We’re all worth more dead than alive!

We’re all worth more dead than alive!

Over the past 6 months we have had quite a few clients, friends & trustees of self-managed super funds ask us about their estate planning. It’s an important issue: what do you want to happen to your assets when you die? For many it’s a simple topic of ‘each to the other and then the kids’ where we have a nuclear family. It’s not as simple as that now, blended families in particular add a complexity that needs to be addressed. Ask yourself this question now: do you know exactly what happens when you die? If you don’t know, aren’t sure, think you have it covered via a Will, it’ll be worth spending 5 minutes to read on. About Us How do we help? Firstly we have a chat about your personal situation, and what you would like to happen with your estate. It starts with a simple question: who is going to look after your estate if you die? We discuss the assets in your life and what you would like to do with them, identify how these could be dealt with. Do you know how your super and life insurance is dealt with if you die? Will your spouse or dependant children receive a pension or a lump sum in their bank account? A Common Scenario Here’s an issue to think about: you are the sole surviving spouse, and you have a home, some money in super that you’re receiving a pension from, some savings, maybe a few shares or an investment property. Or maybe you are a younger couple with kids under age 18. Whilst you...
Super vs Mortgage: a handy way to choose

Super vs Mortgage: a handy way to choose

A new online tool aims to help Australians settle that crucial investment question: should I put extra money into superannuation, or pay down my home loan? It is a pressing concern for many families, as Australia continues to rank highly in the world for household indebtedness. Borrowers concerned that the banks will continue to lift variable rates may want to build up an equity buffer, while those nearing retirement may lean towards boosting their super. To help Australians choose, the MoneySmart team at corporate regulator ASIC (Australian Security and Investment Commission) has developed a handy tool to help simplify the choice.   Help is at hand Miles Larby is the head of financial literacy at ASIC. His team created the tool because the choice between home ownership and superannuation impacts a large section of the nation. “For many people these are amongst the biggest financial decisions they will face,” Mr Larby told The New Daily “A good place to start is to ask yourself if you want to access your money before retirement or not. The answer may differ depending on your financial goals and whether you’re planning to retire in the next few years. “As with any important financial decision you should consider the option that best suits your financial and lifestyle priorities. Seek professional advice if need be.” What’s best for me? Putting more money into superannuation can also be a good way to diversify an investment portfolio, rather than putting every spare cent into the property market. But paying debt feels good. Everybody enjoys the freedom of chipping away at the mortgage hanging over their heads. So, as suggested by ASIC, it is important...
Superannuation reform legislation passed

Superannuation reform legislation passed

The Australian Government Senate has passed the proposed legislation which gives effect to the much discussed superannuation reforms. Summary of changes to superannuation The legislation contains the measures originally announced in the 2016/17 Federal Budget with some changes. The majority of measures commence from 1 July 2017. The key measures include the following which we’ve separated into two categories: (1) those paying money into super, and (2) those who are either retired or approaching retirement. Putting money into super: Reducing the concessional contributions cap to $25,000 for all taxpayers. This includes employer contributions and any monies you may salary sacrifice to super pre-tax. Great news for people with broken work patterns (i.e. especially stay at home mum’s and dad’s). Introducing a concessional contributions ‘catch-up’ opportunity for those with total super balances of less than $500,000 from 1 July 2018. This will allow you to increase your contributions in the current year, above the maximum, by allocating to prior years. Allowing a tax deduction for personal contributions. This previously not available to majority of employees. What does this mean? As an employee, you basically had to predict what your income and expenses will be for the year. Then, calculate the amount each pay that you would salary sacrifice into super. You could not make a personal contribution from your bank account at the end of the year if you had spare cash and claim a tax deduction. From 1 July 2017 you will now be able to. This will help people with income that may vary due to shift work, bonuses, casual employees, or whose expenses may vary (i.e. with kids). Reducing the post-tax contribution cap...
Purchasing an investment property with borrowed funds (strategies for super)

Purchasing an investment property with borrowed funds (strategies for super)

Are you the trustee of a self-managed super fund (SMSF)? Have you been thinking about setting up a SMSF? Do you want to invest in a property inside super? Do you have a long-term investment timeframe?   Let’s look at the broad outline of how this can be achieved.   How does it work? Changes to superannuation legislation allow self-managed super funds (SMSFs) to borrow to invest, providing certain conditions are met. If you have an SMSF, you may be able to use these arrangements to help buy a residential investment property through your fund. Say, for example, your SMSF wants to buy a residential investment property but doesn’t have enough funds for a full purchase. It does, however, have enough funds to make a partial payment. The SMSF can purchase the property under a Limited Recourse Borrowing Arrangement (LRBA) (i.e. in the event of default, the lender only has recourse to the property and cannot claim any other SMSF assets). In this scenario: The SMSF makes a partial payment on the property, and borrows funds to pay the balance plus other acquisition costs – using the property as security under a ‘limited recourse’ The property is held in a trust for the SMSF, which is entitled to the rental income The SMSF pays off the loan over the agreed period After the loan is repaid, legal ownership of the property can be transferred to the SMSF   What does it mean for me? This strategy allows your SMSF to acquire property that’s worth more than what is available in the fund, by repaying multiple installments over the long...