Advice checklist

When advising an older client who wants to dispose of assets to a family member or friend:

Have you taken proper instructions?

These should include and be clear about:

  • the client’s (older person’s) wishes and intentions;
  • the older person’s present and future needs;
  • the nature of the parties’ relationship – the type of dependence e.g. financial, emotional, physical, the older person has on the other person(s);
  • any powers of attorney and/or guardianship and administration orders or issues (see Substituted decision-making);
  • the business and financial acumen of all the parties.

The transaction:

  • the nature of the proposed transaction;
  • the reason why the transaction is proposed;
  • who proposed the transaction;
  • the view of the older person regarding the proposed transaction;
  • the viability of the transaction.

The assets and liabilities of the parties:

  • the total assets and liabilities of the older person and whether the older person is planning to dispose of all his/her assets;
  • the total assets and liabilities of the person receiving the benefit of the transaction;
  • whether the proposed transaction can be financed by the older person or the person receiving the benefit;
  • how the assets and liabilities of the parties will be used in the transaction.

Does the client have capacity?

See Capacity.

Is the client being unduly influenced by another person?

See Ensure your client … is not acting under undue influence.

Have you given full, meaningful and competent advice?

  • Your advice should ensure that the older person fully understands the nature, effect and consequences of the proposed transaction.
  • You must give the older person a correct explanation of the terms of the transaction.
  • You should explain:
    • the propriety of the transaction;
    • the advisability of the transaction;
    • the reasons it should or should not occur.
  • You should put forward other options (see Family agreements) and more prudent alternatives such as bestowing the property by will.
  • Your advice should cover the implications that disposing of assets can have for:
    • their pension or other Commonwealth benefit;
    • asset assessment for the purposes of residential aged care (see Gifting in Centrelink issues);
    • their ability to access residential aged care in the future if they have no other assets;
    • tax (see Financial and tax implications).
  • Your advice should cover the planning approvals that might be required to site or build a ‘granny flat’ or an extension to an existing house (see Planning law).
  • You need to adequately inform the client of the impact the transaction might have on their ability to meet their present and future needs.

Have you taken detailed notes of the advice and confirmed it in writing to your client?

  • You should also request a letter signed by your client stating the advice you have given and acknowledging that they understand it and, if necessary, that they still wish to proceed with the transaction, despite its nature and possible consequences as explained by you.