Vantage. Point Quarterly Newsletter Issue 8 Winter 2014

Transcription

1 Vantage Point Quarterly Newsletter Issue 8 Winter 2014

2 Inside this edition of vantage Point: Responsibilities of an executor Page 01 Four stages of the insurance life-cycle Page 03 Important It is very important that you note that this newsletter, Vantage Point, has been prepared without taking into consideration any of your objectives, financial situation or needs. We recommend you obtain financial, legal and taxation advice before making any financial investment decision. Vantage Wealth Management Pty. Ltd. Copyright 2014 Are you thinking of living overseas? Page 05 Additions to the vantage team Page 08 Issue WINTER 2014 Inside this edition

3 Responsibilities of an executor What it Really Means to Assume this Most Important Role. Key Points Obligations require significant time invested. Nine legal duties required of the executor. Important to consider disputes & legal action. If you re the eldest sibling in the family, or deemed to be the most responsible ; if you re seen to be a good friend by someone; or a fine upstanding citizen by others, chances are you will be asked to be an executor for someone s will. After you ve enjoyed the warm feeling of being wanted, just pause for a moment and take stock of what it really means to assume this most important role. You need to be aware that when the person dies, you will be required to spend a significant amount of time executing your responsibilities and these can be onerous. The actual functions will vary from one situation to another and, to some extent, depend on the surviving family members. However, the legally defined duties of the executor include: Arranging the funeral; Determining the assets and liabilities of the estate; Applying to the court for probate, if required; Determining what assets may need to be sold to pay outstanding debts this may be defined in the will or by established legal definitions; Arranging the sale of all assets which are not to be directly transferred to the beneficiaries including the home, investments, business interests and personal chattels; Lodging tax returns for the estate and the deceased; Paying the debts; Publishing a notice that you intend to distribute the remaining assets to the beneficiaries; Distributing the remaining assets to the beneficiaries according to the terms of the will. For all this you may find yourself in the middle of family disputes and even subject to legal action from a dissatisfied beneficiary or creditor. If placed in this position, the executor needs to be able to manage their responsibilities as impartially as possible. The executor can be held personally liable if a beneficiary suffers financial loss as a result of the executor s actions or inaction, and in some instances, be legally liable for any losses incurred. If all of this seems daunting, an executor can call and engage a solicitor or other professionals to assist as needed. Issue WINTER 2014 Page 1

4 Four stages of the insurance Life-cycle Key Points The right decisions early make a difference. Level and Stepped premium options. Reviewing your income protection is advised. Life insurance claims paid to Australians exceeded $5 billion for the first time in 2013, equivalent to more than $13.6 million paid every day (source: The Risk Store, Industry Claims Paid Stats 2013). While there is no one size fits all model for the right level of personal insurance, we see broadly four stages in the insurance life-cycle : Young and Free, Starting a Family, Children Getting Older, and I m Getting Older. Young and Free Best categorised as someone without financial dependants. Often having little or no debt and trying to build a career. A good starting point is protecting your income. Your financial future rests on you being able to get out of bed, and earn an income. Life insurance may not be overly important when you have no debt or financial dependants, but often a base level of lump sum insurance such as Life, Total and Permanent Disablement (TPD) and Trauma (sometimes called Critical Illness) insurance is appropriate. Using a level premium (which means paying a little more in the early years of cover, for the premium to remain relatively level over time) can make sense, as stepped premiums are variable and can be expensive closer to retirement. Starting a Family This stage includes purchasing your first home, meeting the right person and settling down. This can see debt levels increase dramatically; whilst having a family that is financially (and otherwise) dependant on you. Reviewing income protection cover regularly is a good idea, as you progress in your career and your income changes. You may also find that with increased debt levels and new responsibilities, your lump sum insurance needs have increased above the previous level of cover. A stepped premium (cheaper initially, but increasing each year with factors such as age) may be appropriate for this additional cover, as hopefully this top-up need will reduce over time. Superannuation may also be an appropriate vehicle for funding Life & TPD cover (to reduce the impact on your cash flow), though advice should be sort for this. Make sure you have adequate insurance on the life of Issue WINTER 2014 Page 2

5 Running the ruler over different insurers to make sure you have the best cover and competitive premiums can be a useful process. your partner as well, and consider adding child cover options to your existing policies. Children Getting Older The mortgage is (hopefully) starting to come down, but just as this happens secondary school fees start to roll in. The kids are standing on their own two feet a bit more, though their tastes are becoming more expensive! Again, review your income protection insurance (every 1-2 years, or as required). With debts hopefully reducing, the children are getting older, and the years to retirement decreasing, hopefully your lump sum insurance needs are also reducing. Consideration may be given to reducing the stepped premium component. You may be feeling the pinch on premium increases on these policies. I m Getting Older Hopefully the mortgage is under control and your superannuation savings are starting to build. With premiums starting to increase dramatically due to age on your stepped premiums, you are really reaping the rewards of a level premium on your income protection and base level Life, TPD and Trauma cover. Regular reviews and reducing your stepped premium cover as appropriate will save you money. With the children leaving the nest, you now discuss the importance of personal insurance with them, and potentially converting their child cover into a personally owned policy in their name (to start their own personal protection portfolio)... and may the cycle begin again! Did you know? Your Vantage Wealth Management Adviser will happily meet any of your family, friends or colleagues at no charge for the initial meeting. If you have friends or loved ones who require advice on a particular matter, would appreciate a second opinion or need assistance in developing a financial plan for the future, please direct them to your Adviser who will happily meet with them on a confidential basis. Running the ruler over different insurers to make sure you have the best cover and competitive premiums can be a useful process. Issue WINTER 2014 Page 3

6 Are you thinking of living overseas? Key Points Moving OS requires sound financial planning. Seek advice before becoming a non-resident. Tax, Super, Centrelink, Health/Pharm Benefits. Many Australians dream of living in different countries at some time during their life. For some this remains just a dream but for the 369,500 Australian residents who left our shores permanently in the last year, it became reality. Whether it s a long-term career move to New York or retiring on an island paradise, the decision to permanently leave Australia is one that requires sound financial planning. In addition to learning as much as you can about your new home, there are many areas you must address before you leave Australia and some that need ongoing attention after you have settled abroad. These include taxation and superannuation, regardless of whether you are working overseas or retiring. There are also things like insurance cover and updating your will that must be taken into account. Here are just some of the important points to include in your plans. Taxation The first point to consider with taxation is your status as an Australian resident. Declaring yourself as a non-resident is not just a matter of saying so; there is a set of domicile tests that you need to satisfy beforehand. Becoming a non-resident for tax purposes carries significant advantages when acquiring or disposing of certain assets, specifically when it comes to capital gains tax (CGT). Some assets can potentially carry a 50% CGT discount for non-residents. But the CGT rules are complex at the best of times, so it s imperative that you seek professional advice especially if you plan to derive income by renting out your home in Australia. If you re an Australian resident and you re working while living overseas, remember that any income you earn must be declared to the Australian Taxation Office (ATO) even if tax was deducted in the country you earned it. Your tax adviser is the best qualified person to consult in determining your residency status for tax purposes. Superannuation On the flip-side, as a non-resident, investing back into Australia can attract a relatively low withholding tax rate. This can be particularly favourable for superannuation, however a number of pitfalls exist, especially with Self-Managed Issue WINTER 2014 Page 4

7 moving overseas can be life-changing. Planning and professional advice can make it life-changing for the right reasons. Super Funds (SMSF). Trustees of SMSFs must set up a Power of Attorney to ensure the fund s central management and control remains in Australia. When accessing super, regardless of residency status, the normal release restrictions apply; if you retire after reaching preservation age, you may access your funds. Superannuation is extremely If you need prescription medicine, check your medicine s availability overseas. Additionally, don t assume your medicine is legal in your new country just because it s legal here. Your best advice is to check with the relevant embassy or consulate before leaving Australia. Other issues Equally important are insurance Sources: International tax for individuals (last modified 24 December 2013). Planning for an overseas move (Mark Gleeson 19 November 2013). Australians overseas (last updated 28 November 2013) Overseas Arrivals and Departures, Australia, Jun 2013, released 02/08/13. complicated so it s recommend- and estate planning. ed that you speak with your financial adviser at Vantage before making any decisions. Ensure your will is current and appoint the appropriate Powers of Attorney especially Centrelink if you have assets in Australia. If you receive a Centrelink ben- Overseas assets will need to be efit, your departure may affect included in your planning. your payments. To learn more, go to humanservices.gov.au and type Australians overseas in the search field. Further, not all life insurance policies remain valid if you re living overseas. Check the terms and conditions with your Health and Pharmaceutical financial adviser and make the Benefits appropriate updates. Australia maintains reciprocal health agreements with some countries. For details, go to humanservices.gov.au and type reciprocal health care in the search field. Moving overseas can be life-changing. Planning and professional advice can make it life-changing for the right reasons. Issue WINTER 2014 Page 5

8 ADDITIONS TO THE VANTAGE TEAM Uncanny Timing for Selvy. Welcome Nikki Mendes. Key Points Key point here.. Key point here.. Key point here.. Little did any of us know (Selvy included) that it would also be the day her son would be born. The Vantage office was a little quieter than usual on Monday 9th June. It was the first day of Selvy s maternity leave. Little did any of us know (Selvy included) that it would also be the day her son would be born. Quinlan Liam was born at 11:12am. Weighing 2.53kg and measuring 48cm. Quinn, Selvy and Glen are all doing well. In preparation for Selvy s maternity leave, Vantage welcomed Nikki Mendes to the team in June. Nikki s Bachelor of Commerce Degree at Murdoch University, and recent work experience down in Esperence has provided her with a strong platform for her role as a Client Services Administrator. Issue WINTER 2014 Page 6

9 Level 1, 7 Havelock Street, West Perth WA 6005 GPO Box 2521 Perth WA 6001 Telephone: (08) Facsimile: (08) Toll-free: vantagewm.com.au Vantage Wealth Management Pty Ltd ABN Corporate Authorised Representative No of VWM Financial Services Pty Ltd ABN Australian Financial Services No