Below are the services included in our Power Planning services:
In this service, we will examine the next 30, 50, or more years to determine whether you will have sufficient resources to achieve your short-term or long-term financial goals. This includes considerations such as purchasing your next property and saving enough for retirement. Through some of our strategies, we have assisted clients in multiplying their wealth within 20-30 years or extending their retirement savings by 20 or more years. For additional information, please feel free to explore our YouTube session by clicking here.
This service is especially important if you are a business owner. Different business structures could provide you different level protections. But there are still circumstances that third party creditors could tap into your personal assets. By setting up a protector trust and transfer your personal assets to the trust, you are adding more protection to your assets. You can even do this without changing the legal ownership of a property, therefore saving the transfer costs such as capital gains tax and stamp duty. We will help you to have a look at your current structures and give you advice on how to best protect your wealth.
You have worked hard to accumulate your wealth. Do you know how to pass it down to the future generations? What are the risks involved? How about tax implications? Are you the sole director and sole shareholder of a private company? Do you know what will happen to your company if something happens to you? We will help you to answer all these questions, and help you to build up the best structures and strategies to have smooth transfers on your family wealth.
Most people believe that as long as they have a valid Will, their assets will be passed down to the people they nominate as beneficiaries of their estate. But the reality is, a Will can be contested by an ex-spouse (including a de facto spouse), a child or stepchild, etc. So many things could happen to alter the estate distribution from a perfectly prepared Will. On top of this, taxes on inheritance could be significant since the underlying assets could be valuable. By planning in advance and utilize the right structures, there are many opportunities to avoid loss of assets during the transfer and make substantial tax savings.
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Examples and consequences on missed planning opportunities
Tom and Kylie are retired and are receiving full age pension from Centrelink. To utilize the benefit on downsizer contribution to super, they sold their main residence and bought an apartment as their new main residence. However, since age pension is asset tested and only main residence is exempt from the asset, they testing assets has increased after selling their first main residence. Now they are not eligible to receive age pension anymore. Loss per year $40,238 based on 2022 rate.
Ryan and Olivia decided to establish a family trust to purchase a rental property. Since Ryan’s mom Emma is going to finance major part of the purchase, Ryan and Olivia decided to make Emma the Appointor and Trustee Director as a good gesture. After the trust is set up and the property was purchased, Emma applied for age pension and was rejected. Due to her position in the family trust, she is technically controlling the trust asset and Centrelink need to include the property as a part of her asset test. The family amended the trust deed to remove Emma’s name from the key positions. After this, Emma still need to wait for 5 years to be able to apply again. Loss pension in total for 5 years: $133,445 based on 2022 rate.
James and Ava run their family business in a family trust. James’ father Henry is receiving full government pension. The family trust only contribute minimum profit to Henry so that it does not impact on his pension. Last year the family trust sold a big commercial property earning multi millions of dollars of capital gain. The family didn’t know that they could save $178,978 on tax if they allocated more gain to Henry. The tax saving is a lot more than Henry’s aged pension. Loss on possible tax saving $152,289.
John is a plumber. He decided to run his business as a sole trader business. After causing some major damage to a building, he was sued by the owner. Unfortunately, the damage was not covered by his insurance policy. John lost all his properties and personal assets and had to claim bankruptcy to get out from the case. If John has used a company structure for his business, or moved his personal assets to a protector trust, he could be better protected. Now he is penniless and has to start from the beginning again. Loss incurred: all John’s personal assets.
Sophia has a Will to pass all her assets to her two daughters. Out of kindness, she has allowed a homeless guy Mike to live in her basement for a few year before she passed away. Mike claimed that they were in a de facto relationship and challenged the Will. He was successful and received a major part of the estate distribution. Lose incurred: about $500,000.
We will not bore you with more examples. In every area of our Power Planning services, unless you understand all your choices, you could be missing key opportunities that could lead to you losing more than what we have listed in the above examples. Most of the losses can be easily avoided if you are proactive and set up the right structures and utilize correct strategies.
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