WELCOME TO THE JULY 2009 ISSUE OF iNEWS!

Each month iNews brings you exciting and topical issues to help you stay informed and make the most out of life!

HAVING A WILL IS ONLY ONE PART OF ESTATE PLANNING

It is all too easy to focus on the accumulation of wealth, however we often forget about the importance of planning for the transfer of our wealth and assets to the people who we want to receive them.

Having a will is obviously important, however while your will may cover your Personal Assets it may not cover Non-Estate Assets.

What are some of these assets that may not be covered in you will?

ASSETS OWNED AS JOINT TENANTS OR TENANTS IN COMMON. Assets owned by you and another person in joint names as joint tenants are not part of your estate and full ownership will pass to the survivor upon the death of a joint owner.
Assets owned as tenants in common are part of estate assets and can be gifted or dealt with in your will.
If you were to buy an asset such as a house as joint tenants with a friend or relative and one of you dies, the other becomes the sole owner. The deceased’s family could lose a valuable asset. A better option is to buy an asset as tenants in common where ownership of an asset can be transferred by a will.
FAMILY TRUSTS. Assets held within family trusts can be a complex area. Assets held in a family trust are not owned by you personally and cannot be specifically dealt with in your will. However your will can allow for the transfer or termination of the trust upon your death. It is essential that your estate plan provides for the effective transfer of control of the trust.
COMPANY OR UNIT TRUST ASSETS. Assets held in a private company or unit trust are not part of your estate as they are not owned by you. The governing rules of the company or unit trust should determine who will control the company or unit trust after your death. As these assets are not part of your estate, separate strategy decisions are necessary.
SUPERANNUATION. Superannuation can sometimes be the largest asset of many people. Generally the rules of the superannuation fund determine who receives your super payout in the event of your death. Depending on your fund you may be able to nominate who receives your super payout. It is an issue that you should clarify.

There are many issues that need to be addressed when considering your total estate planning, and the appointment of a power of attorney and adequate insurance are also an important part of your planning.

POWER OF ATTORNEY

A Power of Attorney means that a trusted family member or a friend can make financial decisions in your interest if you were unable to do this yourself, if for example you became ill, you were travelling overseas or you lost the mental capacity to make these decisions.

There are three types of powers of attorney.

A general power of attorney is given to someone to make financial decisions on your behalf, if for example you frequently travel overseas and wanted someone else to handle your affairs in your absence.
A limited power of attorney is given to someone to make financial decisions on your behalf for a specific purpose or a set period of time, if for example you wanted someone else to sell your house.
An enduring power of attorney is put in place in the event that something happens to you such as illness or accident and you are unable to make your own decisions.

ARE YOU ADEQUATELY INSURED?

How would your family cope financially if for some reason you were unable to work for an extended period of time due to an accident or illness?
To ensure your family’s financial security and your ability to retain your current lifestyle due to unforseen circumstances you should consider:

Income protection insurance
Trauma insurance
Total and permanent disability insurance

ARE YOUR RECORDS AND DOCUMENTS IN A SAFE PLACE AND IN AN ORDERLY STATE?

The above are some issues which may be overlooked in your estate planning.

Your iPlan adviser can help you identify areas of your estate planning that may require attention. Contact us on 13000IPLAN (1300 047 526) or email us at info@iplan.net.au

BORROWING TO INVEST

Borrowing to invest or “gearing” has recently been the focus of some media coverage.

Despite unfortunate experiences for some investors, borrowing to invest is still a very important and legitimate Wealth Creation Strategy.

WHAT ARE THE MAIN BENEFITS OF BORROWING TO INVEST?

To acquire large assets that you might not otherwise be able to invest in using your own money alone. For example an investment property or an investment portfolio.
To buy an asset or an investment that will appreciate at a faster rate than the cost of the borrowing.
It increases the amount of money that you have to invest.
Potential tax benefits. The costs of borrowing to invest are generally tax deductible.
Where there are other structural benefits, a business or an investment loan may free up personal funds to reduce private debt or to protect an asset from business risk.

WHAT PRECAUTIONS SHOULD I TAKE?

Generally only borrow for appreciating assets, or assets that are likely to appreciate.
Avoid borrowing for expenses such as holidays, luxury items and expensive motor vehicles.
As with all investments, asset prices may drop. You must have strategies in place to cope with this.
Avoid having to become a forced seller if the price of the asset falls.
Avoid buying property or assets at inflated prices.
Borrow sensibly.
Negotiate a favourable interest rate.

IS BORROWING TO INVEST FOR ME?

How would you answer the following questions?

Am I a long term investor?
Do I have a reliable income?
What would happen if I lost my job?
Do I have surplus income or access to an emergency fund?
Do I have the financial flexibility to fund any cash flow deficit that may arise?
What happens if I get sick? Do I have income protection? Am I adequately covered by my insurances?
Can I handle interest rate rises?

SUGGESTED STRATEGIES

Only borrow an amount that you know you can service.
As with all of your investment strategies, ensure that your investments are diversified.
You could consider leveraging through a regular investment plan.

Your iPlan adviser can help you develop a gearing strategy suited to your investment goals and circumstances. Contact us on 13000IPLAN (1300 047 526) or email us at info@iplan.net.au

Your Question's Answered

Got a question you would like answered?

Please email your questions to info@iplan.net.au, or why not phone one of our financial advisers directly on 13000 IPLAN (1300 047 526).

iPlan Financial Services Australia Pty Ltd ACN: 106 591 833 as trustee for the iPlan Australia Trust ABN: 58 928 175 252 is a Corporate Authorised Representative of iPlan Financial Services P/L ABN 70 122 979 140 AFS Licence No. 311824

This Month

1)	Having a will is only one part of estate planning
2)	Borrowing to invest
3)	Your Questions Answered
4)	Contact Us

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iPlan Financial Services makes no representation and gives no warranty as to the accuracy of the information in this document and accepts no liability for any errors, misprints or omission herein (whether negligent or otherwise). iPlan Financial Services shall not be liable for any loss or damage whatsoever arising as a result of any person acting or refraining from acting in reliance on any information contained therein. The above is for the intended audience only and contains only general information. Please seek professional advice before making any decisions.
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