibilities
Financial Security and Compliance
Legal Exposure
Fiduciary Exposure
Wealth Transfer protection
Physical asset protection
Financial Leverage
Financial Oversight
Financial reporting and Compliance
Family Group Oversight and accountability
Taxation Planning
Determines the client’s attitude towards taxation.
Care Planning
Determines client’s attitude to the impact of declining health and capacity of the
client and their dependents on the cost of their care and maintenance during
their lives.
Determines the needs of vulnerable beneficiaries in the estate planning of clients.
Determines the legal accountability of client s to vulnerable beneficiaries.
Retirement Planning
Determines the client’s retirement objectives
Determines the client’s attitude towards retirement
Determines the client’s comfort with retirement planning assumptions
Estate Planning
Identifies the client’s estate planning needs and objectives
Identifies family dynamics and business relationships and personal relationships
that could impact estate planning strategies
Business Succession Planning
Considers legal agreements and documents that currently implement or impact
business succession strategies
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Trust benefit planning
Consuder legal agreements and documents that currently implement or impact
trust benefit planning strategies
Philanthropic and social benefit planning
Considers legal agreements and documents that currently implement or impact
philanthropic and social benefit planning strategies
2 Analysis
Considers potential opportunities and constraints and assesses information to
develop strategies
Fundamental analysis practices
2.001 Analyzes the client’s objectives, needs, values and information to prioritize
the estate planning components
2.002 Considers inter-relationships among estate planning components
2.003 Considers opportunities and constraints and assesses collected
information across estate planning components
2.004 Considers the impact of economic, political and regulatory environments
2.005 Measures the progress towards achievement of objectives of the estate
plan
Core Analysis Practice competencies
Considers potential opportunities and constraints to develop strategies
Client Identity
Determine whether the client and ancilliary parties to the engagement are
sufficiently identified.
Resolve any conflict of interest between multiple family elements involved in the
planning engagement.
Include adviser limits to engagement and representation of client in engagement
letter to client
Acknowledge role, function and responsibility of other concurrently engaged
advisers with whom planner will be working in the current engagement.
Client territorial connections
Determine the impact of the client’s territorial connections on their estate
planning objectives.
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Family structure and members
Determine the impact of estate claimant, relationship property and beneficiary
vulnerability on the estate planning objectives of the client.
Financial Management
Determine client limitations on who they will appoint as their representatives.
Asset Ownership & Control
Determines impact and limitations on form of asset ownership on estate
planning objectives..
Determines impact of client family and beneficiary maintenance obligations on
estate planning objectives
Determine impact of estate claimant rights on asset ownership and control.
Risk Management
Determines impact of the client’s risk management objectives on their estate
planning
Taxation Planning
Determines the impact and limitation of the client’s attitude towards taxation on
their estate planning objectives
Retirement Planning
Determines the impact of the client’s retirement objectives on their estate
planning objectives
Care Planning
Determines the impact of declining health and capacity of the client and their
dependents on the cost of their care and maintenance during their lives.
Estate Planning
Identifies the constraints upon the client’s estate planning objectives
Assesses information to develop strategies
Client Identity
Assess whether the client and all other parties are adequately identified
Assess whether the client and all other parties have the capacity to carry out
their role in the estate plan.
Assess appropriate limits on adviser function, responsibility and role in the
engagement as appropriate to the agreed terms of engagement.
Assess appropriate scoping of role, communication process and reporting
accountability with the client and other concurrently engaged advisers in the
engagement.
Client territorial connections
Assess the impact of the nature and extent of client connections with states,
territories and countries.
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Family structure and members
Assess the client’s exposure to estate claimant and other 3rd party claimant risks
Assess the requirement of family members for special treatment (e.g. due to
beneficiary health or vulnerability)
Financial Management
Assess whether there is adequate representation of the client in the estate’s
financial and personal management
Assess whether there are adequate controls in place to align the ownership and
operation of non-testamentary estate structures with the estate planning ,
administration and succession objectives of the client.
Asset Ownership & Control
Assess the estate planning consequences of actual state of asset ownership and
control within estate.
Assess whether client family and beneficiary maintenance obligations are met
through the client’s estate planning objectives.
Assess the impact of estate claimant rights on the estate’s asset ownership and
control.
Risk Management
Assess the impact of the client’s risk management objectives on their estate
planning objectives.
Taxation Planning
Assess the impact of client’s attitude towards taxation and their current
unrealised taxation costs on the clients’s estate planning objectives.
Retirement Planning
Assess the impact of the client’s retirement objectives on their estate planning
objectives.
Assess the impact of the client’s longevity on their retirement planning
objectives.
Care Planning
Determines the impact of declining health and capacity of the client and their
dependents on the cost of their care and maintenance during their lives.
Estate Planning
Assess the impact of the information analysed on candidate estate planning
strategies.
Asses the impact of family dynamics and business relationships and personal
relationships on the client’s estate planning objectives.
Project net worth at retirement and death
Project net liabilities and net estate wealth at death
Assess the needs of beneficiaries and estate claimants.
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Assess the liquidity and solvency of the estate at death
Consider impact of taxation and territorial connections on the client’s wealth at
death and tax rollover’s available
3 Synthesis
the planner synthesizes information to develop and evaluate strategies to create
an estate plan.
Fundamental Estate Planning Practices
3.001 Prioritizes recommendations from the estate planning components to
optimize the client’s situation and meet their estate planning objectives
3.002 Consolidates the recommendations and action steps into an estate plan
3.003 Determines the appropriate cycle of review for the estate plan
Core estate planning competency
To develop and evaluate strategies to create an estate plan.
Estate Planning Competency components
Estate Planning
Develops estate planning strategies that integrate consideration of all estate
planning competencies that are relevant to the objectives, needs and priorities of
the client.
Evaluates the advantages and disadvantages of each estate planning strategy
Evaluates the impact and interrelationship between the estate planning strategy
and the retirement and taxation planning strategies of the client.
Optimises the strategies of the situation of the client.
Prioritizes action steps for implementation of the estate plan.
Estate planning competencies for integration in an Estate Plan
Client, beneficiary and other party Identity
Determine the role function and responsibility of each person in 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
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Financial Adviser competency in Estate Planning Version 1.6.1 GU
Determine the extent of multi-generation accountability in the estate plan and
incorporate strategies in the estate plan to support the operation of the estate
plan across generations in a family.
Determine relevant beneficiary and estate claimant needs and implement
strategies to respond to those needs in the estate plan.
Financial & Estate Management
Determine client appointments for financial management and personal
representation by attorneys, guardians, trustees and general agents &
representatives.
Determine the role functions and accountability of the clients estate and financial
managers to the client’s family and estate beneficiaries.
Determine and recommend funding sources for estate strategies.
Asset Ownership & Control
Determines estate administration strategies within the estate plan that respond
to the actual state of asset ownership and established constraints on that
ownership (e.g. assets owned by a trustee but held in part or whole for the
client’s benefit).
Risk Management
Develop risk management strategies that respond to the identified risks and risk
tolerances of the client.
Determines client willingness to manage identified risks. That include
Business Ownership and Control
Equity Issues
Family Control
Family Dynamics in Business
Family Business Leadership
Business Governance
Management Issues
Alignment of interests
Business Strategy
Operations Issues
Business operations
Wealth Preservation and Enhancement
Investment goals and objectives
Asset diversification
Manager selection
Investment performance
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Financial Adviser competency in Estate Planning Version 1.6.1 GU
Ownership exposure for private equity
Private equity distressed situations
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
Collective ownership responsibilities
Financial Security and Compliance
Legal Exposure
Fiduciary Exposure
Wealth Transfer protection
Physical asset protection
Financial Leverage
Financial Oversight
Financial reporting and Compliance
Family Group Oversight and accountability
Taxation Planning
Includes appropriate strategies in the estate plan to respond to the taxation
liabilities and responsibilities of the client
Develops appropriate tax planning strategies.
Retirement Planning
Determines appropriate retirement strategies that integrate with the client’s
estate planning objectives
Develops appropriate retirement planning strategies.
Care Planning
Determines the impact of declining health and capacity of the client and their
dependents on the cost of their care and maintenance during their lives.
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Financial Adviser competency in Estate Planning Version 1.6.1 GU
Exit Planning – Business
Determines the priority for retention or disposal of the active business interests
of a client.
Determines the pre conditions for business equity to be transacted for value.
Determines appropriate strategies to optimise the value of a business for
retention or disposal.
Determines strategies to deal with the business faced with substantial keyman
dependencies and the prospect of the business not being able to be transacted
for value.
Determines appropriate strategies to manage the voluntary and involuntary
exist of an owner from the business.
Determines appropriate strategies to manage the retention of a business across
generations.
Determines the impact of the retirement objectives and declining health and
capacity of the client and their dependents on the cost of their care and
maintenance during their lives.
Business Succession Planning is the activity focused on the transaction of
business equity or the management rights of that equity to meet the wealth
preservation or transfer needs of a client.
Trust benefit planning is the activity focused on the strategies and techniques
that optimise the achievement of the purpose of a trust by the trustee.
Philanthropic and social benefit planning is the activity focused on the
strategies and techniques that optimise the achievement of the social and
philanthropic contribution purpose of a client.
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Glossary13
Asset Management Strategies are techniques to optimize returns on assets in
consideration of the client’s requirements and constraints.
Asset Allocation An approach to decide how to invest a pool of resources in a
broad array of asset classes to determine an asset mix that will best meet a
client’s return objectives with acceptable and appropriate risk levels.
Best Interest Duty is the duty described by s.961 B of the Corporations Act
2001 (C’Wealth).
Budget A statement that estimates the financial resources and expenditures for
a given period.
Cash Flow Statement A statement that summarizes the cash inflows and cash
outflows for a given period.
Client A person, or persons with whom the professional has a formal client
relationship to represent the interests of a single person or the common interest
of multiple people.
Estate Administration Plan The written record of the strategies, processes and
actions agreed by a client as necessary to preserve a client’s capital and values
for themselves, their family and successors.
Estate Planning Strategies are techniques for preservation and distribution of
income and accumulated assets to meet life, estate management and succession
goals.
Estate Planning is the professional occupation within the field of Estates
Practice focussed on advising clients about meeting their needs for wealth
preservation and transfer.
Estate Administration is the activity of carrying out the tasks required to
implement the Estate Administration Plan of a client.
Financial Management Strategies are techniques to optimize short and midterm cash flow, assets and liabilities of a client
Financial Plan is a methodically formulated and detailed strategy or group of
strategies used to manage one’s financial affairs to meet life goals.
Financial Planning is the process of developing strategies to assist clients in
managing their financial affairs to meet life goals.
Fundamental Financial Planning Practices are the competencies that are
pervasive across all Financial Planning
13
Developed from FPSB Financial Planner Competency Profile Copyright © 2007
FPSB.
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Financial Adviser competency in Estate Planning Version 1.6.1 GU
Fundamental Estate Planning Practices The competencies that are pervasive
across all Estate Planning
Components relate to the integration and interrelationships among the Planner
Abilities across the Financial Planning and Estate Planning domains.
Needs An item or condition that is necessary.
Net Worth Statement A statement of assets and liabilities.
Objectives An outcome that is sought after or aimed for.
Personal Financial Statements Net Worth Statement, Cash Flow Statement
and Budget, in aggregate.
Planning – the activity that establishes the strategies and actions that can be
presented to a client for as methods to improve the administration of their
estates and better align the administration of their estates with their stated
needs and objectives.
Examples of Planning are:
Care Planning
Determines the impact of declining health and capacity of the client and
their dependents on the cost of their care and maintenance during their
lives.
Determines strategies that allow a client to respond to the vulnerability of
themselves or their successors.
Determines strategies that facilitates optimising the welfare of a client or
their successors.
Determines strategies that respond to the longevity of a client or their
successors.
Exit and Succession Planning – Business
Determines the priority for retention or disposal of the active business
interests of a client.
Determines the pre conditions for business equity to be transacted for
value.
Determines appropriate strategies to optimise the value of a business for
retention or disposal.
Determines strategies to deal with the business faced with substantial
keyman dependencies and the prospect of the proprietor equity in the
business not being able to be transacted for value.
Determines appropriate strategies to manage the voluntary and
involuntary exist of an owner from the business.
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Determines appropriate strategies to manage the retention of a business
across generations of business owners
Determines governance strategies to optimize the retention value of a
business for an interest group e.g. family ort consortium of linked
interests.
Determines the impact of the retirement objectives and declining health
and capacity of the client and their dependents on the cost of their care
and maintenance during their lives.
Financial Planning is the process of developing strategies to assist
clients in managing their financial affairs to meet life goals.
Professional Financial Planning is the occupation of a professional
financial planner described in the paper titled “FPA Consultation Paper:
FoFA and the Code | October 2012” available at
http://www.fpa.asn.au/media/FPA/FPA%20Standards/FPA%20Code%2
0Consultation%20Paper_FINAL.pdf .
Tax Planning is the activity focused on strategies and techniques to
maximize the present value of after tax family net worth using recognised
concessions and processes in taxation advisory practice that legally
minimise the taxation liability of a client.
Wealth Planning is the activity focused on strategies and techniques to
optimise the retention or transfer of a client’s financial and non financial
wealth as appropriate to the needs and/or the objectives of a client.
Business Succession Planning is the activity focused on the transaction
of business equity or the management rights of that equity to meet the
wealth preservation or transfer needs of a client.
Trust benefit planning is the activity focused on the strategies and
techniques that optimise the achievement of the purpose of a trust by the
trustee.
Philanthropic and social benefit planning is the activity focused on the
strategies and techniques that optimise the achievement of the social and
philanthropic contribution purpose of a client.
Qualitative Information is information about client qualities, attitudes and
preferences.
Quantitative Information is information about the client that is objective and
measurable.
Retirement Planning Strategies and techniques for wealth accumulation and
withdrawal during retirement years.
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Risk Management Strategies and techniques to manage financial and other
exposure due to personal risk and other risks. The terms risk, risk exposure and
risk tolerance refer to the risk of financial loss due to personal circumstances
and other identified risk consequences.
Strategy (Strategies) A method of estate administration designed to achieve one
or more specific needs or objectives 14of a client.
See
http://www.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s961b.html and
note s. (b) (2) (a).
14
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