There are many niche, technical rules that impact the planning advisers can give to clients. To be around all of them may seem excessive to some, and entirely unnecessary to others. However, when clients come to their advisers with situations impacted by these niche rules, a lack of understanding could lead to much worse outcomes.
For example, how many advisers know how an 80-hectare property with a family home is assessed under the asset test?
According to the answers provided by advisers at a recent MLC webinar, only 11 per cent of advisers watching knew that the entire property was exempt.
“This is one of those areas where you really have to go through the rules, because the general understanding is the family home and up to two hectares is exempt,” said senior technical service manager Mark Gleeson.
“But there are special rules that mean all of the land can be exempt, and if you don’t know about them, you can easily get this wrong for the client.”
Alongside fellow senior technical service manager Scott Quinn, the two explained how an understanding of these kinds of niche rules seem unnecessary until they are not, and how many need to form the fundamental knowledge base of the average adviser.
“We often describe these as niche strategies, but they’re necessary, because you might only see them occasionally, but when you do, the impact on the client can be significant,” Quinn said.
Gleeson added: “It’s worth exploring this with clients. If you ask the right questions and understand how the rules work, you can get a very different outcome.”
Another rule addressed was those regarding permanent financial hardship and retirement, with the example of a 61-year-old man on jobseeker who just had employment terminated when he was 60.
When asking if he could access $50,000 from his super as support, the majority of participants believed he could do this through declaring permanent retirement. However, it would actually be through severe financial hardship.
“What the rule is saying here is that if you get to age 60 plus 39 weeks and you’ve been on income support payments for a cumulative period of 39 weeks or more since turning age 60, you can access all your super. That’s why Ricardo could access the $50,000, because he met that condition of release,” explained Gleeson.
Quinn added: “These are the kinds of strategies that aren’t well known, but they’re absolutely necessary.
“If you’re not aware of them, you’re potentially missing huge opportunities for your client.”
