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As an advisor can you charge the cost of estate planning fees to a client superannuation account?
Dear Lawrence,
Thank you for your query.
It sounds like you may be referring to the applicability of the ‘sole purpose test’ noted in the Superannuation Industry (Supervision) Act 1993, which regulates what costs can be borne by a superannuation fund. Essentially, a superannuation fund must be maintained for the sole purpose of providing retirement benefits to members, or to their dependants where applicable.
With regard to dealings with members’ funds, the Final Report on the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry noted that:
“… [T]he nature of the advice that may properly be paid for from a superannuation account is limited to advice about particular actual or intended superannuation investments. This may include such matters as consolidation of superannuation accounts, selection of superannuation funds or products, or asset allocations within a fund. It would not include broad advice on how the member might best provide for their retirement or maximise their wealth generally. Any practice by trustees of allowing fees for these latter kinds of financial advice to be deducted from superannuation accounts must end.”
Fees that were incurred in relation to the estate planning aspects of the clients’ superannuation would appear to come within this requirement, but not broader estate planning advice.
You can contact our Financial Services Team if you would like further assistance.
Author: David Court (Partner)
Co-contributor: Jared Mintz (Law Clerk) and Nicolette Tan (Law Clerk)
Thank you for your reply.
Estate plans cover what to do with your superannuation/life insurance that is held inside your super etc, but also covers outside of super assets and usually set up a testamentary trust. The advisor changes the fee from the superfund as he has the authority to do so, but the fee is then passed mostly onto the lawyers who create the will/estate plan. As the same estate plan / will covers both inside and outside of super assets, you cant determine which part of the fee is for what – if that makes sense.
