Capacity doubts now more common
The partner of a legal firm specialising in superannuation has revealed the concept of SMSF member mental capacity is becoming more prevalent in estate planning challenges, prompting the need for practitioners to amend their procedures regarding all fund actions.
.
“[It means] we want to make sure we have evidence when we’ve got clients signing important documents, particularly if there is an issue about capacity that might come up later, that they had capacity [at the time of authorisation],” Cooper Grace Ward partner Scott Hay-Bartlem told attendees of the SMSF Association Technical Summit 2024 held in Sydney last week.
Hay-Bartlem warned advisers and accountants this is not as easy a task as would appear on face value, emphasising the importance of understanding all of the subtleties of the issue.
“[A person’s capacity] may come and go. It’s not a matter [of being] set now and never having it again. It might come and go during a day, it might come and go during a week, a month or a year, but you need to make sure when you’re doing something [related to an SMSF] particular people [involved] had capacity on that day,” he noted.
According to Hay-Bartlem, the more practitioners become familiar with addressing capacity issues, the more acute their skill will be and recommended they thoroughly investigate any situation where doubt might exist over a person’s capacity.
“The more [you] deal with clients with questionable capacity, the more you will learn their ‘tells’. [Please note] people with capacity issues become very clever at hiding it,” he said.
“You shouldn’t get a surprise when you find that your client died and the death certificate [includes a diagnosis of] dementia because you should know beforehand.”
He stressed the need for advisers and accountants to also recognise the capacity of a client is not determined by their age.
“Is capacity an issue only for old people? No, capacity can affect younger people [as well],” he said.
July 29, 2024
Darin Tyson-Chan
smsmagazine.com.au
Hot Issues
- Investment and economic outlook, September 2024
- Economic slowdown drives mixed reporting season
- ATO stats show continued growth in SMSF sector
- What are the government’s intentions with negative gearing?
- A new day for Federal Reserve policy
- Age pension fails to meet retirement needs
- ASIC extends reportable situations relief and personal advice record-keeping requirements
- The Leaders Who Refused to Step Down 1939 - 2024
- ATO encourages trustees to use voluntary disclosure service
- Beware of terminal illness payout time frame
- Capital losses can help reduce NALI
- Investment and economic outlook, August 2024
- What the Reserve Bank’s rates stance means for property borrowers
- How investing regularly can propel your returns
- Super sector in ASIC’s sights
- Most Popular Operating Systems 1999 - 2022
- Treasurer unveils design details for payday super
- Government releases details on luxury car tax changes
- Our investment and economic outlook, July 2024
- Striking a balance in the new financial year
- The five reasons why the $A is likely to rise further - if recession is avoided
- What super fund members should know when comparing returns
- Insurance inside super has tax advantages
- Are you receiving Personal Services Income?
- It’s never too early to start talking about aged care with clients
- Taxing unrealised gains in superannuation under Division 296
- Capacity doubts now more common
- Most Gold Medals in Summer Olympic Games (1896-2024)
- SMSF assets reach record levels amid share market rally
- Many Australians have a fear of running out
- How to get into the retirement comfort zone
- NALE bill passed by parliament
- Compliance focus impacts wind-ups
- LRBA interest rates increase for 2025
- Income-free areas set to increase from 1 July
- Most Spoken Languages in the World