I have just returned from a trip to the country where I have been helping clients with their transition and estate planning requirements. An important part of most transitions and estate plans is insurance.Frequently, I notice insurance policies that have been set up without due regard to the clients circumstances and objectives.
Better planning can result in your insurance premiums becoming tax effective,assisting in avoiding estate planning disputes, improving asset protection and in leaving a legacy for the next generation in a safe and secure manner.
The key elements of a comprehensive Wealth Protection Plan are as follows:
This is the best place to start. A comprehensive estate plan should be prepared. It is important to get an in depth understanding of your objectives,family tree and dynamics. A thorough review of your assets and liabilities and existing estate planning documents. Existing estate planning documents are frequently out of date and need to be updated to make sure they are asset and tax protective. An estate plan review includes reviewing existing wills, trust deeds, superannuation policies, loan agreements and partnership agreements.
The review is completed in collaboration with your existing advisers including your solicitor and accountant.An estate planning review and subsequent update provides the perfect foundation upon which to determine how to structure the insurance policies. In fact an estate plan should be completed before any financial advice or taxation advice is provided.
Type of Insurance & Ownership
Once the review is completed, it is possible to determine appropriate ownership of insurance policies. There are many different types of insurance including
- Income Protection,
- Term Life Insurance,
- Trauma/Critical Illness Insurance,
- and Total and Permanent Disability (TPD) Insurance.
They each cover different needs and may all be part of a comprehensive Wealth Protection Plan. An important part of a Wealth Protection Plan is to consider what person or entity should own the policies. To determine this answer, consideration must be given to the objective behind the insurance. If the insurance is required to look after your family for the long term, then it should be structured so that the proceeds are paid into a testamentary trust which provides asset protection and tax planning flexibility.
Insurance policies are frequently set up to obtain a tax deduction, however it is important to consider the tax implications when the proceeds are paid. If your insurance policy has been set up correctly, the proceeds can be tax free . However this can change on a year to year basis, based on the circumstances of your beneficiaries and changes in income tax legislation.
Your Wealth Protection Plan should be reviewed at least every two years to make sure that it is up to date with your current circumstances and legislation. It is also important to have your Estate Plan reviewed at the same time or in conjunction with your Wealth Protection Plan to make sure that they are in sync with each other.
It is important to have your insurance reviewed and structured properly so that your beneficiaries receive the maximum benefit from it. Please contact me if you would to have your Wealth Protection Plan reviewed .
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JFO Australia Pty Ltd T/A
Jamiesons Strategic Wealth Solutions
Apogee Financial Planning Limited
PO Box 1278 Gwelup WA 6 018
JFO Australia Pty Ltd ABN 52 139 285 180 Authorised Representative of Apogee Financial Planning Limited ABN 28 056 426 932
Australian Financial Services Licensee, 105-153 Miller Street North Sydney NSW 2060
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Disclaimers & Disclosures
Geoff Ivanac is a Sub-Authorised Representative (No. 000309751) of Barsden Private Wealth Pty Ltd ATF The BPW Trust (ABN 41 153 930 799) trading as Barsden Private Wealth. Barsden Private Wealth is a Corporate Authorised Representative No.416315 of BPW Licensee Services Pty Ltd (AFSL 484 198).
The information provided on this website has been provided as general advice only. We have not taken into account any particular person's objectives, financial situation or needs. You should, before acting on this information, consider the appropriateness of this information having regard to your personal objectives, financial situation or needs. We recommend you obtain financial advice specific to your situation before making any financial investment or insurance decision.