The firm of ‘now’ – 5 things about the way you do the things you do**

Following on from recent posts, to give some insight to what we believe a ‘firm of the future now' looks like, 5 examples from our business that we have abandoned as compared to a traditional model are as follows:

1. Guaranteed fixed pricing – the definition of a competent service provider is someone who can devise a scope of work and provide an upfront fixed price that they are willing to refund in full if the customer is not satisfied with the performance.
2. ROWE – if you do not know what this is for, Google it or click here and join the movement.
3.  Solution choreographed teams – we work with whomever and on whatever terms are best to achieve the client’s objectives.
4. AAR – again, if you do not know what it is, Google it or click here, and embed it into your business today.
5. Diversity of thought – when two people in business are constantly of the same opinion, one or more is irrelevant. It raises diversity in every sense of the word and arbitrary politically correct percentages become irrelevant.

** For the trainspotters, ‘The way you do the things you do’ is a song by the Temptations from 1965, The version I first heard was by Hall & Oates.

The time is now** for the firm of ‘now’ – 5 things not to do

Following on from recent posts, to give some insight to what we believe a ‘firm of the future now' looks like, 5 examples from our business that we have abandoned as compared to a traditional model are as follows:

1. No Timesheets – with timesheets, all we ever focused on was what was chargeable – without timesheets, we now focus on what is valuable.
2. No leave policies – leave policies are a hangover from the industrial age – it is time to move on.
3. No individual budgets – while we certainly have team goals, these are never broken down into individual monetary targets. Our targets are aligned around our performance in the eyes of customers. If we get those right, everything else flows (including money).
4. No performance reviews – again, a very poor hangover from the industrial age.
5. No diversity goals – seeking to mandate minimum percentages of certain genders, cultures, religious beliefs or sexuality disguise much bigger problems with the underlying business model.

** For the trainspotters, ‘Time is Now’ is a song by Moloko from 2000.

What’s Your Story?** … Tax Sharing & Funding Agreements

Though originally designed to primarily assist 'the big end of town', the tax consolidations regime is available to any Australian company and often can be very useful for small to medium size business operators.

One of the key consequences of forming a tax consolidated group is that all of the members of the group are jointly and severally liable for the tax liabilities of the group as a whole.

If however, each member of the group signs a valid tax sharing agreement (TSA), then it is possible for each member of the group to only be responsible for a 'reasonable' portion of the Group's tax liability.

A TSA is generally seen as a document that should be in place whenever a tax consolidated group is formed.

Generally, a TSA will also set out how any member of the group can make a 'clean exit', ensuring that it will not bear any future liability in relation to taxes that arise once the entity has left the group, even where they relate to a period where the entity was in fact a member.

Often, a TSA will be implemented in conjunction with a tax funding agreement (TFA).

Due to the way in which the tax consolidations regime is structured, the head entity of a consolidated group is the one that is ultimately liable for the tax of the group as a whole.

In order to ensure that the head company has the funds to meet the tax liability, a TFA can be utilised to regulate the manner in which that funding is to occur, particularly with reference to relevant accounting standards.

While most consolidated groups in the small to medium enterprise space will (or at least should) implement a TSA, often TFAs are only utilised by larger tax consolidated groups, given that they are more mechanical and technical in nature.

** For the trainspotters, ‘what’s your story’ is a line from the Red Hot Chili Peppers’ song from their 1986 album Stadium Arcadium, namely ‘Tell Me Baby’.

2+2 made 5** … adding testamentary trusts by Court Order – a family law perspective

With thanks to the Television Education Network, today’s post considers the above mentioned topic in a ‘vidcast’.

As usual, an edited transcript of the presentation is below -

One very interesting decision was originally published as ADT v LRT and then the appeal, the appeal decision was released as GAU v GVT.

The case involved a mother who had a will that she’d signed giving a significant number of assets to her son in his personal name.

The son was going through divorce proceedings and the mother had lost capacity and was unable to change her will.

The Court was asked by the son to incorporate a testamentary trust into her will for the express purpose of protecting the son’s future inheritance from his matrimonial proceedings.

The inheritance was estimated to be about $5 million, which was significant in terms of the matrimonial proceedings if it was successfully excluded.

In the first instance (ADT v LRT), the Court said that they agreed the testator would have made the change if she still had capacity, but then concluded that it was inappropriate to interfere with Family Court proceedings and therefore refused to grant the order.

On appeal (GAU v GVT), the son was successful and the Court said that the will maker’s intentions were the critical test and there was no doubt she would have made the change if she still had capacity.

The Court said the Family Court proceedings were only relevant at the margins and it agreed to grant the order incorporating the testamentary trust into the mother’s will.

** For the trainspotters, ‘Two and two made five’ is a song by Ned’s Atomic Dustbin from 1992.

Legal Professional Privilege** in adviser facilitated estate planning

A question came up recently from a financial planning licensee about whether an adviser attending an estate planning meeting between a client and their lawyer inadvertently waives the client’s legal professional privilege over those estate planning discussions.

As mentioned in last week’s post, legal professional privilege protects communications between a client and their lawyer from third parties, if the communications are brought into existence for the dominant purpose of obtaining legal advice. However, legal professional privilege over communications between a lawyer and a client can be waived if the information is disclosed to a third party.

Broadly we confirmed that we do not believe legal professional privilege is particularly relevant in the context of most estate planning discussions with clients. In particular, the advice generally provided to the client in a meeting is unlikely to be of the nature that legal professional privilege would need to be claimed. Furthermore, the legal documents (i.e. the final wills and powers of attorney) themselves are not generally privileged.

Indeed, in an adviser facilitated estate planning scenario, the client will have, in most cases, already disclosed most (if not all) of the information that will be discussed in the online meeting to the adviser as part of the initial fact finding process before the lawyer commences the legal aspects of the estate planning exercise.

We therefore believe that the risk of any implied waiver of legal professional privilege by having a client’s adviser sitting through the online meeting with the client is low and it would be an unnecessary step looking to avoid having the adviser attend the online meeting.

As most readers will be aware, our strong preference is to have the adviser attend the meeting as, generally speaking, their insights about the appropriateness of the estate planning strategy for the client’s family and financial circumstances is highly valuable.

** For the trainspotters, last week I mentioned that ‘privilege on privilege’ is a line from one of my favourite privilege related songs, from the Church and their 1986 album Heyday, namely ‘Myrrh’. Based on further research, this song is not simply one of my favourite privilege related songs, it is the only decent song I can find, thus listen again.

Financial Advisers to become qualified witnesses - Young Guns (do not necessarily) go for it **



Very positive to see the announcement that financial advisers will be granted the status to witness a Commonwealth statutory declaration.  

A step that sees advisers become the ''equal'' of medical practitioners, justices of the peace and lawyers.  

And arguably a long overdue iteration to provide an easy and far more cost effective way for customers to have documents witnessed. And yet it must be asked, when will all states follow this lead?  

Particularly in the (state regulated) estate planning space, one of the single biggest roadblocks we see is the witnessing of attorney documents. Particularly in Victoria, New South Wales and (to a lesser extent) Queensland the existing witnessing requirements appear to remain unchanged.  

Thus, especially in NSW, you essentially need a lawyer to do the witnessing (kudos to the NSW lawyers union for achieving this position).  

In other words, simply because a person (ie a financial adviser) is eligible to witness statutory declarations is not sufficient to make them qualified for the purpose of witnessing attorney documents.  

** For the trainspotters, an oldie and a goodie, Wham's 'Young Guns' is the inspiration for the title to the post today.

Legal privilege (on privilege)** and estate planning

Often one of the most important aspects of advice provided by lawyers is the ability for that advice to remain private and confidential to the client on the basis of legal professional privilege.

Particularly in relation to tax planning and asset protection, the ability to maintain confidentiality can often be very important and the case of Nolan v Nolan [2013] QSC140 is an important example of this principle. As usual, if you would like a copy of the decision please contact me.

In summary, the situation in this case was as follows:

1. a wife and husband had been married for some years;
2. following a breakdown in their relationship, the wife claimed an interest in the farming property of the husband's parents;
3. because the husband's parents were still alive, the wife tried to gain access to their estate planning documentation; and
4. the parents of the husband sought to deny access to the documents on the basis of legal professional privilege.

In deciding the case, the court confirmed:

1. the dominant purpose for the creation of various estate planning documents including letters of advice and handwritten notes, both by the estate planning lawyer and the parents, was to obtain legal advice;
2. on this basis, legal professional privilege could apply to deny the wife the ability to access the documents; 
3. unfortunately, because the lawyers for the parents did not raise the issue of privilege until after the relevant documents had been disclosed, the court held that notwithstanding the documents could have otherwise retained their confidentiality, the disclosure of them had waived the protection of privilege; and
4. importantly, it was also confirmed that it is not necessarily automatically the case that wills and related files are protected by legal professional privilege.

** For the trainspotters, ‘privilege on privilege’ is a line from one of my favourite privilege related songs, from the Church and their 1986 album Heyday, namely ‘Myrrh’.