Argyle Lawyers managing principal Peter Bobbin said court decisions in the past – such as the Van Erp case –show that the dependents of SMSF clients can bring an action against a practitioner if they were an "intended but disappointed beneficiary" and feel the adviser has not shown an adequate duty of care.
While Van Erp involved a lawyer, it could also apply to an adviser, and while Van Erp refers to a ‘statutory declaration’ it could also apply to superannuation fund, he said.
The High Court decision shows a claim can be “made only by an intended but disappointed beneficiary in respect of an intended superannuation gift and the duty of care owed by the lawyer to the intended but disappointed beneficiary is in the performance of the work in which it owes a corresponding duty – albeit contractually – to the member”.
“All this [case] is saying, of course, is that if you’re doing the right thing, and you do it professionally, then you’re fine,” he said.
“Trust law will tell you that others are entitled to bring a claim,” Mr Bobbin told the SMSF Association State Technical conference.
“Superannuation, I’ve got to tell you, is the greatest litigation game today. You’ve got the major plaintiff firms advertising about ‘have you’ve been dealing with your superannuation, have you got a TPD problem, where is your trust deed?'”
Mr Bobbin said it is vital that SMSF practitioners disclaim what duties SMSF trustees have to their dependents.
“Tell your SMSF trustee client that they have a duty to their dependents, highlight that any decision that the member makes will impact upon the dependents, note to the client that you’ve considered them, and you can consider their super dependents, but you won’t do that unless you’re asked to – this is a disclaimer by the way,” he said.
“If you put this sort of stuff in your super fund engagement, of the super fund or the member, then you’re helping to limit or put a fence around your relationship from a pure legal perspective.”
Mr Bobbin noted that claims can exist decades later where circumstances facilitate and that trustees need to document that they told their SMSF trustee they must consider their dependents.
“Make sure it’s clear your instructions are to the benefit of them and not others,” he said.