A recent incident where an accountant was sued after an issue with their estate planning advice points to an increasing threat of liability for accountants and planners involved in organising their clients’ SMSF documentation.
Given the availability of online documentation and accountants’ move into financial advice, SMSF professionals are increasingly involved in structuring their clients’ documentation trail.
The document is partly produced by the document provider, but in cases where additional information needs to be filled in, responsibility typically falls on the professional who is filling it in with the client, Estate Planning Equation’s director Allan Swan told SMSF Adviser.
“You do have a shift in liability moving away from the entity who is purported to prepare the documents to the people who actually fill in that information,” Mr Swann said.
“So if the client is doing it off their own bat and doesn’t have any connection with their accountants, well it’s obviously the client’s problem. But if it’s the accountant who is the one helping the client filling in the information and gets it wrong, well then it’s the accountant’s problem,” he said.
“It’s the way of the world now. It’s the risk that people run. As long as things go well, everything is fine. But when things don’t go well and something serious goes wrong, well then the client will want someone to sue and the accountant is a nice target.”
Mr Swann cited an example of a case where an accountant assisted a client in preparing a binding death benefit nomination (BDBN), but nominated someone who was not a dependent to receive the funds. The person who was meant to receive the money ended up suing the accountant.
Mr Swann said he “imagines it will never get to court because it’s just such obvious negligence”.
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