Veritas Wealth Solutions

Gift Vouchers Are Now Available at Veritas Wealth Solutions

Gift vouchers are now available from Veritas Wealth Solutions for an initial consultation session (usually 60 – 90 minutes) with our Certified Financial Planner Ken Wild at a cost of $165. An initial consultation will help your children and friends plan for their future in setting financial goals and developing plans on how to achieve them.

Please contact the office at 02 6162 1522 if you would like to organise a voucher.

Enduring Power of Attorney For SMSFs

While it is never nice to contemplate becoming incapacitated by illnesses such as Alzheimer’s or dementia, or even physically or mentally incapacitated due to illness or accident, if it does occur it is imperative that there are processes in place allowing someone else to legally make decisions on your behalf.

An Enduring Power of Attorney (EPoA) allows a person to give another person the authority to make decisions on their behalf if they should find themselves unable or incapable of conducting their affairs at any point in the future.

It is vital that all trustees/members of a SMSF have an Enduring Power of Attorney (EPoA) so that the nominated attorney can continue to operate the fund when a trustee is no longer able or capable. Failure to do so can cause significant and costly problems for the fund.

Consider the implications for the SMSF if someone is incapable of making decisions:

How does the SMSF run? How can documents be executed? How does a corporate trustee operate? How is a new trustee appointed? How are assets sold or bought? How are pensions or lump sum withdrawals made?

If there is an EPoA:

It means the member gets to choose a person to give the authority to make decisions for your SMSF.
The SMSF can continue to operate if you are incapacitated.
The SMSF maintains its complying status without fear of contravening relevant legislation.

If there isn’t an EPoA:

The ATO may decide to make the fund non-complying.
An incapacitated member cannot be rolled out as SIS regulations require member consent.
Documents that require two signatures can’t be executed.
Apply to the relevant state or territory Civil and Administrative Tribunal.
Apply for guardianship of the incapacitated member.
But who gets appointed? Surviving spouse, son/daughter, Public Trustee? Could be someone the member does not want making decisions for them.
What happens to the SMSF while waiting?

General features of an EPoA:

The EPoA covers financial and legal matters when an individual cannot make those decisions themselves.
The person appointing the attorney must be over 18 years and have the mental capacity to make decisions. Generally you can nominate if the power of attorney is to take effect immediately, or only when, or if, they become incapacitated and can no longer make decisions.
The person appointed as an attorney must be at least 18 years old, have the capacity to make decisions, and agree to be your attorney.
The person appointed as an attorney should be a trusted spouse, partner or adult child, a relative, a friend or even a professional such an accountant or lawyer. You can appoint more than one person so you have different people responsible for different things, or so powers are exercised jointly.
If the attorney has power to sell real estate this must be registered with the relevant state or territory land titles office.
Each state and territory have different formal requirements for the form of the EPoA and witness requirements, so check for the area specific to you or consult a solicitor.
The EPoA ceases upon the death of the appointer. When someone dies, the Will takes over for decisions regarding the estate.

Attorney responsibilities

The decision to act as an attorney and the legal duties involved are significant so this decision must be carefully considered. The attorney must act in the best interest of the appointer when making decisions, take care of property/assets, avoid conflicts of interest, ensure relevant legislation is complied with and if necessary, prove that they have been appointed your attorney.

Things to consider when appointing an EPoA

Make sure you know where your original documents are located, including previous deeds and upgraded company constitutions.
Review those documents and ensure you understand the requirements to appoint and remove trustees and directors.
Consider who is to be appointed as a member’s individual attorney because they will have a significant amount of control should the member become incapacitated.
Consider whether the attorney would be an appropriate choice. Are they sensible, likely to act in your interests, not living overseas?
Do a “what if test” assuming the worst has happened, and test the rules, seeing how the documents would work. Does your appointed attorney and the rules of the trust deed fulfil your wishes?
Regularly review the appointed attorney. Are they still an appropriate choice or have things changed? Has the trust deed or company constitution been changed? The “what if” test should be conducted again to make sure you still achieve your desired outcome.
Seek legal and other professional advice and guidance to ensure the EPoA is a valid document.

Medibank Private Ltd (MPL) Share Transfers

If you purchased MPL shares in individual or joint names and would like transfer the holdings to your self-managed super fund, please contact our office to assist in arranging the transfer for you as soon as possible.

Children and Insurance Cover

What would be the financial consequences on your retirement if one of your children or their partners were disabled or died? Or a grandchild was disabled?

These are confronting questions but unfortunately they require answers and those answers may be financially devastating coming as they will on top of the emotional toll these events would already be taking.

We all know the cost of hospitalisation and modern medical technologies is horrendous even if we prepare via holding private medical insurance. But these out of pocket expenses may be insignificant if for example a son or daughter died leaving children and a single parent whose career was permanently on hold due to parenting responsibilities from then on.

Who pays the mortgage each fortnight out of the now meagre single income? You possibly could assist but that was never in the pre retirement list of expenses calculation.

You may be able to do the child minding duties so the parent can return to a career and better income prospects but you may be wanting to go on extended holidays every so often. Child care is also very expensive and longer term possibly not viable. You are also not as young as you were and looking after demanding young children is going to take its toll on you also and certainly was not built into your retirement plan.

A worse scenario may be if a child or their partner was disabled so was requiring permanent medical assistance and intervention. Again can you afford to help without depleting your investment portfolio to the point where you suffer a reduced standard of living? We are talking tens, possibly hundreds of thousands of dollars here in ongoing care from an injury or sickness which may not have any compensation claims attached to it. We could still have the mortgage and the children’s education to factor in as well in many cases.

Having posed the scenarios what can you do about it to make sure you are not financially ruined by such a tragedy?

The answer is you make an investment in adequate insurance cover for your children who have dependency situations and relationships. Or you insist they do it themselves if they have the means as it is generally not that expensive, particularly whilst they are still relatively young(under 45) which coincides with the highest risk period anyway in most cases ie they have young children, big mortgages and no savings.

One of the best ways to provide the Death, Disability and Income Protection insurances is via a superannuation fund. The premiums are tax deductible to the super fund and group insurance cover offered through the funds can be extremely cost efficient. The only problem can be that some funds do not provide adequate levels of cover so either an alternative super fund needs to be found or a policy outside of super undertaken.

When the child is self funding the insurance via super there is also an element of it is not costing anything as only the child’s ultimate retirement savings are being depleted, not day to day living money. The ability to catch up later in life is assumed with this approach.

As we have just started a New Year a resolution for many of you therefore could be to ask these questions of your children to ensure you are not lumbered with the financial burden of caring and supporting children following a debilitating injury or death.

And if you are the child or children concerned you should take stock of your insurance situation so you do not deprive your parents of the retirement they have planned.

If you require assistance with an evaluation of your insurance needs we will be pleased to provide advice and recommendations.

Beware of Scams

Falling victim to a scam can be embarrassing, not to mention very costly. Some scams are easy to spot but it’s the scams that appear to be genuine offers or bargains that we need to be wary of. Scammers use various techniques; online, via email, SMS, telephone calls and even in person. Every day people are falling victim to scams and Australians are collectively losing millions of dollars a year to them.

Recently, we have heard of people receiving emails from the ATO regarding their tax refunds. It is important to remember that whilst these emails look legitimate the ATO or other Australian Government departments such as ASIC or ACCC will never contact you via phone or email requesting personal details for refunds. From time to time they may send emails and SMS messages, but these do not include or request personal details.

Some tips to remember if you suspect an email, SMS or telephone call is a scam:

Immediately delete emails or SMS messages or hang up on the caller if they are out of the blue and claim you are entitled to a refund or some sort of prize.
Don’t respond to text messages or missed calls that come from numbers you don’t recognise.
Do not click on links in a spam email or open any files attached to them.
Never give out any personal details or information unless you have initiated contact and trust the other party. Likewise, never send money to anyone you are not totally sure about.
Verify who the caller is and who they represent. If it’s a legitimate call you should be able to ring them back on a number you find yourself from an independent source (i.e. google, yellowpages).
If someone is offering you an investment or other financial services ask for their Australian Financial Services Licence Number and check this with ASIC. It is illegal to sell investments in Australia without an AFS Licence.

Scamwatch.gov.au is a good website to take a look at to learn more about scams. It is run by the ACCC and provides information on how to recognise, avoid and report scams. ASIC deals with investment scams or scams concerning financial products or services, you can learn more about this at Moneysmart.gov.au. The ATO has information on tax related scams at ato.gov.au.

New Year Financial Health Check – Are You On Track for tThe 2015 Financial Year?

Whilst many people make New Year resolutions to set personal goals, January is also an important milestone in the financial year. Reviewing your finances now allows you time to implement new strategies and/or make sure existing plans are running accordingly to schedule. We have included some items that should be checked or planned for now rather than in June of the financial year when it is often too late to implement.

For those working – check your Super Concessional Contributions (this includes Super Guarantee, Salary Sacrifice and personal contributions) to make sure you do not exceed your cap ($30,000 for under 50’s, $35,000 for 50 and over) or look at making further contributions to make the most of what is still available. Remember deductible super contributions are only tax deductible in the financial year they are received in your super fund account and often the last quarter or monthly contributions are not received until the next financial year. Ask your employer or check your super fund account if you are unsure of the amounts that have been paid for this year so far.
For retirees – check that you are on track with your minimum pension withdrawal amounts. Scheduled fortnightly and weekly payments can sometimes fall short due to the timing of weeks in the financial year i.e. 25 payments rather than 26.
Be proactive – for those that tend to leave paperwork to the last minute start organising your accounts and tax paperwork now. This alleviates stress by not leaving it until the last minute and also assists in getting an idea of your current financial and tax position so you can utilise the next few months effectively and then;
Talk to us at Veritas Wealth Solutions to see what you can possibly take advantage of over the next few months or have any questions answered in regards to your financial goals before June 30 arrives.