4 minute read
Your Money, Your Wealth, Your Estate
from Hepburn 2021 Issue 3
by Hepburn
Jacqueline Hodges
We all long for a healthy life in our retirement and enough funds in retirement, enough funds to enjoy ourselves, and some left over for our family. If you can relate to this, then you need consider how you wish to live in your retirement, establish your goals, start planning for your future, and decide how to share your estate among your family and love ones after your death. If you haven’t considered your retirement yet, now is the time to start planning. Because the earlier you start the more likely you will have plenty to enjoy in your later years. We are fortunate in Australia, that we have guaranteed future retirement savings in the form of superannuation. Those of us we are employed, have the benefit of our employers pay at least 9.5% of our wage into our superannuation fund. If you are selfemployed you, your superannuation savings may be more sporadic than you desire. Shaping your future can be confusing and not only involves navigating a myriad of rules, regulations and tax laws but also managing the family dynamics. You should seek the help of your financial team but as an introduction you will need to establish a retirement plan and an estate plan.
Start a Retirement Plan
We all have dreams about how we wish to spend our retirement. It may be a sea change with a life at the beach, a tree change to a farmlet or a lifestyle block, or a caravan trip around Australia. How you fund your lifestyle choice will require planning and the earlier you start you will be able to control of your retirement savings. Planning requires understanding your goals and values. Spend some time to think about how you wish to spend your retirement and write down you goals. Once you have your goals established you need to consider how much you will need to fund those goals. Ask yourself. Are your goals feasible? Can you save enough to fund those goals? Funding your retirement can be a multi-pronged approach. You may be waiting to downsize form the family home into a smaller property and use the excess equity for your retirement funds. You may already have a sizable superannuation fund and investment portfolio and feel confident that your retirement is secure. If you haven’t got a plan yet, that’s ok. Now is the time to focus on your future, consider what options you have and set your plan in motion. Transition to Retirement
If you are aged 55 and over and are still working you may be able to supplement your income and your superannuation savings using a Transition to Retirement pension. If transitioning to retirement you can transfer some or all of your current superannuation into pension phase while continuing to earn income. You can boost your super by salary sacrificing additional super into your fund up to the concessional cap. Your additional superannuation contributions will only be taxed at 15%. You will also receive a pension from your superannuation and although while you are under 60 years of age the pension is assessable, you will receive a 15% tax offset against this income. Effectively, the amount that you put into your superannuation fund will be more than the amount that you take out as a pension.
– Ken Poirot
Start an Estate Plan
You estate plan is more than simply preparing a will. Your will is just one part of the estate plan. Estate planning is a process. A process of deciding how your assets will be organised and managed before and after you pass away. It is an important part of your wealth management. While your estate plan will include your will, it may also include life insurance, and a testamentary trust. A testamentary trust is a special type of trust that is set up by your will on your death. They are particularly useful for distributing to minors or where you wish to protect the assets from be split in a divorce. Your superannuation does not form part of your estate, but deciding how the superannuation will be distributed is a part of the estate planning process. Generally you will nominate a beneficiary by way of a Non-Binding Death Benefit Nomination or a Binding Death Benefit Nomination. Remember, things change, people change, and choices change. Your estate plan is simply a plan and it can also change to reflect your changing relationships, your changing wishes and also changes in the law. You should consider it to be a dynamic document that is to be reviewed regularly. Bind Death Benefit Nomination
A Binding Death Benefit Nomination is a written direction from you to the trustee of your superannuation fund setting out how you want the remaining superannuation balance to be distributed and to whom it is to be distributed. The BDBN must be renewed each three years, but might also lapse if your marital status changes. The BDBN must be in writing, signed, dated and appropriately witnessed to be valid.
