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CAse Studies

Find below some of our real life solutions that we have provided to our clients. Solutions must always be determined by taking the client's full financial circumstances into consideration. The case studies we have provided below show some of the complexities involved in determining efficient solutions.

Case studies - OUR SOLUTIONS

Find below some of our real life solutions that we have provided to our clients. Solutions must always be determined by taking the client's full financial circumstances into consideration. The case studies we have provided below show some of the complexities involved in determining efficient solutions.

 

Please contact us for your individual customised brief.

Case Study #1 - Our divorce

After 25 years of marriage and now that all of their children have left home, Bill, a doctor and Mel, a stay at home mum, agree to go their separate ways and start new lives. After careful negotiations, a family law property settlement was reached. A formal divorce, however, was never obtained.

 

Both Bill and Mel find new partners. However, Bill's new-found contentment was cut short when he died suddenly from a heart attack.

 

Bill never made a will. His estate was therefore distributed in accordance with the intestacy provisions. Mel and her children share in the estate and Bill's new partner received nothing. This would not have been Bill's intention.

 

The preparation of a Will to include his new partner would have avoided this unexpected result.

Case Study #2 - Dad's inheritance

James is a highly qualified professional who is employed as a computer engineer. James's income is taxed at the top marginal tax rate. James's wife is a part-time dentist who is also earning an high income. James and his wife have three children all at school.

 

James's father Kerry, died leaving him a share in the balance of his estate valued $500,000. James's father on advice, had prepared a Will that enabled James to take his entitlement through a discretionary testamentary (or Will) trust for his family. James invested the inheritance and last financial year the investment produced an return of $25,000.

 

As trustee, James, resolved to allocate the income equally between his children. Because the income was generated by a discretionary trust created by a Will, all his children are taxed at adult tax rates. The result for James is that no tax was paid on the trust income. Had no provision been made for a discretionary testamentary trust in his father's Will, James would have paid tax on the income at his marginal tax rate and as a result lost almost half of the income in tax.

 

The tax outcome would be no different, had James gifted the money to his wife and she in turn made the investment. Further, the tax outcome would be worse if the investment was made in the names of the minor children.

Case Study #3 - My superannuation

Betty made a Will leaving her personal estate to be distributed equally to her children. She has considerable superannuation entitlements. Betty has three children, the youngest is 16 years old. Her other two children are 23 and 25  and are non-financial dependents.

 

Upon Betty's death, the trustee of her superannuation fund decides to pay the superannuation to Betty's youngest child, who is regarded as a dependent for taxation purposes. Betty's Will provides for all three of her children to share equally in her residuary estate. As a result, Betty's youngest child, in addition to her entitlement from the estate, also benefits from the superannuation.

 

A well-drawn Will should provide for the beneficiaries entitlements to be adjusted to reflect superannuation proceeds received by one beneficiary.

Note: The above case studies and purely for information purposes and should not be taken as personal advice. The names and scenarios are fictitious and any resemblance to real life is mere coincidence.

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EverMore Partners Pty Ltd

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