Private Client Services: 2023 Year in Review

As we come to a close on 2023, our Private Client Services (PCS) team reflects on some clear themes that have emerged in family succession planning this year.

“In 2023, we’ve observed the long anticipated significant inter vivos inter-generational transition of family wealth via succession planning for high net and ultra high net worth individuals.  The year has reinforced the importance of aligning wealth preservation with dynamic family goals.  Our clients are strategically navigating the balance between maintaining legacy and fostering financial independence, emphasising the need for tailored succession plans that evolve with the changing times.”

Donna Benge – Partner

“Amidst legislative uncertainty and increasing oversight of trustees by courts, 2023 has highlighted the critical role of proactive trustee succession planning and the SMSF.  Our clients are increasingly recognising the value of staying ahead, anticipating challenges, and fortifying their family legacies.  We’ve been honoured to guide them in creating resilient succession plans that not only address historical fractures but also stand prepared for uncertainties that lie ahead.”

Rod Jones – Partner

Industry insights

In 2023, our PCS team continued to be called upon to advise our clients at a national level, including some international assignments with instructions received from South Africa, the UK, Singapore and the USA.  Much of that focus has been on cross jurisdictional succession advice.

This year has seen an increase in the net establishment of SMSFs, as individuals seek investment alternatives, particularly private equity opportunities outside of industry and retail funds.   That trend has highlighted the need for a well thought out exit plan, particularly in the event of incapacity and death of a member.   Ensuring that good trust deeds and proper powers of attorney are in place are critical. For corporate trustees, making sure that the company constitution provides for alternatives such as successor directors should be considered.

We continue to see clients vulnerable to financial exploitation by family members and third parties, which has emphasised the importance of a considered estate plan.   We continue to approach the court on behalf of a number of clients to protect their interests and if possible, retrieve assets over which they have lost control.   Often the transactions do not come to light until after death.  These cases serve to highlight the importance of whom is charged with appointments as directors of a trustee company, attorneys and executors of wills.

The team also published a number of timely Insights throughout the year.

Of most interest in 2023 for those in South Australia will be the passing of the Succession Act (SA) that will consolidate the existing Wills Act, Inheritance (Family Provision) Act and Administration and Probate Act into one single instrument.   This will be the most significant legislative change in this practice area for decades.   Our Insight will be circulated with commentary once that receives Royal Assent.

Significant matters

SMSFs continue to be a hotbed of contention this year.

Validity of Binding Death Benefit Nomination (BDBN)
In the case of Williams v Williams & Anor [2023] QSC 90 the court was asked to consider whether a BDBN was valid.  Broadly, in this case, a deceased member’s BDBN had been executed by the deceased member (i.e. executed by himself, albeit in his capacity as a fund trustee).  The relevant provisions in the fund’s trust deed required that the trustees be given written notice of a BDBN. However, the second trustee (i.e. the deceased member’s son) was not given written notice and as such, it was held that the BDBN was not valid. The findings from this case provides yet another reminder of the importance of precisely following the terms of a fund’s governing rules, to ensure than any BDBNs made by fund members are valid.

Property development – ATO Taxpayer Alert
The ATO issued Taxpayer Alert (TA) 2023/2 which deals with “Diverting profits of a property development project to a self-managed superannuation fund, through use of a special purpose vehicle, involving non-arm’s length arrangements.” Outlined in this Taxpayer Alert are arrangements of concern to the ATO which broadly involve SMSF trustees investing, directly or indirectly, in a special purpose vehicle which undertakes property development. The Alert outlines the ATO’s view that non-arm’s length dealings by any party, in respect of any step, in relation to a scheme, can give rise to non-arm’s length income (NALI). This extends to any capital gains derived on the subsequent disposal of an SMSF’s interest in the special purpose vehicle. The ATO’s concerns generally revolve around the lack of commerciality and the inappropriate diversion of profits from property development projects to an SMSF.

Statutory Declarations Amendment Act 2023
Amendments to enable electronic and digitally verified execution applies to Commonwealth statutory declarations, effective from 1 January 2024.

Treasury Laws Amendment (Better Targeted Superannuation Concessions and Other Measures) Bill 2023 Superannuation (Better Targeted Superannuation Concessions) Imposition Bill 2023
Is adding unnecessary complexity and red tape by reducing tax concessions for individuals with superannuation balances of more than $3 million.  The announcements are unpredictable and challenging to plan for and will impact upon death of spouses, policy misalignment, family law settlements, disability – excluding structured settlements.

Team movements

We were pleased to see Nicole Harford being recognised by her promotion to Associate and welcomed legal administrative assistant Maddy Penalurick and junior legal administrative assistant An Nguyen to the team.

Recognition

This year, we have had some outstanding recognition for our team. We are grateful for our clients and colleagues, and are looking forward to another successful year in 2024.

The Best Lawyers in Australia

In the 2024 edition of The Best Lawyers in Australia, 54 of Piper Alderman’s lawyers are recognised across 43 legal areas including the following partners in our Private Client Services team:

• Donna Benge– Wealth Management / Succession Planning Practice, Adelaide
• Rod Jones– Wealth Management / Succession Planning Practice, Adelaide

Doyle’s Guide

In the 2023 edition of Doyle’s Guide, we received the following recognition:

• Donna Benge– Wills, Estates & Succession Planning (Leading) / Wills & Estates Litigation (Recommended)
• Sam Morphett– Wills, Estates & Succession Planning (Rising Stars in SA)
• Piper Alderman Private Client Services Team – Second Tier Firm – Wills, Estates & Succession Planning Law