www.epeq.com.au

Contact us

Allan Swan
Director
allan.swan@epeq.com.au

Karen Ho
Lawyer
karen.ho@epeq.com.au

Naomi Swan
Law Clerk
naomi.swan@epeq.com.au

 

Estate Planning Equation Preventative Law

Level 13, 200 Queen St,
Melbourne Vic 3000
+613 8600 6906

 

Areas of Practice

Asset Protection | Estate Planning | Ownership of Funding | Strategy | Structuring | Superannuation | Tax Planning | Trusts

Ownership of Funding

One of the important roles that financial planners play in asset and wealth management is to ensure that plans are formulated in line with an individual's available funding.  The success of that FUNDING is also dependent on careful attention to ownership issues including choice of structure, control, the ability to meet changing circumstances and the preparedness to deal with contingencies.

For most people, the funds that enable them to live their choice of lifestyle come from personal exertion income such as salary and wages or owner-controlled businesses.  The funds may also include loans taken out to acquire assets such as family homes, investment property and business working capital.  Should the life of a person take an unexpected turn, the ability to maintain a lifestyle and support other family members may be placed in jeopardy.  To that end, people often ensure that they have contingent funds available, eg income protection, and other forms of life insurance. 

At Estate Planning Equation - Preventative Law, we provide advice and implementation of asset and wealth management strategies to ensure that any funding that has been put in place will benefit the right people and will be controlled by the appropriate people.  To this end, in the life insurance context, we look at the legal aspects concerning: 

  • The choice of ownership of policies, including the use of superannuation funds;
  • The choice of nominated beneficiaries for those policies or, in the case of superannuation, for the member's death benefits;
  • The taxation implications of the policies, eg the deducibility of policy premiums;
  • The need for preventative planning to ensure that insurance policies are not available to fund a challenge by unintended beneficiaries; and
  • In the case of owner-controlled businesses, the terms of agreements regarding the involuntary exit of a business owner due to health reasons, eg buy/sell and other business agreements.

Case Study

Stephen has two positives that have come out of his troubled relationship with Stephanie, i.e. his two young children.  He wants to make certain that his children are provided for while at the same time, wishes to ensure that Stephanie, her new partner or her subsequent children do not benefit from any financial assistance that he provides.  As part of the arrangements for financing the education of his children, he has put in place a sizeable life insurance policy with benefits to be paid in the event of serious illness or death.  Some issues that Stephen should consider in relation to the ownership of the contingent funding are:

  • Whether the life insurance should be held within or outside superannuation;
  • Making certain that Stephanie will not be in charge of the policy proceeds, eg as the legal personal representative of the children;
  • Whether some form of trust arrangement for the policy be put in place if there is a risk that the proceeds may be challenged by either Stephanie or any future partner that Stephen might have; and
  • Choosing an appropriate person to be in charge of the funds and knowing that that person will have his children's best interests at heart.