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Presentations to support book "Bulletproof Your Life" Sydney Australia
Citation preview
“I wholeheartedly recommend this book that actually makes the law interesting and understandable” Derryn Hinch 3AW
“This is a book every family should read now rather than later.” Sydney Morning Herald
“Geoffrey Winn doesn't tell you how to become rich, but he does offer something the rich have: peace of mind, secure in the knowledge that you are as protected as you can legally be. Great book.“ Dan’s Fiction (five star site)
“Geoffrey Winn wants to help you take control of your life.” InvestSmart
“This book will help you avoid nasty financial surprises.” The Age
Protecting yourself, your family and your assets =
empowerment
Ask hard questions about your financial and legal affairs
NOW
Bulletproof frame of mind = different perspective
Proactive – not reactive
Everything Changes !!!
The Bulletproof prescription for stress relief and the “lack of power principle”
Lack of control = stress
Simple Elegant Organised
When it comes to the law, simplicity is power
Learn from others – what LawMatch taught me
What you can learn from other’s experience
Rich people don’t worry when the refrigerator breaks down
Peace of mind is your highest goal –
see the Big Picture
Power of attorney – financial, health & lifestyle
Estate planning
Insurance
Public liability
Financial agreement
Superannuation
Asset protection
Bulletproofing is a question of values
What are the values that I want to pass on to those for whom I am responsible?
Most people don’t have legal problems - they have simply failed to avoid having the problem in the first place
Plan Your Estate
You always need a will
Don’t undervalue your true wealth
More than a mere transfer of assets
What are the values that I want to pass on to those for whom I am responsible?
Bulletproof value - don’t inflict chaos on loved ones
Estate v Non-Estate Assets – traditional view
What’s the difference? Why is this important?
How to use it to your advantage
Think about a testamentary trust - endless flexibility for accountants and financial planners.
What is a trust?
• Will → beneficiaries
• Testamentary Trust → trustee → beneficiary
• Beneficiaries = right to be considered (discretionary)
Why is this structure useful?
Tax
Streaming
Children’s Marriages
CGT
Professional exposure
Bankruptcy
Disability – note Special Disability Trust
Spendthrift child
Pitfalls
Ongoing administrative issues - is estate sufficient to
warrant the trust?
Adequate funding - boost with superannuation + insurance
No privacy
Laws change – e.g. 2002 Centrelink assets test change
Capacity
It’s a lot easier to lose assets than it is to accumulate them
The First Line Of Defence – Insurance
Damage or loss to your home
Loss of home contents
Damage to someone else’s property
Damage to your motor vehicle (or someone else’s)
Injury to someone else
Public liability
Personal accident
Temporary or permanent disability and sickness
Get adequate replacement insurance
ACT bushfires
The components of the total cost of rebuilding
Improvements
Renovations
Inventory
Don’t use rates notice
Take account of rising home building costs
Review, review, review
• Be wary of averaging clauses – why your family heirlooms are only insured for half their value
• Public liability insurance – does your dog bite?
Flood Insurance
Not part of most house and contents insurance
Flood and other types of water damage may be treated
differently by your insurer
What is your most valuable asset?
Protect your income Your age – younger may be better
What you can afford?
How much do you need?
Do you have any equivalent cover?
What is covered – injury &/or sickness
"Pre-existing" illnesses?
PROBLEM – how to bulletproof decisions about your health, your finances and your lifestyle
BULLETPROOF SOLUTION - use the law to your advantage
Powers of attorney
• General
• Enduring financial (“enduring” = bulletproof issue)
• Enduring medical
• Enduring guardianship
Guardian appointed by Tribunal
v. Enduring Guardian
= crucial bulletproof difference
• Ageing parents
• What to discuss about their decision-making needs
for the future.
Do It Yourself
NSW Office of the Public Guardian www.lawlink.nsw.gov.au/opg
Phone 1800 451 510
Superannuation – a regulated
environment
After I die my superannuation: A. Goes to my family
B. An asset that is part of my will
C. Continues to exist without me
Superannuation Death Benefits
“Death benefit” = balance super account plus life insurance
Binding or non-binding nominations
Who is eligible to receive your superannuation after you die?
A. Your spouse
B. Your de facto spouse
C. Your former spouse
D. Children who are dependent on you
E. Adult children who are not dependent on you
F. Your mother-in-law who lives with you and has
no other means of support
Who is a “dependent”?
• a spouse or de facto spouse; or
• a child; or
• any person financially dependent on you; or
• somebody with whom you had an “interdependent”
relationship.
.
For tax purposes:
• super benefits paid to dependants are tax-free• benefits paid to “non-dependents” are taxed (generally
at 16.5%).
Superannuation death benefits are taxed
differently depending on who receives them
Problem - bulletproof your relationship
Bulletproof solution – think ahead!
In a breakup what happens to: Joint assets – change your will!
Superannuation – change your nomination!
Inheritance
The bulletproof lesson – consider a financial or cohabitation agreement
Never too late
Get legal advice as soon as you separate
Financial Agreements under the Family Law Act
Cohabitation Agreements
The bulletproof view – it is insurance
Asset Protection
An asset protection plan will be more likely to fail if it is set up
solely to defeat creditors and others to whom you owe a
financial responsibility (including ex-spouses)
Consider a family trust
Discretionary distribution
At the discretion of trustee
Appointor is boss
Family Trust
Low cost and simple structure
Protection from bankruptcy and insolvency
Distribute income to family members who are on low tax rates
Gives children the benefit of funds without losing control of them
Creates a framework/pathway for the family’s future
Family trust for asset protection
The bulletproof value – beneficial interest not ownership
Corporations Act definition – “expectancy”
Be wary of recent court decisions – alter ego test
Don’t buy off internet – get professional advice
Simplified Superannuation
• Reasonable Benefits Limit
• Watch out for clawback – section 128B (no time limit)
• Out of character transactions – create pattern of savings
Avoiding creditors & clawback
Section 120 - undervalued transactions to “related
entities”
Section 121 - assets transferred to defeat creditors
Using Binding Financial Agreements
Bulletproof lessons The best time to implement asset protection is when it is not
needed
Correct choice of structure important before acquiring
assets
Any strategy where the obvious primary focus is ‘asset
protection’ could be at risk of failure
Putting It All Together – The Bulletproof Action Plan
Ten Life Events:
• You reach adulthood
• You begin your career
• You get married or enter into a de facto relationship
• You buy a house
• You start a business
• You have children
• Your children reach adulthood
• You have grandchildren
• You divorce/separate
• You retire
You Have Children
Review an existing will Is a testamentary trust appropriate to take advantage of
tax concessions and assist in funding their education? Get a financial enduring power of attorney Get an enduring power of guardianship Is there an opportunity to establish a family trust to
benefit children? Now is the time to look carefully at income insurance Check underinsurance Have you made appropriate superannuation death
benefit nominations? Remind yourself that your minor children are tax dependents as well as superannuation dependents