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Financial Planning / Wealth Accumulation
*Aged Care Accommodation funding
*Budgeting and savings plans
*Centrelink entitlements
*Comprehensive financial planning (Statements of Advice)
*Gearing strategies
*Investment advice – asset allocations and blending managed funds
*Superannuation & Retirement planning – strategies, investments and income streams
Life Insurance / Wealth Protection
*Term Life Insurance
*Total & Permanent Disability (TPD) Insurance
*Trauma or Crisis Insurance
*Income Protection Insurance
*Business Expenses Insurance
*Key Person Insurance
Estate Planning
* Wills & Enduring Powers of Attorney
* Superannuation; binding or non-binding beneficiary nominations
Financial Planning / Wealth Accumulation
Aged Care Accommodation Funding
From 1 January 2007, the rules for financial assessment for aged care accommodation were changed to align them with the age pension “assets test”. The changes affect gifts of assets and money invested in “income stream” products. They are based upon the principle that older Australians should use their savings and investments to meet retirement costs before they call on taxpayer-funded assistance.
Aged care assets assessments help people to work out the amount they may be asked to pay towards the cost of their permanent aged care accommodation. The assets assessments are normally required by aged care providers to negotiate an appropriate accommodation bond or accommodation charge amount.
The assessments are done by Centrelink and the Department of Veterans’ Affairs on behalf of the Department of Health and Ageing.
For more information about the aged care assets test, call the Department of Health and Ageing's Aged Care Line on
1800 500 853 or refer to the Department’s website at: www.agedcareaustralia.gov.au
For information about the treatment of gifts and income streams under the pension assets test, call Centrelink on 13 23 00 or refer to their website at www.centrelink.gov.au , or if applicable, the Department of Veterans' Affairs on 13 32 54, or refer to their website at www.dva.gov.au
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Budgeting and savings plans
A budget is a useful tool for monitoring and prioritising your expenditure.
We can provide spreadsheet templates to assist you with the preparation of a personal cash flow budget which may assist you to identify areas of expenditure where savings can be made.
Your surplus cash could be used to commence a disciplined savings and investment plan or to fund life insurance cover and minimise your exposure to financial risks related to sickness, accident, permanent disablement or death.
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Centrelink entitlements
We can assist you to assess your entitlements and make applications to Centrelink for Age Pensions, Pension Bonus Scheme etc.
For details of Centrelink entitlements including age pension amounts and eligibility ages, assets and income tests, gifting rules etc. refer to Centrelink website
www.centrelink.gov.au
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Comprehensive financial planning (Statement of Advice)
A comprehensive Statement of Advice takes into account your current financial position including superannuation and insurance policies, your goals and objectives and your attitude to risk. We identify strategies and advise on appropriate investments and/or insurance policies to assist you to meet your goals.
Our Financial Planning Process
In financial planning, we do not take a "one size fits all" approach. Not only do your needs change according to your stage of life, but each client has different circumstances and attitudes to risk and different lifestyle goals.
Step One - Initial meeting to document your financial details
At our initial meeting Lyn will provide you with a Financial Services Guide which outlines the services she can provide. She will then discuss your current financial situation including current assets and liabilities, income and expenses, superannuation and life insurance policies and any future commitments.
Step Two - Identify your goals
Lyn will assist you to detail your personal and business goals, clarifying the position you want to reach in the future. This may include both short term and long term goals.
Step Three - Identify inconsistencies between current position and goals
At this stage Lyn will assist you to identify and assess potential inconsistencies in your current position, relative to your goals. She will clarify and discuss any strengths and weaknesses with you.
Step Four - Consider strategies & prepare a statement of advice
Following our meeting, Lyn will develop strategies to suit your personal situation and prepare a statement of advice aimed at helping you to achieve your financial and lifestyle goals.
Step Five - Second meeting & implementing the financial plan
At our next meeting, we will discuss the recommendations and present any supporting information and documents for your approval before we implement your plan. When you re completely satisfied with the strategy developed to assist you in reaching your lifestyle goals, Lyn will implement the plan.
Step Six - Annual review
As part of any financial lifestyle planning solution, it is imperative that the plan is not set and then forgotten as your needs and circumstances may change over time and the economic and regulatory environment can also change. We generally agree to meet at least annually to review your current circumstances and ensure that your plan is still appropriate.
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Gearing strategies
Gearing strategies or margin loans involve the use of borrowed money to purchase investments. Using your own funds in combination with borrowings enables you to increase your investment opportunities, more than if you were solely using your own assets.
Gearing has the potential to magnify gains, but it is also likely to magnify any losses suffered if the market value of your investments falls.
Negative gearing has a higher level of risk because income from another source, often from a salary, is needed to meet the interest payments. The tax benefits of negative gearing may partially offset this cost.
Positive gearing, on the other hand, is when investment income exceeds the borrowing cost. The benefits of leveraging include the potential for increased returns, the ability to diversify your and the potential tax benefits.
Gearing is a high risk strategy which is not suitable for most investors.
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Investments
Lyn has access to regular research by Lonsec Research on a range of individual managed investment and superannuation funds, platforms and master trusts.
She can recommend a portfolio of blended diversified managed investments, appropriate to your risk profile and investment timeframes, and demonstrate the benefits of regular investing over time.
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Superannuation
Superannuation is an investment structure with concessional tax rates to encourage saving for the provision of your income needs in retirement. When you do not invest within the superannuation framework then this is referred to as investing in non-superannuation assets.
Generally, the same type of assets can be purchased within the superannuation environment as in the non-superannuation environment, for example, unit trusts, direct shares and listed property.
Typical characteristics of superannuation investments are that your money is not accessible prior to retirement and earnings from these investments are taxed at 15% in most cases. Contributions to super can be either concessional (tax deductible) or non-concessional (paid from after-tax earnings) and these are subject to annual limits. Generally concessional contributions are taxed in the super fund at 15%.
Superannuation monies can be used to generate an income stream in various forms throughout retirement. The tax treatment of retirement income streams is extremely generous with a 0% tax rate over 60 years of age. Between 55 and 60 there are concessional tax rates.
Lyn can also recommend a portfolio of diversified managed investments, appropriate to your risk profile and investment timeframes, and demonstrate the benefits of regular investing through superannuation.
Lyn can recommend superannuation strategies appropriate to your circumstances including spouse contributions (which may attract a tax offset), government co-contributions, contribution limits (concessional and non-concessional), salary sacrifice superannuation, transition to retirement pensions, retirement income streams, binding and non-binding beneficiary nominations. She can also advise on the advantages and disadvantages of self-managed superannuation funds and assist you to decide whether they would be suitable to your circumstances.
Lyn will explain the advantages and disadvantages of your life insurance policies being owned by your super fund and the estate planning issues associated with beneficiary nominations.
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Life Insurance / Wealth Protection
Insurance should be included in your financial strategies. It is used as a means of managing risk or minimising your exposure to potential financial disaster due to unexpected illness, permanent disability or death.
Insurance is the foundation on which any good financial plan is built as without regular income it is impossible to build financial security for your family or plan for retirement.
The great advantage about life insurance is that it is non-cancellable by the Insurer once your application for insurance has been accepted, provided you continue to pay the premiums and make a full disclosure of all relevant information at the time of application.
Lyn can assist you to evaluate your exposure to financial risk from extended illness, accident, permanent disability or death and arrange appropriate insurance cover tailored to your needs.
Term Life Insurance
Term Life insurance can (subject to the terms agreed in the policy) provide a lump sum payment to your nominated beneficiaries in the event of your death during the life of the policy. The lump sum may be used to pay out a home mortgage and other debts or be invested to provide an income stream to cover the education and other living expenses of the loved ones left behind.
Term life insurance can also be used by business partners to fund the continuation of the business in the event of the death of one of the partners.
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Total and Permanent Disability
Total and permanent disability (TPD) insurance can help to maintain a comfortable standard of living for you and your family in the event of your permanent disablement. The definition and application of total and permanent disablement varies from Insurer to Insurer. However, three general variations are applied and logically, the more generous the benefit, the more expensive the cover.
The variations relate to the insured’s inability due to disability to perform:
- their usual occupation;
- an occupation for which they are qualified by reason of education, training and experience;
- any occupation.
Term Life & TPD insurance can be taken separately or as part of the one policy. In calculating the appropriate amount of cover, you may include the payment of all debts and a lump sum to be invested so as to provide your family with a continuing income in the event of your death or permanent disablement.
Term Life and TPD insurance can be purchased through superannuation but you should ask us to explain the advantages and disadvantages of acquiring insurance cover through superannuation
You may already have some life insurance through your current superannuation fund and whilst any amount is helpful, this is rarely enough on its own. It is estimated that the life insurance held by most Australians inside super represents only 20% of the cover actually required.
Trauma Insurance
- With the advances in modern medicines, more and more people are now surviving major traumas such as heart attack, cancer, coronary artery surgery etc. However, the recovery period and the cost of care associated with such illnesses normally places extreme financial strain on the person suffering the illness.
- For this reason “Trauma Insurance” or “Crisis Care” will pay you a lump sum if you are diagnosed with one of a list of conditions such as heart attack, stroke, cancer and up to 34 other medical conditions.
- Such a payment may be used in any way that you like. You may wish to pay for medical expenses not covered by Medicare or your health fund, to clear any liabilities, or to take care of other bills and expenses
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Income Protection Insurance
Income Protection is designed to replace income in the event of illness or accident, which means less strain on savings, investment income and other assets. This type of cover can be taken out by employees or self-employed business owners and the premiums are tax deductible.
The maximum permissible cover is typically 75% of your personal exertion income (including salary sacrificed superannuation contributions). It is extremely important that any income protection policy recognises and covers your applicable employment structures and circumstances.
Benefit periods for this type of insurance vary and as such alter the premium of policies. Typical benefit periods range from 2 years, 5 years, to age 55, 60, 65 and Lifetime.
The waiting period before benefits are paid will also alter the premium for income protection insurance. A short waiting period is generally designed to suit those who could be in financial difficulties very quickly if their income stream stops. Your sick leave and annual leave entitlements should be taken into account in deciding the appropriate waiting period.
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Business Expense Insurance
Business overhead or business expense insurance is designed to cover the usual fixed expenses incurred in maintaining a small business in event the life insured is unable to work due to an injury or sickness. It is normally only payable for up to 12 months and is useful for self employed persons or those operating small businesses where the business relies solely or predominantly on the revenues generated by a key person to meet those expenses. Depending on the policy provider, the policy can be written on a “stand-alone” basis or may be taken out in conjunction with Income Protection.
Business expenses are usually defined as:
It is important to note that where a locum or replacement is engaged and the business continues, most policies contain provisions to reduce the benefits so that the benefit payable is consistent with the loss to the business.
Key Person Insurance
Major illness, injury or death of a business partner or key person in your organisation has the potential to interrupt or even close your business.
How would your company cope if one of its key people were to die suddenly, or become unable to work due to illness or injury?
Apart from the personal and emotional impact, how would it affect your company’s future?
Lyn can assist you to protect your business by advising on and arranging the appropriate covers for your business, taking into account ownership structures and potential tax deductibility of premiums.
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Estate Planning
Wills & Enduring Powers of Attorney
A Will is a legal document which sets out how you want your assets to be distributed when you die. A Will allows you to provide for your financial dependents and it may also include the appointment of a guardian to look after your children until they can look after themselves. Even if you do not own many assets you should have a Will. Otherwise, when you die your assets will be distributed under the intestacy rules which apply to everyone and do not take into account your personal circumstances or wishes.
Superannuation assets are not automatically included in your Estate and it is important that your superannuation and any business structures such as companies and trusts are taken into account when instructing a Solicitor to draft your Will.
We will listen to your concerns and assist you to properly instruct your Solicitor so as to achieve the outcome that you desire for your loved ones after your death.
An Enduring Power of Attorney is a legal document in which one person gives another the legal authority to make financial and legal decisions on their behalf. An Enduring Power of Attorney can only be made by a person whilst they are still capable of making those legal and financial decisions for themselves.
An Enduring Power of Attorney must be signed while a person still has legal capacity. It will remain effective even though they may subsequently suffer loss of capacity due to disability or illness. Once capacity is lost through disability or illness, an Enduring Power of Attorney cannot be signed or revoked.
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Superannuation Beneficiary Nominations
If you die while a member of a superannuation fund, the trustee must normally pay your death benefit to one or more of your dependants or your estate.
'Dependants' means your spouse, children, people with whom you had an 'interdependent' relationship or those who depend on you financially.
Most super funds let you nominate who you want your death benefit paid to, either as a 'non-binding' or 'binding' nomination.
A 'non-binding nomination' just guides the trustee, who still has the final say, especially if you have dependants but you nominate someone who does not depend on you for financial support. The trustee is not required to follow the instructions in your Will.
A 'binding nomination' lets you nominate who you want to benefit from your superannuation death benefits and will bind the trustee. You may name a dependant or dependants or your estate (in which case the executor will have to distribute your super death benefits according to your Will.
A binding nomination must be renewed every 3 years or earlier if your circumstances change.
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