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Estate Planning- What is this term we hear so much about?

by Michael J. Vail SA Fin FCPA

By its very definition, the word ‘estate’ means the sum of your net worth; and in this context, means you have died, passed on, departed this mortal-coil.

When added to make the term ‘Estate Planning’, it means you will attempt to ‘speak from the grave’, and plan the process whereby your earthly assets are divided/distributed amongst those you deem worthy or in need.

In other words, it is ensuring that the worthy beneficiary (the right person/entity) receives the appropriate gift (or asset), so that either the endowment has a great home and/or be looked after, or a share in a business, or other assets, end up in the right hands, so the enterprise may continue.

There are very many factors involved in this process. To read about some of these, follow the link below to read the rest of Michael’s article.

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Estate Planning Checklist

Do you need Estate Planning?

Usually, most people who own assets, which they want to ensure pass onto the correct persons, will go through an estate-planning process, with the documentation of these wishes being represented in the Last Will and Testament of the deceased.

It also follows that if you have family or others who rely upon you, that you will want to provide for them.

So you see the importance of having an estate-plan, with the more complicated the personal and financial affairs, the more important and necessary it becomes.

This plan should be reviewed every three (3) years; and definitely every five (5) years, to ensure it remains current and lawful.

You should review and change the plan whenever you circumstances change, such as:

  • You get married, divorced, begin living with or separate from a partner;
  • You have children, or they pass away;
  • You set-up, buy or sell a business;
  • You incorporate a company;
  • You set-up a trust;
  • If you have family members with special needs;
  • If you have a change in superannuation;
  • If you buy real estate or other valuable assets.

To work through our checklist to see how you stand, follow the link below. You may need to discuss any ‘no’ or ‘unsure’ answers with an estate planning professional.

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Mutual Wills- Everyone thinks they are easy : The Case of Bauer v Hussey

Contribution by Andrew Taylor of Toogoods Lawyers

The decision in Bauer v Hussey highlights one of the biggest problems associated with Mutual Wills.

Mutual Wills are popular among married couples as they create a binding agreement on both parties to pass their estate to the intended beneficiaries. The problem with Mutual Wills often arises when the parties have not clearly expressed their intentions in the process of drafting the will as was the case in Bauer v Hussey.  This article will explore the problems associated with Mutual Wills, and suggest ways to circumvent these problems as presented in Bauer v Hussey.

What is this legal case about?

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Sickness and Accident Insurance: Are you the Primary Income Earner?

Your ability to earn an income is your most valuable asset…

Income Protection, also known as ‘salary continuance’ pays a monthly benefit of up to 75% of your annual income if you’re unable to work due to illness or injury.

This money can help meet regular financial commitments and stay on top of debts during what could be a very stressful time.

Many policies also provide optional protection to help you focus on rehabilitation and recovery. Some will even cover your superannuation (SG) payments and premiums are usually tax-deductible.

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Why every parent needs a plan for the future...

As an adviser who deals with life insurance on a daily basis, I’ve seen how insurance can help families in hundreds of different ways. But without doubt, one of the most fundamental roles of life insurance is to protect a family financially if they lose a parent.

According to a 2010 study commissioned by OnePath, the loss of a parent can have a devastating affect on a family’s lifestyle – with almost a third (32%) of families having to move house within two years as a result of financial pressure.

The study also found that financial pressure can add to the already significant impact on the lives and mental wellbeing of children.

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Income Protection Insurance- What's the hype about?

Your ability to earn an income is your most valuable asset...

Income Protection, also known as ‘salary continuance’ pays a monthly benefit of up to 75% of your annual income if you’re unable to work due to illness or injury.  This money can help meet regular financial commitments and stay on top of debts during what could be a very stressful time.  Many policies also provide optional protection to help you focus on rehabilitation and recovery. Some will even cover your superannuation (SG) payments and premiums are usually tax-deductible.

 

If you would like more information on Income Protection Insurance, contact our office on 3376 7111 for a discussion with Stephen Nielson, our wealth advisor from ASCENT-TPC Wealth Management.

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Do your children have a back-up plan (other than you)?

by Stephen Neilson, ASCENT - TPC, Authorised representative of GWM Advisor Services Ltd.

 

Picture this. You’ve recently retired, and you’re reasonably confident you’ll have enough savings to fund the comfortable lifestyle you’d always hoped for.

Then you receive a phone call with some bad news – your daughter has been badly injured in a car accident while travelling overseas. The doctors are saying she’s unlikely to walk again.

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What is Fixed Income?

Contribution from Andrew English, Fixed Income Dealer for FIIG Securities.

 

Fixed Income refers to debt securities (for example bonds) that pay a defined distribution (the coupon) for a given period of time (the term) and repay the face value of the security at maturity.

A fixed income security or bond is a loan from an investor to the issuer of the security. Issuers of fixed income securities in Australia include Commonwealth Government, state governments, banks and corporations.

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Budget changes emphasise need to seek sound advice

The Federal Budget handed down on 8 May 2012 aims to spread the benefits of the mining boom while also delivering the Gillard Government’s promised surplus. Indeed, Treasurer Wayne Swan anticipates a $1.5 billion Budget surplus in 2012/13.

Steve Nielsen from Ascent TPC Wealth says the key take-outs from the Budget include an increase in social security entitlements for many families and welfare recipients, the cancellation of previously proposed tax deductions, and some important changes to superannuation.

“The proposed superannuation amendments are designed to generate cost savings and reduce tax concessions for higher income earners,” says Nielsen. “Now more than ever, super fund members will really need to keep an eye on their level of super contributions and seek professional financial advice to help ensure they’re not penalised for exceeding the imposed limits.”

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Aged Care What you need to consider

Moving into an aged-care home can be a complicated and emotional process. There are many issues to consider and good financial advice can make the transition easier and minimise costs.

Australia’s aging population is steadily increasing, with many of the baby boomer generation born between 1946 to 1966, entering the aged-care bracket between 2011 and 2031. At present, 13.5% of the population (approximately 3 million people) is aged 65 years or over and this is expected to increase to 22.7% over the next 40 year. (Source: Intergenerational report 2010 ‘Australia to 2050: future challenges’ – Department of Treasury)

For some of these baby boomers, it may mean looking into alternative accommodation such as aged-care homes and other care arrangements. “The decision as to which type of accommodation or care arrangements you require may be based on lifestyle choice or a need for assistance with daily living activities if it becomes harder to manage on your own,” says Stephen Nielsen of Ascent TPC Wealth.

If you require assistance with daily living activities, one of the hardest decisions you may have to make is whether to remain in your home or move to a hostel or nursing home. If you remain in your home, there are various community programs available which can help you. On the other hand, if you require accommodation in an aged-care facility, you will need to take into account a variety of financial, legal and social security issues.

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Why every person with a Self Managed Super Fund needs a will

Approximately 60% of Australian’s die without a will in place. The average age of people with a will is 82 and the average age of people who die without a will is 62. Apparently, the majority of us believe that we are all going to die of extreme old age.  Dying intestate can be complex enough but if you have a Self Managed Superannuation Fund the situation can become even more complex. Dying without a will in place is likely to mean that there will be a significant period of time before your beneficiaries can access your superannuation - even if you have binding death benefit nominations in place.

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Your SMSF and Borrowing Rules

Knowing what assets your Self Managed Superannuation Fund (SMSF) can own is an important part of being a fund trustee.   You should also know what assets your fund can acquire from you or related parties.  New rules recently introduced may give more scope for your SMSF to borrow funds to acquire these assets but there are unique rules and guidelines that need to be adhered to.  As the trustees of your SMSF, you need to ensure that all assets held in the fund are consistent with the fund’s investment strategy.  That is, as trustee you need to consider issues such as risk and return, diversification of the fund’s assets, liquidity within the fund, and of course, the ability of the fund to discharge liabilities.

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