Don’t Leave a Mess in the Hereafter

In a nutshell, estate planning is getting your financial affairs in order ahead of your passing.  What it really means though is not leaving a bloody big mess for your spouse or kids to clean up. Families in conflict over money with more lawyers than you need, dragging it out for years, is a common result if you don’t leave some legally recognised instructions ahead of death.

‘She’ll be right mate!  I don’t care what happens after I die because I’ll be dead?” is typical of the apathetic attitude that I encounter regularly.  The fact is that two thirds of the adult population in Australia has a blind spot when it comes to making plans for death which is why only 30% of us have updated and valid wills.  And a lot of those forget to do anything about their superannuation.

So to help you avoid having your estate chewed up in legal fees, here are five busted myths in this highly misunderstood area:

MYTH 1.   “I don’t need a will because the missus / hubby gets everything anyway.”

A.  That outcome is nowhere near guaranteed because it’s taken out of your family’s hands. After death the Public Trustee Office (or state based equivalent) pays out to beneficiaries according to a strict formula they use and it is likely to include a few more beneficiaries

MYTH 2.   “My mortgage and other personal debt will automatically be extinguished when I die.”

A.  You may die but your debts will live on forever, or at least until they are repaid, usually out of money and possessions in your estate.  One way or another, it’s your family who bears the brunt. One of the easiest ways to deal with debt is to insure it, so it is repaid from insurance claim proceeds when you die.  That really saves putting a massive hole in the family wealth.

MYTH 3.   “I can get a will done for free at the Public Trustee’s office.”

A.  Indeed you can and there’s an equivalent body in every state and territory.  But preparing the will is where the free stuff stops.  If you choose that option, the Public Trustee administers your estate as part of the deal and their services aren’t free; and it may take a while which can be very frustrating for a family who need the money and property asap.

MYTH 4.   “I can save myself a fortune by completing a will kit purchased from a Post Office or newsagent.”

A. Good luck with that.  The fact that you even consider this demonstrates your lack of knowledge in this area.  If you leave out some of your money and assets you will create a partial intestacy and that part will go off to the Public Trustee to be dealt with slowly and expensively.  If your will is not properly signed and witnessed, it will be invalid.  Do yourself a favour and go see a solicitor.

MYTH 5.   “My will takes care of everything I own, as well as everything I jointly own; plus my super, life insurance and companies and trusts I control.”

A.  Wrong!   A will only deals with money, property and other stuff that you own personally (i.e. in your own name only).  That’s it!  Everything else needs to be addressed separately.  For most employed people, superannuation is the largest chunk of money they have.  You must complete a form (look on your fund’s website) to nominate beneficiaries to receive your super.  If you don’t understand the difference between a ‘binding’, ‘non-binding’ and ‘non lapsing’ nomination, please seek advice.

So there it is; five common mis-beliefs; and there are many other traps for new players.  However, you can make the process quite simple and straight forward by going to see an experienced solicitor.  A simple will doesn’t cost an arm and a leg.  And for most people who don’t have companies and trusts, it is relatively easy to complete valid nominations for your life insurance and super in addition to your will.  Any reputable financial adviser can help you with that.  Contact me on 0408 756 531 if you would like to chat or ask questions.





review your SMSF trust structure

SMSF Review – Individual Trustees a Disaster Waiting

review your SMSF trust structureThe majority of SMSF in Australia are estate planning disasters waiting to happen.

Why?  Because the majority of people have avoided the expense of using a corporate SMSF trustee, and have chosen the cheaper option of setting up their SMSF with ‘individual trustees’.

As you are probably aware, a SMSF can have up to four members, and all of the fund’s members must be trustees.  There is a choice of trustee structure.  Members can choose:

  • To act as individual trustees; or
  • To act as directors of a company that acts as corporate trustee.

The problem arises in two member funds with individual trustees (which would be the majority of SMSF in Australia) when one member dies.  A SMSF cannot operate with only one individual trustee.

The reason it’s not permitted is a legal trust relationship cannot exist with only one person involved.  A SMSF with individual trustees is required to have at least two trustees to operate.  So it means bringing in a second trustee.  In some family circumstances, this can be a problem.

Depending on who the person is, bringing a new trustee into the fund to replace a trustee who has passed away can upset the balance of SMSF control at trustee level, with the potential to send a couple’s original Estate Planning into a tail spin.

On the other hand, if a company is the trustee, it can continue to operate with one director only.  The advantage of a corporate trustee is that when the first death in a couple occurs, SMSF management and control stays firmly in the hands of the surviving spouse and the Estate Plan can stay on track as originally intended.

Just another note of caution!

If you already have a company for another purpose, don’t rush into to using it as the corporate trustee for your SMSF without first seeking advice.  That could create more problems than it solves.

So if you are an individual trustee of a 2-or-more-member SMSF, please raise the level of urgency for a SMSF review to high.  Call me and I will fix the problem for you.  It is not difficult to do, but it is time consuming to change the name of the trustee on all of your investments.  However, it could save you a lot of money and heartache down the track.


General advice warning

The article above is general advice only designed to educate and heighten awareness of superannuation issues. It should not be regarded as personal advice because it does not take into account your personal circumstances, financial situation or specific goals. For personal advice that is tailored to your needs, please contact me or consult your licensed financial adviser.


estate planning is essential

SMSF Review – No Estate Plan?

estate planning is essentialMost clients I see for a SMSF review have not done much about Estate Planning.

Estate planning means making a plan for the distribution of everything you own and control when you die.

While most people I meet have been meaning to get around to it, they haven’t taken action.  I understand why because it is a complex area, and sometimes it is hard to know where to start.

Estate planning is more than just having a Will.  Your last will & testament only deals with money and assets that are owned in your personal name.  Whether you realize it or not, you probably have other assets within your control that can’t be dealt with directly by your Will.  There are separate strategies for these.  They include:

  • Money & investments held in superannuation, including your SMSF
  • Life insurance policies
  • Jointly owned property (e.g. your home)
  • Money and property controlled in a private company or trust

Whilst you can’t put your home in your SMSF, it is common to draw some of the other common elements of your wealth together into your SMSF such as money, investments, property, life insurance policies and business premises.

And there is a reason for this!

One of the lesser known advantages of a SMSF is the protection it offers as a vehicle which can carry and distribute family money and assets from one generation to the next.

I can’t emphasise enough how important estate planning is as part of a SMSF review.

This protection is not only effective against those you love the least, like creditors and those who want to sue you, it is also effective against potential risks arising from family members you love the most.

I know that sounds really strange, nut here’s an example.

The last thing you want is for hard earned money to be squandered by a child with a drug or gambling habit, or be taken by a child’s departing spouse as part of a divorce settlement.  That can happen if you don’t get it right.  And I can tell you now that a simple Will won’t cut it.

Also if you have a child who can’t fend for themselves, for example a child with a disability or a spendthrift child, you can set up the means to provide for that child for life, long after you’ve departed this world.

However, it is essential that all of these arrangements be put into place while you are alive and still have your full mental faculties to make such decisions.

This is the heart of estate planning!

Call me for a SMSF review and get your SMSF working for you as the inter-generational wealth vehicle it should be.


General Advice warning

The article above is general advice only designed to educate and heighten awareness of self-managed superannuation and estate planning issues. It should not be regarded as personal advice, because it does not take into account your personal circumstances, financial situation or specific goals. For personal advice that is tailored to your needs, please contact me or consult your licensed financial adviser.

How much email marketing is too much?

This is something I wrestle with personally.  At the moment I am busy promoting my new online MyProsperityForum site.  My target market is risk insurance (i.e. life insurance & income protection) advisers, financial planners and home loan professionals.  I am also about to start a keyword and social media campaign to drive traffic directly to the site.

But back to the email issue!  I am emailing other financial professionals to let them know what a great resource this innovative forum is for them personally as well as the enormous benefits for their clients.

Whilst I don’t want to send emails too often, I do want them to know the benefits of using and referring their clients to the forum.  But how much is too much?

I am reasonably well known in the financial planning and business coaching Brisbane communities so I don’t want my emails relegated to the spam box.   That outcome will only serve to tarnish my good reputation.

But I do want to get my messages across.  For example:

  • Non-financial planning financial advisers are regularly asked questions outside their field of expertise.  MyProsperityForum is a perfect solution.
  • Some people, even clients of financial planners, are personal finance DIYs who are very interested in understanding the many tricky financial planning concepts as they apply to both individuals and business owners.  MyProsperityForum is the ideal solution and a service option not available or offered in the past
  • Many people can’t afford to or are reluctant to consult a financial planner.  Again, MyProsperityForum is a perfect solution
  • A lot of people simply want to ask questions of a knowledgeable professional without any obligation or product push.  There is also a lot of value at MyProsperityForum in seeing what other people ask.
  • People want difficult financial concepts (e.g. personal risk insurance, investment, superannuation, retirement, estate planning) explained in plain English.  MyProsperityForum already has such content uploaded in easy-to-read article form

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