Advice opportunities in new divorce laws
NEW opportunities have opened for advisers with changes to the superannuation laws regarding divorce settlements.
Merrill Lynchtechnical services manager Sue Merriman says the new rules, introduced in December last year, allowed superannuation to be split between the two parties.
“Half of all divorces occur after 10 years of marriage, so the superannuation contributions could be significant,” she says.
“The courts will be looking for experts in superannuation to deal with this part of a settlement. The lawyers aren’t experts in superannuation so they will be looking for expert advice that advisers can supply.”
Merriman, speaking at theResnikWealth Accumulation conference in Melbourne, says this new area of providing advice is similar to estate planning where the accountants, lawyers and financial planners work together.
“The first stage of the divorce process is information gathering. After collecting the information, the adviser can put a value on the amount of superannuation to be divided and that can be passed to the lawyer in the form of a report.”
Subsequently, an order can then be served on the fund’s trustees ordering the split based on the adviser’s report. The settlement can bring further business to the planner, Merriman says.
“The lawyer is not allowed to give advice on how the funds are actually divided, so the advisers can then be retained to work out the best solution to benefit both parties,” she says.
“It is a value-add service for the lawyers and there are two financial planning opportunities for the adviser.
“Firstly, providing expert advice to the lawyer and then providing financial planning advice to both parties in the divorce.”
Merriman says both parties, as they are usually older, will need further advice to rebuild their wealth for retirement, so there is the possibility of ongoing work for the adviser.
“However, it is important the adviser shows the lawyer they know about superannuation as this will lead to referrals,” she says.
“It is also important to remember the adviser will be dealing with lawyers and any mistakes could lead to litigation.”
Merriman says the few advisers that do offer this service tend to work on a fee-for-service basis and see the work as a referral service for future clients.
At present, the superannuation legislation only covers marriages, but there are changes planned to include de facto relationships, which will open up a bigger opportunity for advisers.
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