It is often said that death is final. However, a grieving family knows only too well that the death of a loved one can trigger events that may drag on for years afterwards, especially when it comes to sorting out the estate of the deceased person. Outlined below are some suggestions that may help reduce the burden on those you leave behind.

1. Prepare a will.
A properly prepared will is one of the crucial elements of your estate planning. Your will should not only state how your assets are to be divided, it should also nominate an individual (the executor) who will be responsible for carrying out your wishes. When preparing a will it is important that you make adequate provision for your dependents, and document the reasons for your decisions to help minimise the risk of your will being contested.

2. Consider an Advance Health Directive.
Advance Health Directives are another important tool in the estate planning toolkit as they enable you to give detailed instructions in relation to your health care, including decisions on any treatment you wish to receive or refuse if you are incapable of communicating those instructions.

3. Establish a Power of Attorney
Whilst a will deals with your estate upon your death, Powers of Attorney are designed to deal with your affairs while you are still alive. Powers of Attorney enable you to appoint an individual to deal with your affairs if you become incapable of making your own decisions. Powers of Attorney can be as wide ranging or as limited as you require or desire.

4. Appoint a guardian for children.
If you have young children, appoint a guardian to care for them. In doing so, you can provide that guardian with guidance about your child’s upbringing, and make provisions for your children’s financial future using the most tax-effective means available.

5. Make binding death nominations.
It is also important that binding death benefits nominations are made on superannuation and retirement income stream products as they ensure these funds bypass an estate, and in so doing, be excluded from any claims against an estate. And make sure yours is current.

6. Cover those assets not covered by your estate.
One of the most common mistakes made in estate planning is leaving no instructions for those assets not covered by your estate, such as assets held in trusts and companies. Separate provision needs to be stipulated to ensure that control of these assets passes on to those you intended.

Other estate planning mistakes to avoid include:

• Writing an informal will and not having it witnessed – or having beneficiaries as witnesses;
• Not reviewing or updating your will on a regular basis;
• Not telling anyone where your will is located.
• This list covers important aspects to consider, however professional advice should be sought to tailor your estate plan to your unique individual circumstances. Then you can get on with living your life.

For more information, contact us at Leenane Tempelton on 02 4926 2300 or email success@leenanetempleton.com.au

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Can you now relax in the comfort that everything is under control? Certainly not. Remember, life is dynamic, and you will encounter major milestones on your journey through life. These milestones can be positive and life affirming. For example, you meet and marry the partner of your dreams or you bring children into the world and face the exciting prospect of watching them flourish and develop. The milestones can also be profoundly sad and traumatic, such as the death of a beloved family member. Sadly these events are part of our existence as human beings.

However, in the joy and sadness accompanying these trigger events, we need to take time out to assess the impact of these events on our future wealth and risk profile.

In the case of a forthcoming marriage, you need to spend some time thinking about the distribution of your property in the event of untimely death or disability after marriage. Marriage, for example generally revokes prior Wills. Everyone contemplating marriage should consider how their property should be distributed after marriage, and also discuss with their financial planners whether or not a new Will is necessary. If the marriage is a second marriage, the position is even more complex. In this situation, you need to think of a distribution of property which is fair to the children of the first marriage, and possibly your former spouse.

Many individuals fail to appreciate the limitations of a Will. A Will only operates on death of the testator. It does not operate where a testator survives a traumatic event, such as an accident or stroke, but loses mental capacity. It is preferable for individuals to execute an enduring power of attorney to cater for this contingency. In this document, you can appoint a trustworthy person of your choice to handle your affairs during your period of incapacity. This provides certainty, and reduces the risk of state government interference and delays should you lose the capacity to manage your affairs.

Do not forget, in rejoicing over the birth of a child, to review the impact of the new arrival. It may be necessary to review your insurance needs to provide a source of funding for education and living costs in the event of your untimely death. It is also important to consider whether or not your Will and superannuation beneficiary nominations need updating. There have been instances of newly arrived infants being excluded from death benefits simply because the deceased parent had neglected to update nominations to include the new arrival.

Other trigger events in your life which should prompt you to think of the future include:

• buying a home
• divorce
• an accident or traumatic event
• receiving an inheritance or
• retirement or changing jobs.

There is no substitute for having a well-constructed estate plan. However, you need to do more. Major trigger events will occur as you go through life. When these events occur, it is time to review your arrangements in conjunction with your financial planner, insurance and legal advisers. This will ensure that your estate plan continues to be robust and effective.

Speak with your Leenane Templeton financial planner on 02 4926 2300 to discuss your estate plans.

Source: TAL

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What sort of lifestyle?
Sometimes life has been so busy there has been limited time for choice – school and university fees, mortgage payments and work pressures have been enough to worry about. Between age 50 and 60 it can be a challenge to choose what you (and your partner) really want for the next few decades.

How much do you need in retirement?
This will depend on how you live. For instance, Westpac/ASFA calculations* show that a couple in NSW needs $33,907 a year to live modestly and $ 58,605 to live comfortably, assuming they own their home.

The below graph below from ASFA shows the split of expenditure based on a modest lifestyle in retirement.
 

Setting a budget for your life in retirement is a vital step in achieving your retirement wealth target. Do you have enough invested to live comfortably throughout your entire retirement, which could be as long as 20 or 30 years?

Are your investments suitable?
Now is the time for you to ensure that your investments are working as hard as possible for you. If you have managed funds, shares or investment property, are they the best assets for your changing situation?

If you have life and income insurance policies, do you have the right level of cover for your current circumstances? There is no point paying premiums for cover you don’t need – but take care in cancelling cover that you may not be able to get back.

Are you taking full advantage of superannuation?
Superannuation is clearly the most tax-effective way to accumulate money for retirement and provide capital and income in retirement. Taking advantage of investing in super can make a big difference to reaching your retirement target.

Have you planned beyond your lifetime?
People aged in their 50s will often have growing families as grandchildren start appearing. Some will have more than one family after separation, divorce and second marriages. Taking time to think about how you want your assets to be distributed after your death can save a lot of heartache for those left behind. Don’t forget that the payouts from life insurance policies and superannuation don’t necessarily form part of your estate and may need to be distributed separately from your will.

With all of these things to consider, the first step in updating your financial plan may be the hardest – but it is also the most rewarding.

Contact our licensed financial adviser at Leenane Templeton on 02 4926 2300 who can help you focus on the next stage of your life.

Source: *Westpac ASFA Retirement Standard; http://www.superannuation.asn.au/resources/retirement-standard and click on calculator link

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Completing a thorough estate planning review is crucial for your peace of mind as well as the comfort and wellbeing of loved ones. It is also much more than just making a Will. Depending on your current financial and family situation, you might also need to review your superannuation nominations, discretionary trust deeds, any company documentation and powers of attorney.

Death is not something we like to think about but a little planning can save a lot of heartache for loved ones left behind. H ere are some important areas to consider with examples and possible solutions.

Allocation of your super

In most super funds, the trustee decides who gets your super when you die. Legislation requires the fund to pay your dependants or your estate.

Example

Mary, a divorcee wants to leave money to her children from a first marriage but not to her ex-spouse. She cannot be sure that the trustees of her super fund will not apportion part of her superannuation death benefit to her former partner.

Possible solution

Most super funds allow you to make a Binding Death Benefit Nomination that will provide directions to the superannuation fund trustee as to how your death benefit is to be paid. This ensures your super is paid in line with your wishes. Talk to your financial planner to ensure your super benefit nominations are in order.

Providing money for your dependants quickly

Upon death, your Will needs to be located and, depending on your assets, may need to be proven by the courts in a process called ‘obtaining probate’. This process can take many weeks and in the meantime, your estate assets may be frozen.

Example

David, the principal income-earner dies. David’s family know that he has recently created a Will, however, they are unable to find it and other documents that are needed for both the funeral and to produce for the courts. This is a common situation that causes great distress. In addition, an estranged child challenges the contents of the Will and delays distribution of assets. In the short term, the surviving spouse may have insufficient money to live on, as well as a high level of stress at a time when they are least able to cope with it.

Possible solution

Ensure you have all the necessary records in a safe place. Always tell the executor of your estate where to find this information in the event of your death. To ensure your spouse is protected, it may be beneficial to hold some funds in joint names with your spouse that can be accessed quickly if you were to die suddenly.

Has something in your life changed recently?

Regularly reviewing and updating your Will helps to reduce or even eliminate problems that may arise as a result of changes to your personal circumstances which can affect your Will and even invalidate it.

There are many events that can trigger a need to review your Will, such as:

• marriage – which may revoke your current Will

• divorce – which does not revoke your current Will but does revoke any gifts made under a Will to the ex-spouse

• a change in the family, such as birth, death and marriage

• a change in a relationship, such as children entering or leaving de-facto arrangements

• the death of a person who plays a key role in the estate plan such as an executor or trustee.

Tax and super legislation is complex. Professional advice can help ensure your beneficiaries receive their entitlements in the most tax-effective manner.

An estate planning specialist can help you minimise the stress on your family and ensure your estate and wishes are well protected.

Speak to your Leenane Templeton financial planner to discuss your estate planning solutions on 02 4926 2300

Source: IOOF

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With a growing trend towards individuals managing their own superannuation through Self-Managed Super Funds (SMSFs), the estate planning aspect of SMSFs is becoming an increasingly important issue. For example, what happens if the trustees or members of the fund are no longer able to fulfil their roles through mental incapacity or sickness?

If you are getting on in years, here are some options to consider for your SMSF:

1. Appoint a professional trustee. Giving up full responsibility for the operation can be a good idea but it will involve extra cost. Also, your lifestyle may be affected due to delays in accessing funds. A retiree running his or her own SMSF can access money immediately, while a professional trustee may take several days to release cash.

2. Draw up a power of attorney (POA). It is necessary to exercise care when appointing someone as your attorney as they will have full control of the SMSF and must act in the best interests of the trustees. This person should also have a sound understanding of business and financial management. The POA may also be the executor of your estate.

3. Rollover to a public offer or industry fund. This involves selling or redeeming the SMSF’s assets, so capital gains tax implications need to be considered. Loss of control over the fund’s investment decisions and the investment options available within the new fund also need to be taken into account.

4. Include your children. Once your children are sufficiently mature they may be added as members or trustees of your SMSF. They should then attend all relevant meetings and be involved in the decision-making. Families with more than two children may find this option tricky as SMSFs are currently allowed only four members.

Talk to your licensed financial adviser about the most appropriate option for you to ensure the smooth operation of your SMSF should something happen to you.

Sources:
Murden, M and Gandolfo, P ‘The trouble with ageing trustees’ National Accountant, February/March 2010
www.ato.gov.au   Self managed super funds – key messages for trustees

We are here to help with your SMSF 
Call (02) 4926 2300 or email us. 

To discuss your super through SMSFs or your super in general call the team at Leenane Templeton. 

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“Isn’t estate planning all about looking after the assets of the wealthy when they die? What has estate planning got to do with being a single parent?”

Of course estate planning is about ensuring that there is an orderly transfer of assets between generations for the rich, but every person will leave something behind when they die, so estate planning is for everyone – rich or otherwise. The key aim of any estate plan is to ensure assets are transferred to support the right person(s), at the right time. And this is particularly relevant for single parents with young children. 

While the welfare of all children is a concern to parents, young children of single or widowed parents may be in a more vulnerable position for obvious reasons.

It’s not that difficult

Estate protection is not something the average single parent really wants to think about – or usually has time to do so – but there is good news. Making appropriate contingency plans need not be difficult or expensive – and the resulting peace of mind is worth the effort.

For such an important issue, it is best to seek appropriate professional advice. When seeking advice use the following questions as a starting point:

1. Is your will valid as a single parent? Is it appropriately expressed for the benefit of your children and up to date? Often people forget to update their will when personal circumstances change or they have no will at all. The results can be disastrous for your children.

2. Have you nominated an appropriate person(s) under the will to act as a guardian for your children? Is there a back-up option?

3. Who should be nominated as your personal legal representative (executor) of your will? The person selected should be someone who can competently and responsibly carry out your wishes. 

4. It may be wise to establish a testamentary trust under your will. That is, a protective trust that comes into existence upon death that provides financial support for your children until they complete their education.

5. Do you have enough life insurance so that the legal representative can clear any mortgage or other debts and provide for the living and education expenses of your children? Are the beneficiaries under your life policies appropriate?

6. Have your children (or perhaps the personal legal representative of your estate if a testamentary trust has been created and estate will be clear of debt) been included in any superannuation death benefit nomination?

7. Do all of your major assets have clear, current and unambiguous title? 

8. Should an enduring power of attorney be put in place nominating an appropriate person? This ensures that decisions can be made if you are incapable of looking after your financial affairs.

This list is not exhaustive nor will it be relevant to all situations, particularly where business ownership and other complicating factors come into play. However, it is a handy checklist for when you start talking to your adviser about these important issues.

Our financial planners are at hand to help with any questions you may have in relation to estate planning if you are a single parent. 
Call (02) 4926 2300 or email us. 

Estate planning for single parents needs to be taken seriously so let us help you! 

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Self-managed super funds (SMSFs) are the largest and fastest growing super sector in Australia and for many good reasons. But before you start an SMSF, it’s important to weigh up both the advantages and disadvantages and consider seeking advice to determine whether an SMSF is right for you.

The advantages

SMSFs can offer a number of features and benefits generally not available with other super options.

More investment control

You can establish your own investment strategy and directly control where and how your super is invested.

More investment choice

You can select from a wider range of investments including all listed shares, some unlisted shares, residential and business property, and collectables such as artwork, stamps and coins.

One fund for the family

You can set up a fund for yourself and up to three other people and consolidate your super balances. This could enable you to invest in assets of higher value than if you set up a fund with fewer members, achieve greater estate planning flexibility, and reduce fund costs.

Borrow to make larger investments

Your SMSF could make a larger investment in assets such as shares and property by using cash in your fund and borrow the rest.

Tax savings

With SMSFs you can take greater control over the timing of tax events, such as, starting a pension without triggering capital gains tax when your superannuation assets move into pension phase. You may also have the option of transferring assets that you own into your SMSF.

Greater estate planning certainty and flexibility 

You can nominate who you would like to receive your super when you pass away, without having to meet some of the constraints that apply to other super funds.

The disadvantages

While an SMSF can offer greater opportunities to take control of your retirement savings, there are some potential disadvantages you should also consider.

Higher costs for lower balances

SMSFs generally only become cost-effective if the fund has $200,000 or more invested. This is particularly true where you outsource and pay for most or all of the fund administration.

Greater responsibility

When you set up an SMSF, you and any other fund members will generally need to be trustees (or directors of the corporate trustee) and will be responsible for meeting a range of legal and other obligations.

Harsh penalties for breaches

The Australian Tax Office has the authority to impose various treatments to deal with SMSF trustees who have breached super laws. These include:

• requiring trustees to complete certain educational requirements within certain timeframes
• disqualifying an individual from acting as a trustee or director of a corporate trustee
• imposing significant administrative penalties on individual trustees and directors of corporate trustees of up to $10,200 per breach
• applying through the courts to impose civil and criminal penalties, and
• giving notice to a trustee to freeze the SMSFs assets where it appears that their conduct is likely to adversely affect the interests of beneficiaries.

Time consuming

You will need to have enough time, knowledge and skills to manage your own super and meet your legal and other obligations.

You should seek professional advice or guidance from your financial planner when deciding on the best superannuation solution for you. It is recommended that you also seek advice from a registered tax agent to determine the tax implications before setting up an SMSF.

Call (02) 4926 2300 or email us. 

To speak to our expert SMSF team about whether an SMSF is right for you, please call Leenane Templeton today! 

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Each year, large numbers of Australians die without a Will. As our lives become more complex, it is an oversight that can be as costly as it is heartbreaking.

None of us like to contemplate our own mortality but unfortunately the adage about death and taxes being life’s two certainties is absolutely spot on and it’s worth putting plans in place for what happens when we die.

Dying without a Will – known as dying ‘intestate’ – may not be a problem if you have few assets, have been married to the same person all your life and have no kids. In that situation everything you own passes to the surviving spouse.

But many of us have significantly more complicated lives.

Our high divorce rate means an ex, a new spouse or partner and even stepchildren can enter the inheritance scene. Our assets are also more complex, with superannuation often ranking as the second most valuable asset after the family home.

It all adds up to make having a formal Will more important than ever before.

Intestacy can leave a trail that leads to court

Essentially, a Will dictates who will receive each of your assets when you die. Without a Will in place, your estate will be divided up according to the laws that apply in your state or territory. While these statutory decision trees are set in stone, they are unlikely to be in line with your wishes.

This is especially the case if you have separated (though not formally divorced) from a former spouse, who could potentially inherit everything you own if you die intestate, leaving a new partner with nothing.

The bottom line is to speak to your financial planner and lawyer about arranging a valid Will. All the hard work invested in following a tailored financial plan could unravel in the blink of an eye if you die intestate. The reality is none of us know when we will pass away, so the merits of having a current Will apply equally to everyone.

Not every asset is covered by a Will

One of the benefits of discussing your estate plans with your financial planner is that they have a clear picture of your asset position.

This is important because not every asset you own forms part of your estate. Many people are surprised (and often just a little unnerved) for instance, to discover that it can be left to their fund trustee to decide who inherits their super.

There is a way to have a say in how your super is bequeathed, and it involves completing some paperwork called a ‘binding nomination’. This spells out to the fund trustee who you would like to inherit your super and any life insurance held through super.

Only certain people can inherit your super tax free – notably your spouse and dependent children, or a person with whom you share an interdependent relationship – such as two aged siblings sharing a home together.

Your financial planner can help you make important decisions about who inherits your super and guiding you through the possible tax pitfalls to ensure the best outcome for everyone involved.

The critical thing is to take action today. None of us know what lies around the corner. Once your estate plans are in place, be sure to review those plans annually or following any major change in your life or asset holdings.

Speak with your Leenane Templeton financial planner on 02 4926 2300 to discuss your estate plans.

Source: BT

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Is your retirement just around the corner? Then it’s time to make your super work harder by avoiding these common pre-retirement super traps and start planning.

1. Outdated investment strategies

As you approach retirement, you should revisit your investment strategy. But that doesn’t necessarily mean putting all your money into defensive assets like cash. Diversification is the key to smoothing out the inevitable bumps when economies, sectors and assets rise and fall. A well-diversified portfolio includes a good mix of asset classes — such as cash, fixed interest, property and shares.

2. Over-insurance

Just as your investment needs change, so will your insurance requirements. For instance, if you’ve eliminated or significantly reduced your debts, you may not need as much life insurance or income cover as you once did. And, if you’re an empty nester, you’re insurance needs are likely to be very different to those of a young family’s sole breadwinner.

Your lifestyle might have also changed over the years — for example, you may no longer engage in high-risk work activities or leisure pursuits like skiing. So make sure your cover matches your needs.

3. Missing out on tax benefits

Before the end of your career, it may be worth considering a transition to retirement (TTR) strategy. This involves drawing a pension from your super savings while you’re still working, which you can start doing once you’ve reached your preservation age (currently age 55). This pension income is likely to be taxed at a reduced rate or be tax-free. At the same time, you can boost your super contributions through salary sacrificing, with any contributions of up to $35,000 taxed at just 15 per cent.

This can give a valuable boost to your nest egg during the crucial pre-retirement years. That’s why it’s worth consulting a financial planner to find out the best TTR strategy for your situation.

4. Inadequate estate planning

Although it’s probably not something you like to think about, it’s important to consider what will happen to your estate when you pass away. When it comes to super and insurance, this means nominating who you want to receive your super savings and any payable insurance benefits. The tax implications for your beneficiaries can vary depending on their age, their relationship to you and whether the payments are classified as a lump sum or as an income stream. When you’re getting your affairs in order, it’s a good idea to seek professional estate planning advice.

5. Going it alone

Everyone’s circumstances are different, so your super strategies should be too. Talking to a financial planner is the first step in getting the most out of your super.

Source: MLC, October 2014

To find out more, contact our team of financial planners today.
Call (02) 4926 2300 or email us.

To discuss pre-retirement super traps and what you should be avoiding, please contact the award winning team at Leenane Templeton.
 

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Add to this the reality that many of us are going to outlive our savings, and the age we qualify for the Government pension is rising, then it’s no surprise that aged care and estate planning are hot topics for government, financial advisers, and families alike.

So what are some important things to consider when looking to plan your life, or that of a loved one, after retirement?

Five core issues

1. The costs.

Establish entry fees and bonds and ongoing costs of nursing homes and hostels. For residential care make sure you understand the costs are for things like daily care fees, and income-tested fees.

2. The family home.

Consider if someone will continue to live there, or should it be sold or rented out? You might consider options such as a reverse mortgage.

3. Social security.

Find out how to maximise your age pension entitlement by structuring your assets in the most effective way.

4. Tax.

Look at what special tax offsets may be available when living in residential aged care.

5. Estate planning.

Have you or your loved ones sorted out a power of attorney or enduring guardianship?

Government help

In July 2014, the Australian Government launched the Let’s talk about changes to aged care campaign (myagedcare.com.au). The changes included:

• greater support to stay independent and in your own home and community with more home care packages to meet your needs
• older people being asked to contribute to the costs of care, if they could afford to do so
• increased flexibility in ways to pay for accommodation in an aged care home
• Centrelink providing income testing for people receiving home care, and both income and asset testing for people receiving residential care.

Estate planning

A huge part of aged care planning is estate planning. At its most basic, estate planning is about working through what you want to do with your assets when you die. It’s much more than just a Will. Effective estate planning is about protecting your assets and empowering you with the information and knowledge you need to make informed, conscious choices so that your family is not left stranded or your assets eroded or exposed to systems, processes and challenges that you may not be aware of or have even considered.

Financial planning

Whatever your preferred choices are for aged care there is a need for preparation and sound financial planning.

Source: BT Financial, October 2014

Call Leenane Templeton on (02) 4926 2300 or email us.

Our team of expert financial planners are at hand to assist with your financial position ahead of retirement. Living Long – Living Well.

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