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Kerry and Rosemary

Kerry and Rosemary

Estate Planning

"Kerry was able to continue investing in opportunities that she understood and was comfortable with."

56 year old Kerry found herself dealing with the unimaginable, when her husband passed away unexpectedly at 57 years of age. Dealing with her husband’s estate was rubbing salt into the wound – she had no real idea if the assets they had worked so hard in saving for would be enough to see her through retirement and what if any tax implications there maybe.

With 3 rental properties, a life insurance policy and retail superannuation that she understood little about, Kerry’s biggest concern was not only managing the investments on her own but the potential higher income implications where income had been previously split to now being solely in her name.

Thankfully we were able to structure the investments in such a way that saved Kerry from additional emotional and financial stress, along with saving around $15,000 in tax per year for life.

What we did:

– Set up a SMSF to accept her retail super amounts and life insurance proceeds.

– Established a related unit trust, wholly owned by the super fund, which could purchase the 3 rental properties funded partially by a loan (this structure was possible back in 1998 when this event occurred, it could no longer be set up this way due to new restrictions on related party investments).

– Commenced drawing a pension from the super fund to supplement her income (she was still working part time).

The outcome:

– Tax-free status on the earnings of the super fund, which included the distributed realised capital gains from the property sales down the track

– Her pension income was completely tax-free post age 60

– A $900,000 property portfolio of rentals contributing market rate rent in Sydney and Canberra to the Fund, which met the repayments on the $300,000 loan

– Implementation was as important as a tax saving strategy for Kerry.  She was able to continue investing in what she understood with the careful handholding from our experienced team.

In contrast, Rosemary (70) recently lost her husband and we weren’t able to achieve the same outcome.  Had we established a similar structure whilst either of them were working, we could have saved her and her children close to $100,000 over the course of the next 18 years which is her current life expectancy.

Denial could leave your family paying, and if you’re not sure about your partner or your parent’s arrangements, that’s important to consider too.  If you want to talk to an expert about how to best structure your estate, don’t put it off – Greenlight can even contact your solicitor to make sure all your representatives are on the same page.

We have changed Kerry and Rosemary’s details for the sake of their family’s privacy. We thank them for allowing us to share their stories.

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