How to help your client without financial capacity
27th Jun 2019
The Supreme Court of the ACT in Williams v Hoang  ACTSC 144 recently had to consider whether a young adult male with a brain injury resulting from a motor vehicle accident could choose to engage a private fund manager even if it cost more than the Public Trustee of the ACT.
The plaintiff’s mother had expressed concern about the many and varied difficulties she had encountered in trying to obtain information from the Public Trustee. She also explained that she wanted her son to have one continuing, designated person assigned to look after him.
She noted that due to his injury he was slow to form relationships and build trust, but that this would be needed for him to get to a position of confidence. She wanted a service that could be tailored to her son – a young man who wanted to take an interest in his money and was keen to learn and understand.
The defendants argued that the Public Trustee’s errors and lack of responsiveness ought not to be considered indicative of their approach to service. They suggested that private management was suited only to those with profound disabilities, as others would not need close communication and regular attention.
Thankfully the Court decided that cost was not the sole deciding factor. It upheld the paramount consideration being the best interests of the plaintiff.
This young man was able to select the service that would be right for him.
If the decision had gone the other way, plaintiffs would effectively never be able to recover funds management fees above the levels charged by the local public trustee.
This decision is important because there is a vast difference between private and public funds management, affecting how the plaintiff will be treated for the rest of their days as a protected person.
I know that those of us involved in private management haven’t always done a good job at explaining what we do but let me give you a brief glimpse of life after settlement.
If the money goes to the public trustee it will often simply be placed in a common fund. Some weeks or even months later forms are posted out for families to complete. A call centre number is provided (business hours only).
The service is reactive, perhaps of necessity. Public trustees are the trustee of last resort and have community service obligations. Staff are often suspicious and short on time (and compassion). Their focus is on control rather than support. Investment statements are posted out in the mail.
Private management can be worlds apart from this. Clients are met in their home. Their stories are heard and remembered. Relationships are slowly built and respected. Clients and families are consulted. Their hopes, dreams and preferences are accommodated as far as possible. Reasons are given for decisions. Professional, independent financial advice is provided in writing and in person. External scrutiny in relation to the investment and application of funds ensures the maintenance of high standards over time.
The difference comes down to how clients are treated. For some plaintiffs, cost might indeed be the only important thing. For others, your work in defending their right to select the best provider for them is incredibly important.
So what do you need to do?
Turning your mind to the matter early and sending a few simple emails before settlement are pretty much all it takes for you to achieve great outcomes for your clients.
Step 1. Consider capacity early
- Well before settlement, consider whether your client will have capacity to manage their personal injury money and what sort of solution might work best for them.
- Consider also whether in the meantime a family member should be appointed by the local civil and administrative tribunal for an adult with some income or assets.
Step 2. Organise meetings
- Ask the family to seek out their local public trustee to get a feel for that option.
- Organise for the family to meet with experienced representatives from two different private providers – a couple of quick emails from you to them will kick this off.
- The providers will do the hard yards of explaining the protective system in place in your state – the options and the pros and cons of each.
- They can put their offers in writing for your client to consider and answer as many questions as your clients wish to ask.
Step 3. Obtain private funds management quotes
- This is quick, easy and free.
- You can ask for a range of dollars to be managed, a range of life expectancies, and separate letters.
- Getting the quotes well in advance is a good idea but feel free to ask for additional quotes during your settlement negotiations.
- Providers can work backwards if your agreed settlement is ‘all in’.
Step 4. Get the ‘why’ in writing
- Ask the preferred manager to articulate why your client needs their service.
- Ask them to put this in writing.
- Use this to inform the defendants and later the court.
Achieving a great outcome for a client without financial capacity involves making sure they understand their options, that they get to choose, that they are happy with your recovery of the relevant funds management costs, and that they end up with the service that best suits their needs.
The law supports you in doing this. The steps you take will make a huge difference.
Jane Campbell is the Principal of Aeran, a national independent financial advice business that specialises in financial advice to plaintiffs. Jane has more than 25 years’ experience in injury compensation, starting out in workers compensation, then insurance litigation, then lobbying to improve tax outcomes for plaintiffs. Since 2003 Jane has been providing financial advice to seriously injured plaintiffs directly or via their court appointed substitute decision-maker. Jane is a Certified Financial Planner and maintains her qualifications as a lawyer. Aeran partners with Australian Executor Trustees Limited in cases where a trustee company is required. Jane has been a member of the ALA since 1999 and is a current NSW Committee member. She is actively involved in seeking to protect the rights of injured people. Jane lives in Sydney with her husband and two sons.
The views and opinions expressed in these articles are the authors' and do not necessarily represent the views and opinions of the Australian Lawyers Alliance (ALA).