Viewing posts from: November 2000

Mistakes new investors should avoid

All / 09.09.2021

Mistakes new investors should avoid

You’re young, expecting a satisfying future brimming with friends, family and a comfortable lifestyle.

You’re a Next Generation Investor, likely aged between 18 and 25, and you’re starting to think about financial security.

According to an Australian Stock Exchange study, nearly a quarter of all investors over the past two years were Next Generation Investors. Additionally, some 27% of surveyed people under age 25 intend to invest over the next year.

The excitement of embarking on a journey toward financial freedom is common, as is confusion, after all, in the rush of enthusiasm, how can you ensure you get the decisions made for the future, right today? Further, what are the rookie mistakes to watch out for?

Here are a few that can be easily avoided.

Not clearing debt first

Student loans and credit cards have a knack for eating away income. We’re not saying don’t save at all, but we’re recommending you clear as much debt as possible before committing to serious investments.

Track your spending to spot potential savings, then channel that cash towards your debts. Every little bit helps.

No strategy

Desire to build wealth through investment is not a strategy. Saving for a new car, a home deposit? Perhaps you’re planning to retire in your 40s? The end game determines which investments will be most suitable.

Now, consider how you feel about risk and whether you’ll need access to your money. Successful investment strategies are planned.

If it feels overwhelming, seek professional advice to help you build your strategy. You’ll be surprised at how inexpensive a financial adviser can be.

Not diversifying

Generally speaking, the higher the potential return, the higher the potential risk.

Market-linked investments, like shares, can be big-earners, but you’ll have to ride economic ups-and-downs to get there – sometimes for ten years or more.

If this worries you, consider lower-risk investments. Conservative in nature, their returns are generally lower, but you’ll probably sleep better.

Decide how much risk you’re comfortable with. You may be better off minimising exposure to high-risk assets by diversifying your portfolio with a variety of investment types.

Trying to predict the market

Investment markets are notoriously unpredictable; even experienced traders sometimes get their timing wrong. Buying shares at the wrong time can mean you pay more than you should, similarly selling at the wrong time can result in losses.

Short-term buying and selling might seem exciting, but it’s a fast-track to losing money. The way around this, as previously mentioned, is research, diversification and being prepared to stay the distance.

The magic word is patience.

Review

No investment is a set-and-forget scheme. Always keep track of your savings and your ongoing investment plan, ensuring that it continues to align with your goals, particularly as they change over time.

A flash car may be your priority today, but fast-forward a couple of years and perhaps marriage and children are your priorities.

As your goals change, so must your investment strategy.

A few other things…

Fees and taxes are unavoidable and various investments attract different expenses and tax structures. Find out what you’re up for before making financial decisions.

Feeling lost? The Australian Stock Exchange offers free online courses and the Government’s MoneySmart website has a free info Starter Pack to get you underway.

Of course, nothing beats professional advice tailored to your needs. The Financial Planning Association of Australia will put you in touch with a qualified adviser suitable for you.

Strategic investing sets you up financially, and helps create a savings habit for life. Your financial future begins today.

For more information or to speak to one of our Financial Advisers please contact TNR Wealth Management on 02 6626 3000.

Disclaimer
Past performance is not a reliable indicator of future performance. The information and any advice in this publication does not take into account your personal objectives, financial situation or needs and so you should consider its appropriateness having regard to these factors before acting on it. This article may contain material provided directly by third parties and is given in good faith and has been derived from sources believed to be reliable but has not been independently verified. It is important that your personal circumstances are taken into account before making any financial decision and we recommend you seek detailed and specific advice from a suitably qualified adviser before acting on any information or advice in this publication. Any taxation position described in this publication is general and should only be used as a guide. It does not constitute tax advice and is based on current laws and our interpretation. You should consult a registered tax agent for specific tax advice on your circumstances.

 

 

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5 tips to protect yourself from being scammed

All / 02.09.2021

5 tips to protect yourself from being scammed

In 2020 Australians reported over 7,000 investment scams to Scamwatch, well up on the 5,000 reported in 2019. Scamwatch recorded investment scam losses of $65.8 million, but add in notifications made to other government agencies and the major banks and reported losses across 2020 soared to $328 million. Due to embarrassment many losses go unreported so we may never know the full extent of the damage.

With a high likelihood that we will all be targeted by scammers at some stage, perhaps repeatedly, how can we identify scams and protect ourselves from losses?

Ignore unsolicited offers

Most investment scams start with a phone call. No matter how compelling the story told by the caller, if you haven’t done anything to invite contact from an investment’s promoter, it is likely to be a scam. The simple solution? Hang up early in the call. If the approach is made by e-mail, social media or text message don’t click on any links and delete the message.

Beware of promises of large and guaranteed returns

In times of low interest rates it’s hard to find a good return on lower risk investments such as term deposits and bonds. The promise of high returns, perhaps with a built in guarantee may look compelling. But the age old saying holds: if it seems too good to be true, it probably is.

Some investors are willing to put such promises to the test by making a small investment. When professional looking statements show that the promised performance is being delivered, the investor makes a much larger deposit. Not long after that the promoter seemingly disappears.

Research the promoter through independent and official channels

Are they based overseas? This is a big red flag. If Australian, are they (and their prospectus) registered with ASIC? Do they have an Australian Financial Services Licence? Do they appear on the list of companies you should not deal with (available at moneysmart.gov.au)? Is their street address genuine and do they have a physical office? How long have they been in business?

Get independent advice before investing

Even with a legitimate investment an independent assessment is a good idea. With a questionable investment it might just save you from being scammed.

Educate yourself

Scams are evolving all the time. Government websites moneysmart.gov.au and scamwatch.gov.au provide information on a wide range of scams and are updated as new scams appear. They also provide advice on how you can protect yourself.

What can you do if you’re the victim of a scam?

You can make a report via the Scamwatch website (operated by ACCC), to ASIC and to your local police. Stop sending money to the scammer, and beware of the double sting where scammers offer to help you recover your losses, for a fee, of course.

While ASIC and ACCC do not provide direct assistance to scam victims, the information can help with investigation and law enforcement, and provide intelligence on scam activity. Police may also be limited in their ability to identify and prosecute scammers, particularly if they are located overseas. The sad fact is that most victims of scams never see their money again.

Practical help is available from IDCARE. This is a free support service that can assist businesses and individuals with a range of cyber issues including identity theft, romance scams and investment scams.

For more information or to speak to one of our Financial Advisers please contact TNR Wealth Management on 02 6626 3000.

Disclaimer
Past performance is not a reliable indicator of future performance. The information and any advice in this publication does not take into account your personal objectives, financial situation or needs and so you should consider its appropriateness having regard to these factors before acting on it. This article may contain material provided directly by third parties and is given in good faith and has been derived from sources believed to be reliable but has not been independently verified. It is important that your personal circumstances are taken into account before making any financial decision and we recommend you seek detailed and specific advice from a suitably qualified adviser before acting on any information or advice in this publication. Any taxation position described in this publication is general and should only be used as a guide. It does not constitute tax advice and is based on current laws and our interpretation. You should consult a registered tax agent for specific tax advice on your circumstances.
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Is a DIY Will kit enough?

All / 26.08.2021

Is a DIY Will kit enough?

More than 45% of Australians don’t have a valid Will. If you die without one, your hard-earned wealth (your estate) will be distributed according to the rules of intestacy – a government-determined formula. That may not divide your estate as you would like, and if your family consists only of distant relatives your assets could end up enriching your state government’s coffers.

If that’s convinced you that a Will is a good idea, how do you go about making one? There are three main options:

Engage a solicitor

Using a solicitor to prepare your Will, particularly one who specialises in estate planning, is most likely to deliver the desired result. If your situation calls for anything more than the most basic of Wills, for example if there is a family business, disabled dependents, or complex family or financial structures, an estate planning lawyer will be able to provide advice on how to best structure your Will.

The downside is the upfront cost. This can range from a few hundred dollars for a straightforward Will to several thousand dollars where the situation is more complicated.

Use a trust company

There are public or state trustees in each state and territory, as well as a number of private trustee companies. They are specialists in preparing Wills and can also act as the executor of an estate. A private trustee will charge a few hundred dollars to prepare a Will, and the estate will be charged a fee when the trustee performs the role of executor. Some public trustees will waive the fee to prepare or update a Will if they also act as the executor.

Do it yourself

Will kits are available from newsagents, post offices, the Internet and other sources. Doing it yourself certainly appears to be the cheapest option, but if something goes wrong, the cost of putting things right may dwarf the initial savings.

Common problems with DIY Wills include:

  • Ambiguous wording that may need to be ruled on by a court. Fixing this can cost big dollars.
  • The Will is not properly signed or witnessed. This can invalidate the Will.
  • The Will covers only part of the estate. The remainder will be dealt with under the rules of intestacy (ie. your state government decides).
  • The Will contains unenforceable or unreasonable conditions, such as leaving out a gift to an entitled beneficiary. This can also lead to expensive legal bills.
  • Business ownership issues may be overlooked or not properly addressed.

Involve your financial planner

Your financial planner can’t prepare a Will, but as the professional most likely to have a detailed overview of your financial and personal circumstances, he or she is often the person best equipped to identify estate planning issues, and to brief your estate planning lawyer.

Your adviser may also be able to refer you to an estate planning expert, and work with them to create a Will that will deliver a smooth transfer of wealth at a time of great personal distress for your loved ones.

For more information or to speak to one of our Financial Advisers please contact TNR Wealth Management on 02 6626 3000.

Disclaimer
Past performance is not a reliable indicator of future performance. The information and any advice in this publication does not take into account your personal objectives, financial situation or needs and so you should consider its appropriateness having regard to these factors before acting on it. This article may contain material provided directly by third parties and is given in good faith and has been derived from sources believed to be reliable but has not been independently verified. It is important that your personal circumstances are taken into account before making any financial decision and we recommend you seek detailed and specific advice from a suitably qualified adviser before acting on any information or advice in this publication. Any taxation position described in this publication is general and should only be used as a guide. It does not constitute tax advice and is based on current laws and our interpretation. You should consult a registered tax agent for specific tax advice on your circumstances.

 

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Who gets your super?

All / 19.08.2021

Who gets your super?

Who decides what happens to your superannuation savings when you die?

You may think that you do, but that isn’t always the case. The ultimate decision may be made by someone you don’t even know – the trustee of your superannuation fund. Let’s look at how you can have greater control.

Binding death benefit nominations

The most certain way to direct payment of your superannuation death benefit is by making a binding death benefit nomination. The nominated beneficiaries must be ’dependants’ – a spouse, de facto spouse, child or financial dependant – or a legal personal representative (ie. the executor or administrator of a deceased estate.)

If the nomination has been properly signed and witnessed, and is still current at the date of death, then the trustees of the superannuation fund must pay the death benefit to the nominated beneficiaries.

Unlike Wills, valid binding superannuation nominations are unlikely to be overturned by a court, so they provide great certainty. It is up to the trustees of each superannuation fund to decide whether or not to allow binding nominations, so they aren’t available to everyone.

Although some funds offer non-lapsing binding death benefit nominations, most are only valid for three years, so it’s important to check yours and ensure it remains up-to-date.

Trustee’s discretion

The trustee is under a legal obligation to pay a death benefit to the member’s dependants, and in most cases benefits will be paid in a way that is consistent with the wishes of the deceased member. However, it is possible the trustee may recognise a wider range of dependants than the member would have liked – including a separated spouse.

In some cases, the member’s preferred beneficiary may not meet the legal definition of a dependant. This may apply to parents. In the absence of any dependants and a legal personal representative, the trustee may exercise their discretion, and pay the benefit to a non-dependant.

While dependants receive lump-sum death benefits tax free, the rate of tax payable by non-dependants can vary from nil to 30% depending on the components of the superannuation payment.

Superannuation pensions

The situation is a little different if the member has already retired and is drawing a superannuation pension. With pensions, it is common to nominate a surviving spouse as a reversionary beneficiary. This means the pension payments will continue to be paid to the nominee, either until their death, or until the funds run out. If the reversionary beneficiary dies, any remaining balance is then paid out as a lump sum death benefit according to the type of nomination they have made.

Good advice required

Increasing levels of wealth being held via superannuation and the nomination of beneficiaries should be made in the context of a comprehensive estate plan. This includes taking into account the way superannuation death benefits are taxed when paid to different types of beneficiary. Your financial adviser can help you make the right decision.

For more information or to speak to one of our Financial Advisers please contact TNR Wealth Management on 02 6626 3000.

Disclaimer
Past performance is not a reliable indicator of future performance. The information and any advice in this publication does not take into account your personal objectives, financial situation or needs and so you should consider its appropriateness having regard to these factors before acting on it. This article may contain material provided directly by third parties and is given in good faith and has been derived from sources believed to be reliable but has not been independently verified. It is important that your personal circumstances are taken into account before making any financial decision and we recommend you seek detailed and specific advice from a suitably qualified adviser before acting on any information or advice in this publication. Any taxation position described in this publication is general and should only be used as a guide. It does not constitute tax advice and is based on current laws and our interpretation. You should consult a registered tax agent for specific tax advice on your circumstances.

 

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What happens when you can’t manage your SMSF?

All / 12.08.2021

What happens when you can’t manage your SMSF?

More than 1.1 million Australians manage their superannuation via a self-managed superannuation fund (SMSF) structure. Many are motivated by the desire to have control over their own money, the potentially lower costs, or the option to make investments that aren’t available to members of public offer funds. Whatever the reason, if you are a trustee of a SMSF, have you stopped to ask yourself, “Who will look after my super if I can’t?”

Members of SMSFs tend to be older than the population as a whole. While we are living longer and healthier lives, many people will reach the stage where they are no longer able to properly look after their financial affairs. Due to the high regulatory requirements controlling SMSFs, the penalties for not managing your fund correctly may be substantial. So what are the options?

Rely on the other trustees

If the fund has more than one member, is the other trustee(s), or directors of a corporate trustee, able to manage the fund? While it’s common for a SMSF to have two members, usually spouses, it is often the case that only one knows what’s going on. With single member funds, it is possible to appoint a second, non-member trustee, but it is important that they have the skills to run the fund if necessary.

Appoint an attorney

Whatever your circumstances, you should provide an enduring power of attorney to a trusted and informed person. This allows them to step in and manage your affairs if you can’t. However, if your attorney is to help manage your SMSF, he or she needs to be both willing and able to do so.

Switch to a small APRA fund (SAF)

A SAF is similar to a SMSF but with an external, professional trustee. While SAFs offer most of the benefits of SMSFs, trustee fees can increase the costs of running such a fund.

Rollover to a managed superannuation fund

While a retail or industry superannuation fund will restrict your investment options, for example not allowing you to hold direct property within your super, all of the administration and many of the investment decisions will be made by professional managers. Overall fees may be higher with these funds, but they take the weight of fund management off your shoulders.

Use an adviser

A qualified financial adviser with the appropriate systems in place can help you manage your SMSF. In the event that you lose the ability to make decisions about your fund, an adviser can also assist other trustees or your appointed attorney. Depending on the size of the fund, the overall cost of using an adviser can be less than the total fees charged by managed super funds, while ultimate responsibility for fund compliance remains with the trustees.

It can be difficult to decide when the time is right to hand over the reins of your super to someone else. It’s important to make plans, discuss them with your fellow trustees or your attorney, and to seek professional advice as to the best way to ensure your super will be well managed if you can no longer ‘do it yourself’.

For more information or to speak to one of our Financial Advisers please contact TNR Wealth Management on 02 6626 3000.

Disclaimer
Past performance is not a reliable indicator of future performance. The information and any advice in this publication does not take into account your personal objectives, financial situation or needs and so you should consider its appropriateness having regard to these factors before acting on it. This article may contain material provided directly by third parties and is given in good faith and has been derived from sources believed to be reliable but has not been independently verified. It is important that your personal circumstances are taken into account before making any financial decision and we recommend you seek detailed and specific advice from a suitably qualified adviser before acting on any information or advice in this publication. Any taxation position described in this publication is general and should only be used as a guide. It does not constitute tax advice and is based on current laws and our interpretation. You should consult a registered tax agent for specific tax advice on your circumstances.
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Is your business your super?

All / 05.08.2021

Is your business your super?

Many self-employed people view the sale of their business as their retirement fund – their superannuation. So just like ensuring superannuation investments are being well managed, business owners need to plan ahead to ensure their business can continue to provide a reliable income after they retire.

One of our new clients, Dale, is a typical example of this expectation – he is an accountant working from his custom-built office attached to his house. He wants to retire in a few years, and has always assumed that he can sell his business and retire on the proceeds. Although he advises his clients to plan ahead, amazingly he has failed to follow his own advice and has never documented a succession plan.

The value of a business

Dale understands the value of the loyal client list he has built up over 20 years. Those clients will continue to need good accounting advice in the future, and their fees will provide an ongoing income stream to the business that services those needs. If Dale can transfer his clients’ loyalty to another accountant, then it represents an asset he can sell.

To plan his succession, Dale could explore a few options. He could employ a junior accountant to train up with a view to having him or her buy his business. Or he might be able to sell the business to an established accounting firm and continue to work with his clients as he transfers their loyalty to the new owner.

What about tax?

Any sale proceeds Dale receives will be treated as a capital gain, which would normally be subject to tax. However, a number of concessions are available to small business people, particularly when it comes to retirement. These concessions are designed to reduce or eliminate any capital gains tax payable on the proceeds of the sale of the business.

Relinquishing control can bring rewards

Business succession confronts many small business operators. It’s not a case of one size fits all. The specifics of the succession plan will vary from business to business, and it may present a significant challenge for independently-minded owners. After all, it means progressively giving up control and letting go of the day-to-day running of something they have created personally. It’s sometimes a good idea to engage a business consultant to help design and guide the succession strategy.

Will your business fund your retirement?

For many people, converting a business into an asset that can be sold for a six or seven figure sum could be the most profitable use of their time between now and their ultimate retirement.
If you’re a small business owner, ask yourself, what does your retirement fund look like? If you don’t have an answer, talk to us sooner rather than later. Then you can get back to running your business knowing your ‘superannuation’ is being well managed.

For more information or to speak to one of our Financial Advisers please contact TNR Wealth Management on 02 6626 3000.

Disclaimer
Past performance is not a reliable indicator of future performance. The information and any advice in this publication does not take into account your personal objectives, financial situation or needs and so you should consider its appropriateness having regard to these factors before acting on it. This article may contain material provided directly by third parties and is given in good faith and has been derived from sources believed to be reliable but has not been independently verified. It is important that your personal circumstances are taken into account before making any financial decision and we recommend you seek detailed and specific advice from a suitably qualified adviser before acting on any information or advice in this publication. Any taxation position described in this publication is general and should only be used as a guide. It does not constitute tax advice and is based on current laws and our interpretation. You should consult a registered tax agent for specific tax advice on your circumstances.
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Salary sacrifice vs personal contributions to super

All / 29.07.2021

Salary sacrifice vs personal contributions to super

If you are an employee, there are two ways in which you can optimise the tax-effectiveness of your additional super contributions:

  • opt for a salary sacrifice arrangement, whereby your employer makes additional superannuation contributions beyond the compulsory superannuation guarantee (SG) amount from your pre-tax earnings and reduces your salary accordingly; or
  • make a personal contribution and claim a tax deduction when you submit your tax return.

Generally, higher income earners gain the greatest benefit from either of these strategies. Lower income earners may be better off not claiming the tax deduction and receiving a government co-contribution if eligible.

Which option?

For starters, employers don’t have to offer salary sacrifice. If they don’t, claiming a tax deduction is the only option.

Another thing to look out for: if salary sacrifice is available, will your employer still make SG payments on your pre-sacrifice salary? Legally, employers only need to pay SG on the actual salary amount, so for every $1,000 of salary sacrifice you would lose $95 in SG contributions. In this situation, you will most likely be better off claiming a tax deduction.

Fortunately most employers do the right thing and don’t reduce their SG contributions. The federal government has also announced plans to ensure salary sacrifice does not result in a reduction in SG payments. If this happens, it will pretty much level out the playing field between salary sacrifice and tax-deductible personal contributions, but some subtle distinctions remain.

Let’s look at Jenny and Brian. They both earn $120,000 a year, and want to contribute an extra $12,000 pa ($1,000 per month) to superannuation as concessional (pre-tax) contributions. Jenny opts for salary sacrifice and will receive SG contributions based on her pre-sacrifice salary. Brian decides to make his own contributions and later claim them as a tax deduction.

Both will see their overall annual income tax bill drop by $4,680. After allowing for 15% tax on the super contributions, they are both better off by $2,880 for the year.

The key difference is that Jenny will enjoy her tax benefit each payday. Brian needs to wait until the end of the financial year and submit his tax return before he can receive any benefit from his choice.

On the other hand, Brian’s regular pay will be more than Jenny’s as his gross income remains at $120,000 pa compared to her $108,000. This gives him more flexibility. For example, he can wait to make his entire contribution just prior to the end of the financial year – if he hasn’t been tempted to spend it in the meantime. However, if he makes regular contributions to his super fund, his net disposable income each month will be lower than Jenny’s. Only when he receives any tax refund might they be back on equal terms.

Beware the rules

While the greatest benefit of extending tax deductibility on personal contributions goes to employees who are unable to access the salary sacrifice option, it’s still a positive move that provides everyone with flexibility and choice. However, whether you opt for salary sacrifice or claiming a tax deduction, there are rules to be followed. Talk to your financial planner about the best superannuation contribution strategy for you.

For more information or to speak to one of our Financial Advisers please contact TNR Wealth Management on 02 6626 3000.

Disclaimer
Past performance is not a reliable indicator of future performance. The information and any advice in this publication does not take into account your personal objectives, financial situation or needs and so you should consider its appropriateness having regard to these factors before acting on it. This article may contain material provided directly by third parties and is given in good faith and has been derived from sources believed to be reliable but has not been independently verified. It is important that your personal circumstances are taken into account before making any financial decision and we recommend you seek detailed and specific advice from a suitably qualified adviser before acting on any information or advice in this publication. Any taxation position described in this publication is general and should only be used as a guide. It does not constitute tax advice and is based on current laws and our interpretation. You should consult a registered tax agent for specific tax advice on your circumstances.
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Giving the gift of investing

All / 22.07.2021

Giving the gift of investing

Did you have a savings account when you were young? It wasn’t uncommon and those old Passbook accounts funded many a first car.

Now you’re a parent, are you thinking of opening an account for your kids? Record low interest rates have taken some of the fun out of watching bank accounts grow, but there are alternatives.

For example, have you considered a share portfolio?

Direct shares follow market movements, whether that be up or down, but over time, quality shares have greater growth potential than many other investment types.

For a child’s investment fund, you’re probably looking at a savings term around 15 to 20 years – ideal for riding market ups-and-downs.

When Lincoln was born, his parents discussed possible long-term investments with their financial planner, and settled on a portfolio of diverse assets suitable for a 15-20 year time horizon.

Meanwhile, Lincoln’s grandparents chose to open a traditional savings account at their preferred bank.

How did the two compare?

Consider the following example:

Initial investment: $500

Monthly contribution: $50

Investment term: 20 years

Assumptions: Savings account return calculated on 1% per annum interest. Share portfolio return 4% per annum based on a comparison of mixed Balanced Asset funds over the past three years to December 2020.

This example demonstrates how shares, year-on-year, can potentially outpace a savings account. By year 20, Lincoln’s projected Savings Account balance was $13,899 and his projected Share Portfolio balance was $19,450.

Straight-forward? Not so fast, as here are a few other points to think about.

Tax and TFNs

Your child can have a tax file number (TFN) – there’s no minimum age. All funds will request a TFN, but whether you quote the child’s TFN or your own depends on a number of factors like who is contributing to the investment, whether the money is being used, etc.

Tax is tricky too. Your child’s age and whether they’re earning their own money will determine whether they have an income tax liability and need to lodge a tax return.

Additionally, there’s Capital Gains Tax (CGT). Share portfolios are assessed for CGT if the assets are sold for more than their purchase price. The amount of CGT payable will depend on a number of elements, but your tax agent will be able to assist.

There will always be tax, but how much, what type and how it is calculated will depend on your, and your child’s, circumstances.

Do your sums to work out the most suitable tax outcome for you and your child. Remember that mistakes can be costly so it’s wise to consult a tax accountant for personalised advice.

Trusts

Many people consider setting up a trust for the children’s savings, as it helps to protect the assets in the child’s name. There are two types of trusts and they’re quite different.

Trust accounts are accounts held at a bank that you open for your child, but you retain ownership. When the child turns 18, control of the account passes to them.

Trust funds are legal arrangements, managed by trustees for the child’s benefit. They’re generally used for substantial investments and the child can access the assets once they attain a certain age.

Where trust funds are concerned, forget everything you thought you knew about tax and speak to a professional with expertise in family trust arrangements.

Everyone’s situation is different and investment types and structures are not one-size-suits-all. Before making any decisions, seek the advice of qualified professionals, and regardless of whether you choose a share portfolio or an alternative investment, you’ll be across your options and confident that your particular needs are being met.

For more information or to speak to one of our Financial Advisers please contact TNR Wealth Management on 02 6626 3000.

Disclaimer
Past performance is not a reliable indicator of future performance. The information and any advice in this publication does not take into account your personal objectives, financial situation or needs and so you should consider its appropriateness having regard to these factors before acting on it. This article may contain material provided directly by third parties and is given in good faith and has been derived from sources believed to be reliable but has not been independently verified. It is important that your personal circumstances are taken into account before making any financial decision and we recommend you seek detailed and specific advice from a suitably qualified adviser before acting on any information or advice in this publication. Any taxation position described in this publication is general and should only be used as a guide. It does not constitute tax advice and is based on current laws and our interpretation. You should consult a registered tax agent for specific tax advice on your circumstances.
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Ensuring your voice is heard

All / 15.07.2021

Ensuring your voice is heard

The importance of maintaining a current Will ensuring your own last instructions are followed with your insurance, superannuation and nominated beneficiaries.

When you’re here to supervise your worldly affairs, your voice, which reflects your current views, is heard, and more often than not, heeded. But when you’re not here, what voice will be heard? Will it be your most recent voice; an old voice from several years ago; or the voice of government legislation? Unfortunately, all too often, it is voice number two, or worse, three.

If your Will and other estate arrangements have not recently been reviewed, you risk your voice not being heard. If you have overlooked making a Will, the government decides how your estate is to be distributed. This reinforces the importance of keeping all of your estate arrangements current.

That said, even with the best of intentions the most up-to-date Will in the world can be challenged. There have been countless real-life court dramas involving high profile public figures engaging in claims and counter-claims following the death of a wealthy relative. Some of us have experienced similar emotional intensity, anguish, and even bitterness. We must always remember that people change, form new relationships, and take advice from different sources whose motives may not always be pure.

In ensuring your voice from the other side will be heard and heeded, the Will remains the centrepiece of estate planning, but with life insurance and binding nominations for superannuation, there are additional tools you may not have thought of.

The insurance option

A policy taken out by a person on their own life and owned by that person forms part of their estate to be distributed in accordance with their Will, and thus subject to challenge. But, and here is the feature which can make insurance such an important part of sound estate planning. A policy which nominates someone other than the life insured as the beneficiary does not form part of the estate and is quite separate from the Will – and not subject to challenge.
What this means is that if there is even the smallest possibility that your wishes may not be carried out after you’re gone, it might be a good idea to seek professional advice about the value of a life insurance policy.

The super solution

It is widely believed that superannuation is included in an estate and dealt with through a Will. Not so. The trustee of your superannuation fund determines how your super is paid upon your death. You may identify a “preferred beneficiary” however the fund trustee can override this decision at its discretion. If you don’t want this to occur, you should complete a ‘Binding Death Benefit Nomination’.

Binding Death Benefit Nominations

Superannuation legislation allows you to specifically nominate, with certainty, who will receive your super following your death.

These nominations must be in writing and clearly state the names of beneficiaries and any split details between multi-beneficiaries. Some funds offer non-lapsing binding nominations however, many binding nominations must be renewed every three years and are only valid if you nominate a dependant, eg. your current spouse (including de facto), or your child of any age, or a person financially dependent upon you at the time of death. You may also nominate your estate.

Binding nominations are still relevant if you have a self-managed super fund. Even though you have the final decision on how your super is managed whilst you are alive, it is crucial to ensure your trustee/s (who may also be family) continues to fulfil your wishes after you die.

To ensure it’s your own voice that takes final control of what you have worked hard for in this lifetime, consult an estate planning specialist or talk to your financial adviser.

For more information or to speak to one of our Financial Advisers please contact TNR Wealth Management on 02 6626 3000.

Disclaimer
Past performance is not a reliable indicator of future performance. The information and any advice in this publication does not take into account your personal objectives, financial situation or needs and so you should consider its appropriateness having regard to these factors before acting on it. This article may contain material provided directly by third parties and is given in good faith and has been derived from sources believed to be reliable but has not been independently verified. It is important that your personal circumstances are taken into account before making any financial decision and we recommend you seek detailed and specific advice from a suitably qualified adviser before acting on any information or advice in this publication. Any taxation position described in this publication is general and should only be used as a guide. It does not constitute tax advice and is based on current laws and our interpretation. You should consult a registered tax agent for specific tax advice on your circumstances.

 

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Getting more out of income protection insurance

All / 08.07.2021

Getting more out of income protection insurance

If you’re working and haven’t yet reached the point of financial independence then income protection insurance should be on your radar. As the name implies, it can help you protect your greatest asset – the ability to earn an income.

At the heart of all income protection policies is the promise to pay the policy owner a regular benefit, usually 75% of their normal income, if they are unable to work due to accident or illness. Payments are made after an agreed waiting period and continue until either the policy owner is able to return to work, or until the end of the agreed benefit period.

Core and supplementary benefits

In addition to the core provision to pay a replacement income, most income protection policies also offer a wide range of supplementary benefits. These vary from policy to policy, but may include:

  • Rehabilitation benefits.
  • Travel and accommodation costs, for example to return you home if you are injured while overseas.
  • Childcare benefits.
  • Specified injury benefits that pay an additional amount if you suffer things like broken bones, loss of sight, paralysis or other stated conditions.
  • Bed confinement or nursing benefits.
  • Elective surgery benefits.
  • Family support benefit or accommodation benefit, payable if a family member needs to travel from their usual place of residence to be with you.
  • Total and permanent disability benefit.
  • Death benefits.

Adding supplementary benefits adds to the cost of cover, and the value of any supplementary benefit depends very much on individual circumstances. Someone with a good income, modest expenses and a working partner may be able to easily meet costs such as childcare, even if their income drops to 75% of its usual amount. For someone on a tighter budget, supplementary benefits may be a way of achieving greater cover at a reasonable cost.

Tailored cover

Supplementary benefits allow cover to be adjusted to suit individual needs. Take Kate. She’s a single, 29-year-old marketing manager who lives alone. Kate’s immediate family all live interstate and she regularly holidays overseas.

Not surprisingly, Kate sees no value in the childcare benefit. With no dependents she also doesn’t require death cover. However, with no close family living near her, the family support benefit and bed confinement benefit do appeal to her. Given her frequent overseas travel she also opts for the travel and accommodation benefit.

The ability to select only the relevant supplementary benefits means that Kate is able to design an income protection solution that suits both her needs and her budget.

Design your policy

Income protection insurance is one of the key foundation stones of an effective financial plan. If your income needs protecting, talk to your financial planner about designing the policy that best suits you.

For more information or to speak to one of our Financial Advisers please contact TNR Wealth Management on 02 6626 3000.

Disclaimer
Past performance is not a reliable indicator of future performance. The information and any advice in this publication does not take into account your personal objectives, financial situation or needs and so you should consider its appropriateness having regard to these factors before acting on it. This article may contain material provided directly by third parties and is given in good faith and has been derived from sources believed to be reliable but has not been independently verified. It is important that your personal circumstances are taken into account before making any financial decision and we recommend you seek detailed and specific advice from a suitably qualified adviser before acting on any information or advice in this publication. Any taxation position described in this publication is general and should only be used as a guide. It does not constitute tax advice and is based on current laws and our interpretation. You should consult a registered tax agent for specific tax advice on your circumstances.
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