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The unfortunate thing is 50
percent of estates these days are

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challenged and 70 percent of those
that are challenged are successful.

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And I'll tell you the number one reason
is because it's not at their expense.

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So when an estate is challenged,
guess who pays for it?

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The person challenging th ... Read More

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The unfortunate thing is 50
percent of estates these days are

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challenged and 70 percent of those
that are challenged are successful.

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And I'll tell you the number one reason
is because it's not at their expense.

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So when an estate is challenged,
guess who pays for it?

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The person challenging the
estate doesn't pay for it.

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The actual person that
pays for it is the estate.

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Welcome to Don't Be Caught Dead, a
podcast encouraging open conversations

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about dying and the death of a loved one.

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I'm your host, Catherine Ashton, founder
of Critical Info, and I'm helping to

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bring your stories of death back to life.

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Because while you may not be ready
to die, At least you can be prepared.

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Don't Be Caught Dead acknowledges
the lands of the Kulin Nations

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and recognises their connection
to land, sea and community.

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We pay our respects to their
elders, past, present and future.

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Present and emerging and extend
that respect to all Aboriginal and

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Torres Strait Islander and First
Nation peoples around the globe.

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Today, we're speaking with Shannon Smith.

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Shannon is the founding director
of Smart Business Solutions

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Group and Smart Private Wealth.

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Shannon is a chartered accountant,
a registered tax agent.

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Financial advisor and
licensed mortgage broker.

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But I know Shannon as my financial
advisor and also my accountant.

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Shannon works not far from me
in Mornington and she actually

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returned to Mornington after having
some pretty impressive career

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positions throughout the world.

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So.

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Thanks for being with us today, Shannon.

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Thank you so much for
inviting me to join you.

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Now, tell me Shannon, what brought
you back to the Mornington Peninsula?

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You know, I see that you've been in New
York, Prague, Amsterdam and Melbourne.

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So, what brought you back home?

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Are you always been a Peninsula girl?

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Yeah, so I actually grew up on the
peninsula, grew up in Red Hills, a very

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fortunate, went to Red Hill Primary,
and I guess I was fortunate to actually

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be brought up in this beautiful area.

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Did, then obviously got my accounting,
did the city thing, spent a few

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years in Melbourne, especially, you
know, in your early twenties, and

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then decided I wanted to go abroad.

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So obviously I went abroad.

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I ended up spending a
few years in Amsterdam.

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I was in the Czech Republic.

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Then New York City.

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What's not to love about New York City,
five years in New York City, but really

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wanted to come back home, um, had two
children myself and just wanted them

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to have that same experience that I
had growing up on the peninsula and

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what's not to love about the peninsula.

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So I guess coming back home was.

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Really driven by my children, but
also wanting to create then my own

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practice that took all of those city
experiences, all those large company

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experiences for small business.

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Because the reality is
the tax laws are the same.

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The bigger businesses just have.

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on the end of their revenue,
but the tax laws are the same.

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So I really want to bring that global
expertise into that local environment.

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And what really impressed me was when
I looked at your website and cause I

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was referred by a lawyer I was using
locally and he was saying, Oh yeah,

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this woman is really well referred.

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And I'm like, okay, so I checked out your
website and you not only actually brought

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your business back into Mornington,
you also built a building to house it.

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I don't like paying rent.

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So I thought, what do I do?

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I'll just build the building.

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They do often call me the accountant
that builds, which is hence

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why I'm doing my podcast, the
accountant that builds physically

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building, but also build wealth.

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But I love projects.

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I built my first house at 21
and I've done a few different

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developments on the side since.

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So yes, this.

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I did build my office building.

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It was the fire station in Main
Street Mornington when I bought it.

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And no, there was no fire pole.

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Someone had already stolen
the fire pole, but it was the

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old Mornington fire station.

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And yeah, so I bought that back in
2011 and then built the building.

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And we've been in the
building now 10 years.

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So time flies when you're having fun.

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I just wanted to, you know, not
have to pay rent and, you know,

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you've got to practice what you
preach when you're an accountant.

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And financial advisor, you know, I put
it in my super fun and I did all of that.

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So I guess that's what I, I love what I
do, but if I can practice what I preach,

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that's a win win for me and a win win for
my clients, because I can actually speak

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from not just theory book experience.

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I can speak from real experience.

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And that's what I think that drew
me to your business and your staff.

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So, you know, I think at the time we
were going around and meeting with

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different accountants and it's just
so different walking into your office.

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You know, people genuinely care and, you
know, they really have, yeah, just a,

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a wonderful warm lovable family really.

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So yeah, it's, it's a really amazing
business that you've, you've set up.

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I feel very fortunate that we've now just
over 20 and we've been trying, you know,

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I've been able to maintain that culture,
but I've got a number of my team, teams

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that have been here for, you know, I
have to accrue for long service leave

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because, you know, one's been here 10
years, many of them been over seven years

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and people don't leave, which is great.

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And I guess where I'm really fortunate is
I have the team acts all like mini owners.

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You know, they all care at the same
level of as I care about my business,

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just as you do when it's your own
business, you know, so I think it's,

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they really care about the clients
and that's what we try and do.

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I mean, client service, because at the
end of the day, you would expect a lot

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of accountants would be all technical,
but it's about the client service.

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I think that's what distinguishes.

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All of us, you know, on that side.

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And do you mind sharing with our
audience something that you gave

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me a little bit of insight recently
about how you treat your staff?

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Like, I can understand completely why
they have been with you such a long

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time when it's a little thing such as
just, you know, having lunch provided.

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You know, I think that's amazing.

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And

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that's using what I
know about tax purposes.

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If I take them out for lunch,
that's not tax deductible.

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There's FBT and all these other nuances,
you know, every Friday, so we've got

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a grocery channel on our teams and
everyone just adds what they want.

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Every Friday, they have
a budget each week.

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Every Friday they order from Woolworths.

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It gets delivered on a Monday morning.

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And so everyone.

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eats lunch together.

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They cook lunch together.

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It might be taco Tuesdays or it might
be whatever they're wanting to do.

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But by doing that, we've got a
kind of full kitchen at the office,

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but it keeps the team connected.

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But not only that, I've taken
pain points away from them.

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You know, many of them even have,
you know, a bit of toast in the

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morning when they get to work, they
don't have to think about what they

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need to bring to work for lunch.

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What are they going to have to go out?

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And also in this cost of living
time, having lunch provided

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is just another one of those.

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Aspects that just saves for
them, you know, so yeah, it's

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a really good good scenario.

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I think for all round

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I think it's it's such a brilliant way to
Create the sort of culture that you want

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to you know, really encourage in a work
environment and and I think it's fantastic

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So thanks for sharing that with us.

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So let's move into your wheelhouse
and why we have you on the show.

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So Let's talk, you know estate planning.

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What is it?

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Yeah.

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So estate planning is interesting.

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It's not all accountants actually
consider estate planning.

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As accountants, we're often, and financial
advisors, building up this wealth.

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But what I've noticed, and I guess I first
got into estate planning about probably

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just under seven or eight years ago, and
I think accountants and financial advisors

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are really well positioned to assist.

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We're not lawyers, but to
assist in estate planning.

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And the reason for that is
we know client's wealth.

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And what a lot of clients don't
understand is that if you don't clearly

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structure your estate planning, all
this wealth that you've built up

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may not be going to the places that
you intend for it to be to be going.

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Now, I guess when we get to the estate
planning, you're no longer here.

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So maybe you don't know, but it would
be nice to know how am I actually

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going to pass down my wealth?

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Am I doing that in the best?

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Asset protection means, am I
doing in the best tax protection?

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I mean, why would you want to pay
additional taxes, you know, when

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passing down some of your wealth?

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So estate planning, I'm really working a
lot with our, with lawyers on the estate

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planning, because we as financial advisors
and accountants, I know the full pictures.

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Now the lawyers are not accountants,
they're not financial advisors.

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So we can't expect them to understand.

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And then often you've got
the client in the middle.

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Who the client might understand, you know,
quite a bit about their structure or not.

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And they're trying to articulate
to the lawyer who also doesn't

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understand tax and accounting.

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So we often put together a briefing paper
that they can bring to their lawyers, or

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we can facilitate with that so that we're
making sure that what gets into the will.

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Cause I've read a lot
of wills over the years.

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And it still may as well be written in
Chinese, to be honest, because I can't

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understand the legal jargon of it.

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So having something like that and being
able to assist, estate planning is

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really a really important part of being
able to pass down your wealth and have

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it go in the way in which you want it
to, so that it benefits your children,

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your family, how you want that too.

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And I think it's just a really important
part that a lot of people don't think

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about because we all think that.

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None of these things will happen to us.

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It happens to everyone else.

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It doesn't happen to us.

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And what sort of things do you
cover off in these briefing

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papers when you write them?

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Yeah.

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Well, we, we might've gone through,
um, financial advice with the client

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or we've got, got their accounting.

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We start by saying, who are all
of the people in this family?

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What's the family tree look like?

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You know, who are these people?

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I'm quite a visual person.

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I find there's a lot of my clients
that are quite visual as well.

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And so we put a visual
family tree together.

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I often say who's who in the zoo.

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What are the different relationships?

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That you have with
those different parties.

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And then let's now look at the structures
because a lot of people don't realize

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that your entities, your business entities
are not included in your personal will.

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So you can have a will, but your family
trust, your business company, your

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business trust, your super self managed
super fund, they are not covered.

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By your standard will,
they're not covered.

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So how are you managing that estate?

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So we will put together not only the
family tree, what does that look like?

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00:10:14,565 --> 00:10:17,835
What does your business
legal entity look like?

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00:10:17,844 --> 00:10:20,404
You know, your corporate trees,
we like to call it, but who are

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the entities, who are the direct.

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Shareholders, what are all of those
different owners in that so that we

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can actually kind of visually put that
together and then actually talk about

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what is it that you want and how do
you want your estate to be distributed?

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You know, some of those different
aspects of that will be highlighting.

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I did one recently where one of
the adult children talking like.

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45 was still quite dependent on the
family, dependent on the family.

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They had, they have a minor disability.

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They're dependent on the family.

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They live in a unit that's
owned by the family.

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And when you've got someone
who's a dependent, there are some

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aspects where a dependent who
inherits your superannuation.

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00:11:01,890 --> 00:11:05,190
So if you inherit your parent's
superannuation, most people

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don't realize we don't have
inheritance tax in Australia.

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However, superannuation, the money has
been in a. Low tax no tax environment,

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there is a true up of tax payable
when your super is inherited by

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00:11:21,700 --> 00:11:25,919
someone who is not what we call a
cis dependent, and a cis dependent

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00:11:25,949 --> 00:11:27,229
is a superannuation dependent.

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00:11:27,470 --> 00:11:32,020
So husband wife, when you inherit
from each other, there is no tax or

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00:11:32,040 --> 00:11:33,920
any extra tax or anything on that.

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But when an adult child, if they're
under 18, then there's no tax.

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One would hope that they're not
inheriting until they're quite

225
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older because you're living longer.

226
00:11:43,425 --> 00:11:47,525
But when your adult child inherits
your super, there is about 17

227
00:11:47,525 --> 00:11:50,115
percent tax that you're going to
pay, which is the true up tax.

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00:11:50,115 --> 00:11:54,124
It's not inheritance tax, but it's
kind of this true up tax between the 15

229
00:11:54,125 --> 00:11:56,665
percent tax that the superannuation fund.

230
00:11:57,075 --> 00:11:57,515
paid.

231
00:11:57,745 --> 00:12:02,605
And the average kind of Australian tax
is around about this 32 percent that,

232
00:12:02,645 --> 00:12:04,525
and so there will be 17 percent tax.

233
00:12:04,725 --> 00:12:08,865
A lot of people don't realize that
they inherit the money and that tax

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00:12:08,865 --> 00:12:10,545
isn't withheld when they inherit it.

235
00:12:11,464 --> 00:12:13,464
And then they're going
to have this tax bill.

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00:12:13,495 --> 00:12:16,745
And so I've had a number of people
surprised where they've inherited money.

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00:12:16,974 --> 00:12:20,290
They've received it from say, Just
the retail super funds, one of the big

238
00:12:20,290 --> 00:12:22,940
superannuation, they got their 100, 000.

239
00:12:23,020 --> 00:12:26,320
And then now they've got to declare
that they get a tax credit for the

240
00:12:26,320 --> 00:12:29,650
15%, but they're paying 17 percent tax.

241
00:12:29,890 --> 00:12:33,820
Now, if you do estate planning,
and I had a client that had been

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00:12:33,820 --> 00:12:37,270
talking to their lawyer and had
already been going down that path.

243
00:12:37,570 --> 00:12:39,620
And I said, now, what are you
doing with your superannuation?

244
00:12:39,630 --> 00:12:42,460
Because, you know, one of your children.

245
00:12:42,845 --> 00:12:47,505
Is what we call a CIS dependent if you've
got, and in this particular situation,

246
00:12:47,505 --> 00:12:50,815
if they've got say approximately two
and a half million in assets, you

247
00:12:50,815 --> 00:12:54,405
know, the personal home and other
assets that potentially we inherited,

248
00:12:54,574 --> 00:12:55,415
I said, well, hang on a minute.

249
00:12:55,425 --> 00:12:57,194
You've got about a million in super.

250
00:12:57,654 --> 00:13:01,924
Let's make sure that the first share.

251
00:13:02,239 --> 00:13:07,249
goes to the adult child who is a cis
dependent because then it's tax free.

252
00:13:07,520 --> 00:13:11,270
Whereas if you just split everything three
ways, you know, the other two will pay

253
00:13:11,270 --> 00:13:13,030
tax on their share that comes from super.

254
00:13:13,480 --> 00:13:15,360
So there's some really big.

255
00:13:15,940 --> 00:13:17,150
Changes that you can make.

256
00:13:17,150 --> 00:13:22,910
So estate planning is looking at it
all holistically and working at how

257
00:13:22,910 --> 00:13:26,550
can we make sure that the assets
go in the way in which we want

258
00:13:26,550 --> 00:13:28,979
them to flow, how can we do that?

259
00:13:28,980 --> 00:13:33,930
The most tax effective way of
doing it and also asset protection.

260
00:13:34,250 --> 00:13:38,230
And so one part on asset protection
that I really like to talk about

261
00:13:38,230 --> 00:13:41,050
with clients is a testamentary trust.

262
00:13:41,320 --> 00:13:43,369
Now, a lot of clients will
operate their business.

263
00:13:43,870 --> 00:13:47,520
through a family trust, or they may have
a family trust that owns the shares.

264
00:13:47,520 --> 00:13:50,740
And so some people are familiar
with the term of a trust.

265
00:13:51,260 --> 00:13:55,410
What a testamentary trust is
incorporated into your will.

266
00:13:55,900 --> 00:13:59,629
And so you're not going out and setting
up this testamentary trust today.

267
00:14:00,210 --> 00:14:04,920
It's the deed of the testamentary
trust is incorporated into the will.

268
00:14:05,150 --> 00:14:07,580
And so you can nearly say
it's paragraphs of the will.

269
00:14:07,700 --> 00:14:09,470
It'll go for a few pages of your will.

270
00:14:09,910 --> 00:14:12,410
And it's a kind of action at the point.

271
00:14:12,705 --> 00:14:13,555
of your passing.

272
00:14:13,915 --> 00:14:19,755
Now what a testamentary trust is and
I truly believe that anyone who has

273
00:14:19,995 --> 00:14:24,645
children should definitely have a
testamentary trust within their wills

274
00:14:25,145 --> 00:14:29,054
and even those without children should
consider it in depending on who they're

275
00:14:29,054 --> 00:14:34,655
leaving it to because If someone
inherits from you and it comes from,

276
00:14:34,685 --> 00:14:36,245
it goes into a testamentary trust.

277
00:14:36,245 --> 00:14:40,345
So all of your assets, whether
they be crystallized into cash

278
00:14:40,345 --> 00:14:43,365
because you've sold the properties
or maybe it's the properties.

279
00:14:43,815 --> 00:14:49,794
If that is left to you in a testamentary
trust, you as the recipient of these

280
00:14:49,795 --> 00:14:53,895
assets in a testamentary trust means
you have really some major benefits.

281
00:14:54,065 --> 00:14:55,455
The trust comes into being.

282
00:14:55,680 --> 00:15:00,000
at the time of your passing and
that's inheriting depending on their

283
00:15:00,000 --> 00:15:03,860
age, because especially if the kids,
uh, you might even say they don't

284
00:15:03,860 --> 00:15:05,380
have access to it until they're 30.

285
00:15:05,440 --> 00:15:08,310
If you want to used to be
21, then it went to 25.

286
00:15:08,310 --> 00:15:11,659
I think maybe we're saying the younger
generation, we're keeping an eye on

287
00:15:11,659 --> 00:15:14,920
what's going on with the funds, but
if they're actually getting it in a

288
00:15:14,980 --> 00:15:17,980
testamentary trust, I kind of say it's a
little bit of a control from the grave.

289
00:15:18,440 --> 00:15:19,470
But it's good control.

290
00:15:19,790 --> 00:15:22,190
What can happen is you've
got asset protection.

291
00:15:22,500 --> 00:15:28,190
So any assets within a testamentary
trust are protected from bankruptcy.

292
00:15:28,739 --> 00:15:32,050
And the other one, given the
divorce rate these days is

293
00:15:32,050 --> 00:15:33,670
not part of the marital pool.

294
00:15:34,150 --> 00:15:39,890
So if your children inherit your assets
and it's in a testamentary trust,

295
00:15:40,270 --> 00:15:43,550
it does not form part of the marital
pool if they were to get divorced.

296
00:15:44,474 --> 00:15:48,925
And so what happens when, you know, and
this is a bit where I kind of say we

297
00:15:48,925 --> 00:15:53,134
need an education with your children,
you know, with your adult children, or I

298
00:15:53,134 --> 00:15:56,954
actually get a lot of my clients to have
the lawyers incorporate in their will

299
00:15:57,154 --> 00:16:03,044
that the children must seek legal and
accounting advice before any of the assets

300
00:16:03,044 --> 00:16:04,604
are then going to be distributed to them.

301
00:16:04,839 --> 00:16:08,120
Now, the reason I say that, and this is
why an intestinal trust is so important.

302
00:16:08,520 --> 00:16:13,699
So you've got the asset protection side
of things from bankruptcy, even from, you

303
00:16:13,699 --> 00:16:15,989
know, divorce on that situation as well.

304
00:16:16,229 --> 00:16:18,159
Doesn't mean they can't use the assets.

305
00:16:18,189 --> 00:16:20,579
So let's just say they inherited.

306
00:16:20,800 --> 00:16:23,000
a property and it went
into a testamentary trust.

307
00:16:23,430 --> 00:16:28,280
They still can use the rental income
and take that income out each year.

308
00:16:28,689 --> 00:16:31,230
Once it's out of the testamentary
trust, that rental income

309
00:16:31,470 --> 00:16:33,019
is up for grabs from anyone.

310
00:16:33,199 --> 00:16:35,780
Most likely what they've done is
they've put the money on their

311
00:16:35,780 --> 00:16:40,290
mortgage, you know, potentially, or
the alternative is let's say they

312
00:16:40,329 --> 00:16:43,410
actually received a million dollars
of cash in this testamentary trust.

313
00:16:43,680 --> 00:16:47,319
You might put that into an investment
portfolio, or they might say, I've

314
00:16:47,319 --> 00:16:48,819
actually got a 1 million mortgage.

315
00:16:48,819 --> 00:16:52,874
So I want to take that money out
tomorrow and pay off my mortgage.

316
00:16:53,344 --> 00:16:56,255
They take the money out tomorrow
and pay off their mortgage and

317
00:16:56,255 --> 00:16:57,735
they get divorced 12 months later.

318
00:16:58,670 --> 00:17:01,920
Probably they're going to have to split
their money and they've lost 500, 000.

319
00:17:02,560 --> 00:17:06,970
Now, you know what they can do
instead is the testamentary trust

320
00:17:07,300 --> 00:17:10,879
can do a formal loan agreement
with them for the million dollars.

321
00:17:10,889 --> 00:17:14,499
So the testamentary trust, you go to
a lawyer, probably cost you 1, 500.

322
00:17:14,499 --> 00:17:16,090
They do a formal loan agreement.

323
00:17:16,329 --> 00:17:19,760
They register a mortgage and
they'll make the loan agreement.

324
00:17:19,760 --> 00:17:21,640
And I always say, look,
structure it saying.

325
00:17:22,000 --> 00:17:27,180
That there is interest payable compounded
daily, but it's not payable until

326
00:17:27,180 --> 00:17:29,330
there's an event of the property is sold.

327
00:17:30,190 --> 00:17:34,370
Or there is a change in the legal
ownership of the property, i. e.

328
00:17:34,510 --> 00:17:35,960
divorce, something like that happens.

329
00:17:36,350 --> 00:17:37,610
What happens at that point?

330
00:17:38,209 --> 00:17:41,250
Something happens, whether that be
they sell to upgrade their house.

331
00:17:41,289 --> 00:17:42,020
Okay, that's fine.

332
00:17:42,020 --> 00:17:42,960
They sell the house.

333
00:17:43,039 --> 00:17:44,460
They sell the house for two million.

334
00:17:44,730 --> 00:17:46,920
The loan by that time might be
one and a half million because

335
00:17:46,930 --> 00:17:48,320
it's been compounded daily.

336
00:17:48,409 --> 00:17:49,760
So the interest is going up.

337
00:17:50,020 --> 00:17:52,160
So it's kind of nearly going
up a bit with market value.

338
00:17:52,550 --> 00:17:55,900
That money gets repaid and then
they can do another loan agreement.

339
00:17:56,399 --> 00:18:01,149
If they go through a separation, the
testamentary trust is paid first.

340
00:18:01,199 --> 00:18:01,939
Yeah, wow.

341
00:18:02,000 --> 00:18:03,820
And then the loan gets money.

342
00:18:03,990 --> 00:18:07,480
So you're keeping the
money in your bloodline.

343
00:18:07,899 --> 00:18:10,289
And trust can go for 99 years.

344
00:18:10,489 --> 00:18:15,270
So it's not only about your child,
it's your grandchildren, it's your

345
00:18:15,270 --> 00:18:19,799
great grandchildren, and that's why
it's really good on the education side.

346
00:18:20,070 --> 00:18:22,149
A lot of large families
have been doing this.

347
00:18:22,480 --> 00:18:28,050
For years, a lot of the high net wealth,
it is available for all of us there

348
00:18:28,280 --> 00:18:29,760
to be helping to protect our wealth.

349
00:18:30,159 --> 00:18:32,629
The other part of the testamentary
trust, so there's the asset

350
00:18:32,629 --> 00:18:36,979
protection, which is really strong
regarding, you know, also bankruptcy.

351
00:18:36,979 --> 00:18:40,179
If there was an issue with their
business and bankruptcy, the other

352
00:18:40,179 --> 00:18:42,530
part is the tax side of things.

353
00:18:42,830 --> 00:18:46,379
So the income that's earned
by the testamentary trust on

354
00:18:46,379 --> 00:18:50,270
that asset is taxable and needs
to be like a normal trust.

355
00:18:50,485 --> 00:18:51,834
distributed down to someone.

356
00:18:52,324 --> 00:18:55,424
Now, if that asset was in your own name
and you rented the property out or you had

357
00:18:55,424 --> 00:18:59,284
the investment portfolio, you'd be paying
tax at whatever your normal tax rate is.

358
00:18:59,735 --> 00:19:04,024
If it's in the trust, we do need to
distribute that out to someone to

359
00:19:04,024 --> 00:19:07,764
pay tax, which could be yourself and
you'll pay tax at the normal rates.

360
00:19:07,764 --> 00:19:08,334
That's okay.

361
00:19:08,795 --> 00:19:13,295
But the other beauty of it is, and I, when
I speak to a lot of people, especially

362
00:19:13,295 --> 00:19:18,895
those that have adult children and then
grandkids, They actually can distribute

363
00:19:18,945 --> 00:19:20,645
because it's a testamentary trust.

364
00:19:20,935 --> 00:19:25,175
You can distribute to children
under 18 and they are taxed

365
00:19:25,175 --> 00:19:26,935
at normal adult tax rates.

366
00:19:27,235 --> 00:19:30,114
Because normally if you distribute
to children under 18, they can only

367
00:19:30,114 --> 00:19:34,645
get up to 416 before they paying
nearly 50 cents in the dollar tax.

368
00:19:34,784 --> 00:19:36,855
So generally you don't distribute.

369
00:19:37,295 --> 00:19:38,265
Otherwise they can get.

370
00:19:39,105 --> 00:19:41,955
Up to 18, 200 tax free.

371
00:19:42,515 --> 00:19:47,585
So you can have a situation, and
I've had this with clients too, where

372
00:19:47,635 --> 00:19:49,565
they've created testamentary trusts.

373
00:19:49,585 --> 00:19:54,785
And I had one of our clients create a
testamentary trust for four grandchildren.

374
00:19:55,335 --> 00:19:59,125
And for her two adult children, the
four grandchildren, she worked backwards

375
00:19:59,125 --> 00:20:04,304
as to what money would go into there
so that it would earn about 18, 000.

376
00:20:04,305 --> 00:20:06,635
So tax free for each four grandchildren.

377
00:20:06,855 --> 00:20:11,535
So they're earning about 18, 000 a
year on the investment portfolio, which

378
00:20:11,574 --> 00:20:12,735
is paying their private school fees.

379
00:20:13,290 --> 00:20:15,170
the kids were in early primary school.

380
00:20:15,630 --> 00:20:16,870
She also wasn't very well.

381
00:20:16,900 --> 00:20:20,020
So we knew the, the timing was
imminent in the next few years.

382
00:20:20,410 --> 00:20:24,039
So those children were in early
primary school and 20, 000, nearly

383
00:20:24,039 --> 00:20:28,530
20, 000 of their school fees are
now paid for the four grandchildren.

384
00:20:28,859 --> 00:20:33,490
But not only that, when those
grandchildren get to university.

385
00:20:33,909 --> 00:20:37,510
They've got 20, 000 nearly towards
their university or they can

386
00:20:37,510 --> 00:20:38,689
use that for their first home.

387
00:20:38,689 --> 00:20:43,830
So there's some really great planning
that can go on from that perspective

388
00:20:43,889 --> 00:20:45,550
that I think people don't think of that.

389
00:20:45,550 --> 00:20:48,429
So often I'm working, a lot
of my clients are in that.

390
00:20:48,815 --> 00:20:51,285
You know, 30 to 60 year old age.

391
00:20:51,645 --> 00:20:54,325
And then they're often, we're going
through this process and then they're

392
00:20:54,325 --> 00:20:58,555
saying, I need you to speak to my parents,
who their parents, she a bit older that

393
00:20:58,555 --> 00:21:01,985
they say, my parents haven't got that
I'm going to inherit from my parents.

394
00:21:02,405 --> 00:21:06,944
And wouldn't it be great if I can
inherit it and then distribute money to.

395
00:21:07,365 --> 00:21:12,805
My future grandchildren or, you know, so
you've got that part of the tax ability,

396
00:21:13,405 --> 00:21:16,735
but you've also got the asset protection
side of things as well to keep that

397
00:21:16,735 --> 00:21:22,285
wealth in the bloodline and it can be kept
there for 99 years and you've got that.

398
00:21:22,334 --> 00:21:24,795
And that's why I think working with
lawyers, lawyers, when they get our

399
00:21:24,795 --> 00:21:26,685
briefing paper, absolutely love it.

400
00:21:26,685 --> 00:21:31,175
I now have lawyers who actually say to a
client, you've got a complex structure.

401
00:21:31,265 --> 00:21:35,685
Please go speak to Shannon and Bianca at
SMART so that they can put it together.

402
00:21:36,280 --> 00:21:38,720
In, in a language and
it's pictorial as well.

403
00:21:38,750 --> 00:21:40,330
I guess I like pictures.

404
00:21:40,330 --> 00:21:41,570
What I mean by that is that.

405
00:21:42,550 --> 00:21:46,230
A lot of my clients, if I'm reading a
lot of wills and I can't understand it

406
00:21:46,439 --> 00:21:49,929
and I've got my background, how does the
average person understand their wills?

407
00:21:49,939 --> 00:21:54,610
So a lot of them will go through
that kind of process of having the

408
00:21:54,610 --> 00:21:57,470
pictures and, and then we say, well,
how do you want it to be distributed?

409
00:21:57,729 --> 00:21:59,709
And then we draw pictures
on how it's distributed.

410
00:22:00,115 --> 00:22:03,784
And making sure, because not all
assets, as I mentioned earlier,

411
00:22:04,074 --> 00:22:05,365
are included in your will.

412
00:22:05,635 --> 00:22:08,615
So you need to create specific wills.

413
00:22:08,625 --> 00:22:13,754
So with an SMSF, we call it an SMSF
will, you need to create a will that

414
00:22:13,785 --> 00:22:16,640
specifically addresses Those aspects.

415
00:22:16,880 --> 00:22:21,550
And so when we even talk about
what's an estate asset, what's not

416
00:22:21,550 --> 00:22:25,740
an estate asset, an estate asset
is kind of what you own personally.

417
00:22:25,790 --> 00:22:26,780
That's your estate asset.

418
00:22:27,169 --> 00:22:31,780
Non estate assets, your business,
your family trust and those aspects.

419
00:22:31,790 --> 00:22:35,709
So you need to create a
framework around those as well.

420
00:22:35,919 --> 00:22:40,590
And what I like about when we even go
through this briefing paper is I actually

421
00:22:40,590 --> 00:22:42,860
also say to my clients, write up a letter.

422
00:22:43,314 --> 00:22:47,544
Write a letter to explain why you've done,
what are your wishes for your estate?

423
00:22:47,554 --> 00:22:53,584
Because the unfortunate thing is 50
percent of estates these days are

424
00:22:53,584 --> 00:22:58,814
challenged and 70 percent of those
that are challenged are successful.

425
00:22:58,985 --> 00:22:59,834
And why do you think

426
00:22:59,834 --> 00:23:00,564
that is Shannon?

427
00:23:00,644 --> 00:23:03,054
The reason is, and I'll tell
you the number one reason is

428
00:23:03,294 --> 00:23:05,084
because it's not at their expense.

429
00:23:05,814 --> 00:23:09,564
So when an estate is challenged,
guess who pays for it?

430
00:23:09,674 --> 00:23:12,750
Not you or I, who Might
choose to challenge an estate.

431
00:23:13,280 --> 00:23:15,730
The person challenging the
estate doesn't pay for it.

432
00:23:16,240 --> 00:23:18,260
The actual person that
pays for it is the estate.

433
00:23:18,615 --> 00:23:20,555
So it's nearly like a no risk.

434
00:23:20,725 --> 00:23:25,035
So if you have, and I've seen this
many times, a disgruntled child who

435
00:23:25,035 --> 00:23:29,854
may have not spoken to the parents for,
you know, 20 years, they can challenge

436
00:23:29,855 --> 00:23:35,274
the estate and say, I am entitled to
this under the family provision laws.

437
00:23:35,775 --> 00:23:38,855
Which is a special detailed
laws that I am not the expert.

438
00:23:38,855 --> 00:23:41,175
I'm not the lawyer, but gee, I've
learned them as I've gone along.

439
00:23:41,175 --> 00:23:44,895
When I've seen these challenges and
working with lawyers on it, but the

440
00:23:44,895 --> 00:23:49,154
family provisions, people can argue
that I'm entitled to part of this

441
00:23:49,154 --> 00:23:51,085
because I was born into this family.

442
00:23:51,385 --> 00:23:51,895
irrelevant.

443
00:23:51,895 --> 00:23:55,905
I haven't spoken to the family for 20
years, but they can try and they will

444
00:23:55,905 --> 00:23:58,215
be successful in getting something.

445
00:23:58,324 --> 00:24:02,135
So it, it really makes it quite
clear in what you're saying.

446
00:24:02,355 --> 00:24:06,655
Like, we know that people are
living longer nowadays due to

447
00:24:06,734 --> 00:24:08,834
advances in medical technology.

448
00:24:09,165 --> 00:24:12,095
We know that we have blended families.

449
00:24:12,420 --> 00:24:16,780
Families are not, you know, your, your
nuclear kind of set up any longer.

450
00:24:17,100 --> 00:24:21,490
And what's interesting with what I
am hearing you say is, it's not just

451
00:24:21,740 --> 00:24:23,780
death that we need to be considering.

452
00:24:24,050 --> 00:24:29,009
It's how we're actually structuring our
lives now and how we're living, which

453
00:24:29,010 --> 00:24:30,960
will dictate what happens in death.

454
00:24:30,980 --> 00:24:34,670
So, it really isn't just paying attention.

455
00:24:34,824 --> 00:24:38,875
And maybe calling your accountant
at a tax time every financial year.

456
00:24:39,175 --> 00:24:43,665
It's really probably what you're saying
is having those really open conversations

457
00:24:43,665 --> 00:24:49,544
with, you know, someone like yourself
who's a specialist to really work out what

458
00:24:49,544 --> 00:24:51,594
is it that you're working for, really.

459
00:24:52,100 --> 00:24:56,740
Because the only reason why we work is to
earn money, to do what we want to do, and

460
00:24:56,740 --> 00:25:01,560
then, you know, you need that structure
around it to make sure that there's that

461
00:25:01,560 --> 00:25:03,389
framework and that safeguard, don't you?

462
00:25:03,659 --> 00:25:08,389
Oh, absolutely, and you know, it sounds
kind of bad that you're structuring

463
00:25:08,389 --> 00:25:13,345
it so that If there was a divorce, the
money stays in the bloodline, but on

464
00:25:13,345 --> 00:25:17,544
the flip side, unfortunately, with the
divorce rate, the way it is, you know,

465
00:25:17,544 --> 00:25:20,605
you want to protect your children like
that and you want to make sure that

466
00:25:20,645 --> 00:25:24,594
they're still going to be, you know,
okay, you know, there's many other things.

467
00:25:24,594 --> 00:25:26,515
And when we talk about estate assets.

468
00:25:26,795 --> 00:25:30,165
and non estate assets and
actually the blended families.

469
00:25:30,325 --> 00:25:31,685
And they're probably, they're two points.

470
00:25:31,685 --> 00:25:33,325
So I'll touch on both of those.

471
00:25:33,585 --> 00:25:38,094
There are, when I talk about estate
assets and non estate assets and knowing

472
00:25:38,095 --> 00:25:39,465
that your estate may be challenged.

473
00:25:39,475 --> 00:25:42,095
So when we're working with the
lawyers, we're actually going into

474
00:25:42,095 --> 00:25:45,815
this knowing that the estate may be
challenged because 50 percent are.

475
00:25:46,145 --> 00:25:48,855
If I was a lawyer, what's the
number one growing area of law?

476
00:25:49,045 --> 00:25:49,475
Estate.

477
00:25:49,980 --> 00:25:54,580
Because the wealth that's building up
over these years, this is the number

478
00:25:54,580 --> 00:25:58,990
one growing area of estate and of
law is the estate side of things.

479
00:25:59,240 --> 00:26:00,820
And the lawyers are getting paid.

480
00:26:01,039 --> 00:26:02,510
You know, there's no issue.

481
00:26:02,570 --> 00:26:03,530
The lawyers are getting paid.

482
00:26:03,530 --> 00:26:06,369
They don't have an issue with the
arguments going back and forth

483
00:26:06,369 --> 00:26:08,669
because at the end of the day,
the estate is paying for it.

484
00:26:08,670 --> 00:26:11,360
So you can erode an estate very quickly.

485
00:26:11,575 --> 00:26:14,255
Because of that, how can you
protect yourself for some of that?

486
00:26:14,255 --> 00:26:18,135
So we have, if I use some examples,
cause that probably relates more to the

487
00:26:18,135 --> 00:26:19,595
list is when you've got the examples.

488
00:26:19,975 --> 00:26:24,185
So, you know, one of my clients, estranged
son didn't even come to the father's

489
00:26:24,185 --> 00:26:28,655
funeral has not been associated with the
family for the best part of 30 years.

490
00:26:29,015 --> 00:26:34,445
And you've got the other two children and
she was very concerned on her passing.

491
00:26:34,725 --> 00:26:36,405
She said, knowing him, he will.

492
00:26:37,445 --> 00:26:37,865
assets.

493
00:26:37,875 --> 00:26:41,905
And yet I've got my other two children,
adult children, both probably late forties

494
00:26:42,245 --> 00:26:44,545
that have been with the family all along.

495
00:26:44,585 --> 00:26:47,134
So what we've even created on that,
and this is where you can kind of

496
00:26:47,135 --> 00:26:48,324
put the financial advice in it.

497
00:26:48,325 --> 00:26:52,045
And this is why I look at it and
say estate planning is so critical.

498
00:26:52,250 --> 00:26:55,160
In your financial advice and in
your accounting and everything

499
00:26:55,160 --> 00:26:58,640
you're doing, we've actually
even created some investment

500
00:26:58,650 --> 00:27:01,400
bonds that can invest at normal.

501
00:27:01,429 --> 00:27:04,839
And so basically that's like a normal,
I say normal investment as normal

502
00:27:04,849 --> 00:27:07,990
stock investments along the stock
exchange and investing as you would,

503
00:27:08,379 --> 00:27:09,770
but investment bonds have some.

504
00:27:10,095 --> 00:27:12,345
Special tax coating around them.

505
00:27:12,345 --> 00:27:15,685
It's like a little covering on these
bonds, which means if you don't

506
00:27:15,745 --> 00:27:18,995
touch them for 10 years, there's
no tax on the income, there's no

507
00:27:19,095 --> 00:27:23,524
tax on the capital growth, and you
get the tax credit that the company

508
00:27:23,524 --> 00:27:25,024
or in the underlying investments.

509
00:27:25,639 --> 00:27:28,920
Paid at the end of 10 years, but
those can go on for longer and longer.

510
00:27:28,980 --> 00:27:32,930
But what is the really beautiful
thing about them is they are

511
00:27:32,930 --> 00:27:34,629
not part of your estate assets.

512
00:27:34,919 --> 00:27:39,580
So if I use this client as an example,
we, knowing that my particular client

513
00:27:39,639 --> 00:27:41,119
didn't, I say need these funds.

514
00:27:41,119 --> 00:27:45,080
We financially modeled what she needed
in super, what she needed to, you

515
00:27:45,080 --> 00:27:48,709
know, and she's in a kind of like
nearly late eighties, what she needs.

516
00:27:49,050 --> 00:27:51,959
If push came to shove and she needed
more money, she can take these bonds.

517
00:27:51,959 --> 00:27:52,370
Cause you can just.

518
00:27:52,820 --> 00:27:55,750
Grab them and you know, you pay
the tax, but not only that, you

519
00:27:55,750 --> 00:27:56,750
can change the name of them.

520
00:27:56,750 --> 00:27:58,540
So that's going in a
little bit more detail.

521
00:27:58,540 --> 00:28:00,280
We're happy to chat on
another session on that.

522
00:28:00,730 --> 00:28:04,279
So it's not that there's a case of you
locking the money away that she's going

523
00:28:04,280 --> 00:28:07,769
to be destitute and not have, you know,
so there's always that opportunity, but

524
00:28:07,770 --> 00:28:11,889
what we were able to do is take some of
her super and take some of the investment.

525
00:28:12,159 --> 00:28:16,340
Put them into two investment bonds for
the two children, the adult children that

526
00:28:16,350 --> 00:28:20,780
have been, you know, around her whole
life that she wants to get the majority.

527
00:28:21,000 --> 00:28:24,120
So we took all of literally
all of her wealth and did that

528
00:28:24,120 --> 00:28:25,670
between her super and in there.

529
00:28:25,860 --> 00:28:29,209
So that really what's going to be
remaining in her estate is just

530
00:28:29,210 --> 00:28:31,099
the family home at that time.

531
00:28:31,159 --> 00:28:32,289
And when they're in the investment.

532
00:28:32,889 --> 00:28:36,490
Those two adult children have no idea
that those investment bonds exist.

533
00:28:36,860 --> 00:28:40,209
The other part is when you structure
those as part of the estate, no

534
00:28:40,209 --> 00:28:41,850
one else needs to know they exist.

535
00:28:42,149 --> 00:28:46,159
Upon her passing, that child will
get, that adult child, it's not a

536
00:28:46,159 --> 00:28:49,379
child, but that adult child will
be notified that This is your

537
00:28:49,379 --> 00:28:50,740
asset and this is what you've got.

538
00:28:50,770 --> 00:28:54,180
And the same for the two of them,
neither of them in theory will know

539
00:28:54,320 --> 00:28:57,740
that each of them got it and no one
will know them as part of the estate.

540
00:28:58,100 --> 00:29:01,550
So it's really good from an
estate planning perspective

541
00:29:01,619 --> 00:29:02,949
and they cannot be challenged.

542
00:29:03,525 --> 00:29:05,015
They cannot be part of the estate.

543
00:29:05,485 --> 00:29:08,405
And that's interesting because, you
know, that's looking at it from another

544
00:29:08,405 --> 00:29:09,925
perspective and using another technique.

545
00:29:09,925 --> 00:29:14,465
But when we had Greg Russo on, who is a
specialist in wills and estates, a lawyer,

546
00:29:14,735 --> 00:29:19,565
he was also talking about techniques
that, you know, you can use that you

547
00:29:19,565 --> 00:29:24,325
can sell down assets or distribute
assets or income or cash, I should say.

548
00:29:24,855 --> 00:29:30,755
Prior to, you know, if you were diagnosed
with a life limiting illness, so it

549
00:29:30,755 --> 00:29:35,235
isn't part of the estate at the end,
so it doesn't actually rely on the

550
00:29:35,245 --> 00:29:39,275
laws of intestancy to actually, you
know, delivering what has to happen.

551
00:29:39,655 --> 00:29:44,780
So, It really, again, comes back to
the fact that you really need to go

552
00:29:44,780 --> 00:29:49,660
and actually talk to someone about
this sort of thing because you, you

553
00:29:49,700 --> 00:29:53,270
are very well versed in this and you
can, you can reel off all the details,

554
00:29:53,270 --> 00:29:57,640
but it is very much something that
you need to look at each individual

555
00:29:57,640 --> 00:30:00,260
person's unique situation, isn't it?

556
00:30:00,560 --> 00:30:00,820
Oh, absolutely.

557
00:30:00,820 --> 00:30:01,400
And then work out.

558
00:30:02,015 --> 00:30:07,535
What the sort of subtleties are of
that particular family and it seems

559
00:30:07,535 --> 00:30:11,635
to come down to communication and
whether someone is estranged or not

560
00:30:11,635 --> 00:30:16,945
estranged, so it sounds like it's, it's
very much the fact that people need

561
00:30:16,945 --> 00:30:18,735
to be having these conversations now.

562
00:30:19,165 --> 00:30:22,075
And that's where even putting that
letter together on your wishes.

563
00:30:22,705 --> 00:30:26,745
And so even with that particular client,
you could nearly say unwillingly,

564
00:30:26,805 --> 00:30:31,105
but based on advice from the lawyer,
and I say unwillingly, she has

565
00:30:31,105 --> 00:30:33,795
actually set aside 40, 000 for him.

566
00:30:34,240 --> 00:30:38,770
For the estranged so that you know,
so under her wishes, you didn't

567
00:30:38,770 --> 00:30:40,740
turn up to your dad's funeral.

568
00:30:40,880 --> 00:30:42,790
You haven't been in touch
with us for 30 years.

569
00:30:42,790 --> 00:30:44,750
We notified you that your dad was sick.

570
00:30:44,780 --> 00:30:45,900
We've notified all of this.

571
00:30:45,900 --> 00:30:47,000
You've ignored us, et cetera.

572
00:30:47,260 --> 00:30:50,679
Despite all of that,
we're leaving you 40, 000.

573
00:30:50,680 --> 00:30:52,360
So she's got that in her wishes.

574
00:30:52,370 --> 00:30:54,270
Yes, it's in the will,
but she's got her wishes.

575
00:30:54,480 --> 00:30:59,050
So if that is to be challenged
in court, I don't believe.

576
00:30:59,210 --> 00:31:01,690
that he will get based
on the lawyer's advice.

577
00:31:01,870 --> 00:31:05,210
I don't believe you'll get more because
a judge will look at that and say,

578
00:31:05,240 --> 00:31:07,220
well, you haven't had that contact.

579
00:31:07,380 --> 00:31:10,790
You've been provided with 40,
000 where really they're not

580
00:31:10,790 --> 00:31:12,860
obliged to do much more than that.

581
00:31:13,140 --> 00:31:17,020
The other one that is a really challenging
one and why you want to get the advice

582
00:31:17,350 --> 00:31:19,420
is also around the blended families.

583
00:31:20,025 --> 00:31:23,215
And with the blended
families or the other aspect.

584
00:31:23,215 --> 00:31:24,165
So there's probably two parts.

585
00:31:24,165 --> 00:31:28,565
You've got your blended families and
you've also got situations where you may

586
00:31:28,575 --> 00:31:31,085
have wills between, say, husband and wife.

587
00:31:31,465 --> 00:31:35,005
One passes away and the two wills
say that it goes to each other.

588
00:31:35,565 --> 00:31:38,535
And it doesn't provide in theory
for the children because it's

589
00:31:38,535 --> 00:31:39,755
going from husband to wife.

590
00:31:40,035 --> 00:31:40,805
What happens?

591
00:31:40,845 --> 00:31:44,345
And unfortunately I had one of my very
close friends had this exact situation,

592
00:31:44,345 --> 00:31:48,625
which was one of the things that triggered
me about 10 years ago to then start

593
00:31:48,625 --> 00:31:50,755
investigating this estate planning.

594
00:31:50,755 --> 00:31:51,785
How is this even possible?

595
00:31:51,785 --> 00:31:56,335
And then start really getting engaged
in it was her mother had passed away

596
00:31:56,395 --> 00:31:58,615
many years ago, kind of quite young.

597
00:31:58,785 --> 00:32:02,225
And then her father had remarried now.

598
00:32:02,315 --> 00:32:03,775
He then passed away.

599
00:32:03,945 --> 00:32:08,205
All the wealth of the family did not
go on to herself or her siblings.

600
00:32:08,205 --> 00:32:12,985
When her father passed away, it went
to his then new wife who has just

601
00:32:13,125 --> 00:32:16,045
disconnected from the whole family
and taken the wealth with her.

602
00:32:16,045 --> 00:32:21,455
So that would not be what her mother
would have wanted or her father.

603
00:32:21,505 --> 00:32:23,855
I mean, he'd be turning in
his grave as a result of that.

604
00:32:24,075 --> 00:32:27,075
So you need to look, and there
are ways to do that on how to

605
00:32:27,075 --> 00:32:29,755
structure the will so that.

606
00:32:30,065 --> 00:32:34,015
The new wife still gets some benefit
of it, but there's money being left.

607
00:32:34,765 --> 00:32:37,615
which is what would be intended,
you know, on that side.

608
00:32:37,905 --> 00:32:41,505
The other part is also a game with
blended families, you know, with

609
00:32:41,505 --> 00:32:45,045
the blended families, both of the
parents want to make sure that

610
00:32:45,045 --> 00:32:46,215
they're looking after each other.

611
00:32:46,215 --> 00:32:49,735
And now when everyone's alive and
everyone's communicating, that's

612
00:32:49,735 --> 00:32:51,995
all good, but things happen.

613
00:32:52,275 --> 00:32:55,075
And once someone passes, anyone
can change their will tomorrow

614
00:32:55,135 --> 00:32:56,885
and it overrides anything else.

615
00:32:57,315 --> 00:32:58,275
That's been done in the past.

616
00:32:58,285 --> 00:33:01,895
So I think that's where you
want to have open discussions.

617
00:33:02,325 --> 00:33:06,195
And I've worked with a number of
blended families where we go through,

618
00:33:06,265 --> 00:33:08,865
you know, on kind of the briefings,
we know their financial situation.

619
00:33:08,865 --> 00:33:11,505
We know that I leave it to the
lawyers to tell me, how do you

620
00:33:11,505 --> 00:33:12,845
legally make that possible?

621
00:33:13,255 --> 00:33:15,315
But these are the wishes of my client.

622
00:33:15,565 --> 00:33:18,545
How do we make it possible that if
something was to happen to either,

623
00:33:18,725 --> 00:33:21,445
this is what happens to them,
but you need to go through those.

624
00:33:21,475 --> 00:33:24,215
And speaking of these, when you do.

625
00:33:24,475 --> 00:33:28,145
Go through this type of estate
planning, it's not going to be cheap.

626
00:33:28,205 --> 00:33:33,905
Now, when you see the little sandwich
board that says wills 400 will 600.

627
00:33:34,225 --> 00:33:38,455
If the average lawyer is 650 an hour,
how do they do your wills in that?

628
00:33:38,485 --> 00:33:40,725
And this is going to be a bit
of a shock for a lot of people.

629
00:33:40,725 --> 00:33:43,805
And probably some lawyers won't be
happy with me telling you this, but

630
00:33:43,855 --> 00:33:45,275
how can they do it for that price?

631
00:33:45,600 --> 00:33:45,950
Why?

632
00:33:46,430 --> 00:33:52,730
Because the lawyers are allowed to charge
if they prepare your will and in the will.

633
00:33:52,730 --> 00:33:56,930
So anyone listening to this now, go and
grab your latest will out and you're going

634
00:33:56,930 --> 00:34:03,060
to have a look in your will and see if
there's a clause that says, I instruct,

635
00:34:03,160 --> 00:34:08,930
and I'm going to say Joe Bloggs law firm
or any successor law firm, I instruct

636
00:34:09,230 --> 00:34:12,550
to be my executor and manage my estate.

637
00:34:13,130 --> 00:34:14,420
If you have that paragraph.

638
00:34:14,915 --> 00:34:16,185
You need to do something about it.

639
00:34:16,375 --> 00:34:17,295
What does that mean?

640
00:34:17,585 --> 00:34:21,715
Lawyers actually sell their practices
based on basically number of wills,

641
00:34:21,965 --> 00:34:28,185
number of wills that they have, because
if your will instructs the recipients

642
00:34:28,185 --> 00:34:29,965
of the will to go use them as a lawyer.

643
00:34:30,550 --> 00:34:31,620
To manage the estate.

644
00:34:31,630 --> 00:34:35,490
Now, this is the interesting thing is
the Law Institute of Victoria, and you

645
00:34:35,490 --> 00:34:38,720
can Google it, go onto their website,
the Law Institute of Victoria, and it

646
00:34:38,720 --> 00:34:40,960
doesn't have to be in the will there.

647
00:34:40,970 --> 00:34:46,440
The Law Institute allows lawyers to
charge up to 5 percent of the estate.

648
00:34:46,650 --> 00:34:47,690
To manage the estate.

649
00:34:47,990 --> 00:34:48,600
Wow.

650
00:34:48,680 --> 00:34:52,130
And I found out out also from
one of my very close friends

651
00:34:52,610 --> 00:34:54,910
who had an 8 million estate.

652
00:34:54,940 --> 00:34:59,210
They'd had a very large market garden
property, three adult children inherited

653
00:34:59,210 --> 00:35:01,220
in their forties, no one fighting.

654
00:35:01,580 --> 00:35:05,360
And they said to me, yeah,
the lawyers quoted us and said

655
00:35:05,360 --> 00:35:06,790
it's 5 percent of the estate.

656
00:35:06,790 --> 00:35:09,719
And he goes, if I work that
out, that's like 400, 000.

657
00:35:09,720 --> 00:35:11,490
And I said, well, that's ridiculous.

658
00:35:11,550 --> 00:35:13,280
There's no way that you'd
be having to pay that.

659
00:35:13,520 --> 00:35:14,530
Go to another lawyer.

660
00:35:14,875 --> 00:35:19,525
So they went to the other lawyer who
actually said, well, that other lawyer

661
00:35:19,525 --> 00:35:24,275
can challenge the estate because your
dad said you are to use that lawyer.

662
00:35:24,625 --> 00:35:25,055
And.

663
00:35:25,600 --> 00:35:27,900
Lawyers are allowed to charge
up to 5 percent of the estate.

664
00:35:28,190 --> 00:35:29,520
That's under the Law Institute rules.

665
00:35:30,210 --> 00:35:31,480
And that's still the case today.

666
00:35:31,770 --> 00:35:35,590
About two years ago, the Law Institute
put out a notification that lawyers

667
00:35:35,590 --> 00:35:40,360
were not allowed to charge the
percentage as well as a fee for service.

668
00:35:40,585 --> 00:35:42,955
So apparently some lawyers
were double dipping apparently

669
00:35:42,975 --> 00:35:45,805
because now they've made it clear
on the Law Institute website.

670
00:35:46,165 --> 00:35:48,575
So you don't want that paragraph in there.

671
00:35:48,745 --> 00:35:51,695
And I had a client come to me with
their will and they were asking

672
00:35:51,695 --> 00:35:53,565
me a few questions and they were
getting the lawyer and I said, can

673
00:35:53,565 --> 00:35:54,765
you send through the draft will?

674
00:35:54,945 --> 00:35:56,335
And it had that paragraph in it.

675
00:35:56,865 --> 00:35:58,945
So I said to them, go back to the
lawyer and tell them you want that

676
00:35:58,945 --> 00:36:04,445
paragraph removed or you want that
it goes to, you know, a friend or

677
00:36:04,465 --> 00:36:06,425
someone who's going to help facilitate.

678
00:36:06,595 --> 00:36:07,945
finding a lawyer and all of that.

679
00:36:08,295 --> 00:36:11,195
And the lawyer said, well, if
you do that, the legal bill

680
00:36:11,195 --> 00:36:11,955
is going to be a lot higher.

681
00:36:12,245 --> 00:36:13,045
That's okay.

682
00:36:13,415 --> 00:36:18,235
Take the paragraph out and pay what it
actually costs to get the will done.

683
00:36:18,235 --> 00:36:21,875
So just know when you get your will
done properly, it's going to be about

684
00:36:21,875 --> 00:36:26,995
5, 000, you know, to get your wheels,
your superfund wheels, you know, your

685
00:36:26,995 --> 00:36:29,985
enduring power of attorneys and all
of those could be, it's going to be

686
00:36:29,995 --> 00:36:31,975
at least two and a half to three.

687
00:36:32,215 --> 00:36:32,995
If you're paying.

688
00:36:34,425 --> 00:36:35,705
Just check that that wills in it.

689
00:36:35,785 --> 00:36:40,579
If you've gone to the lawyer that had
the sandwich board of the 400 or 450.

690
00:36:40,890 --> 00:36:42,020
That paragraph is in there.

691
00:36:42,080 --> 00:36:43,260
That's where they make their money.

692
00:36:43,360 --> 00:36:45,900
They sell their business based
on the wills under probate.

693
00:36:46,130 --> 00:36:50,750
So a lot of the really good lawyers,
well, I say good lawyers, but they

694
00:36:50,750 --> 00:36:52,230
will charge full fee for service.

695
00:36:53,160 --> 00:36:55,550
Hope that you've had, you know, hope
that you've been happy with the service.

696
00:36:55,550 --> 00:36:58,510
You tell, you know that, but there's
no obligation to go back to them.

697
00:36:58,510 --> 00:37:01,760
So when you're choosing who's that
person that you're going to be putting

698
00:37:01,840 --> 00:37:07,690
in there, it may be a sibling that
you ask to assist with managing that.

699
00:37:07,720 --> 00:37:11,930
It may be a sibling that you say, I
want you to reach out to my sibling

700
00:37:11,950 --> 00:37:15,300
and work with the adult children
to find the most suitable lawyer

701
00:37:15,300 --> 00:37:18,040
and get, you know, get a fee quote
for those lawyers and go through.

702
00:37:18,210 --> 00:37:23,010
I have some clients that put myself
down or Bianca down to say, I want

703
00:37:23,010 --> 00:37:26,760
you to be that one that actually,
you know, have to do an hour's work.

704
00:37:26,790 --> 00:37:30,010
That's what it costs, but you want
someone to facilitate with that.

705
00:37:30,010 --> 00:37:33,190
So it's really important to look
for that clause and make sure

706
00:37:33,190 --> 00:37:34,990
that clause is not in your will.

707
00:37:35,280 --> 00:37:36,200
You know, if you're paying.

708
00:37:36,480 --> 00:37:38,490
cheap, then unfortunately
it's probably in there.

709
00:37:38,630 --> 00:37:41,390
Yeah, it does end up costing
in the end, doesn't it?

710
00:37:41,510 --> 00:37:42,540
It does, yes.

711
00:37:42,870 --> 00:37:47,800
I really like how you were talking
about the writing down of the wishes,

712
00:37:47,830 --> 00:37:52,490
because at that point in time, you
know, they will have only had legal

713
00:37:52,490 --> 00:37:56,470
documents to look at, and legal documents
don't generally provide you context.

714
00:37:56,730 --> 00:37:56,770
Yes.

715
00:37:56,810 --> 00:38:00,390
Whereas at least with that writing
down of the wishes, that provides

716
00:38:00,390 --> 00:38:03,440
context to the reason how and why.

717
00:38:03,895 --> 00:38:07,475
Those documents have been written the way
in which they have, which is sometimes

718
00:38:07,875 --> 00:38:12,025
like the real crux of it is that context
that you need for those legal documents

719
00:38:12,025 --> 00:38:14,115
that sometimes you don't necessarily have.

720
00:38:14,115 --> 00:38:15,755
So I think that's really, really clever.

721
00:38:17,055 --> 00:38:19,365
And we've talked about
testamentary trusts.

722
00:38:19,365 --> 00:38:21,055
We've talked about estates.

723
00:38:21,585 --> 00:38:26,595
Do you have much to do with executors
coming to you when they find themselves

724
00:38:26,595 --> 00:38:29,345
in a situation where a loved one has died?

725
00:38:29,355 --> 00:38:31,925
They've been appointed the executor.

726
00:38:32,540 --> 00:38:35,930
Is there much that you can do at
that stage, or is it really that pre

727
00:38:35,930 --> 00:38:37,960
planning that we need to be focusing on?

728
00:38:38,310 --> 00:38:42,280
Yeah, I would say the pre planning,
sometimes we do get the executors coming

729
00:38:42,280 --> 00:38:46,120
to us more from a, I say more from the
tax side, because what happens when

730
00:38:46,120 --> 00:38:49,390
you do pass, and this is where when
you're trying to pick out the most

731
00:38:49,390 --> 00:38:54,700
appropriate executor, it doesn't always
have to be someone in the family when

732
00:38:54,700 --> 00:38:58,650
you are thinking about that, because
Sometimes it can be quite emotional.

733
00:38:58,870 --> 00:39:02,590
The person you appoint as the executor,
you want actually to be organized.

734
00:39:03,310 --> 00:39:05,780
You want someone to be that they
can actually go through that.

735
00:39:05,980 --> 00:39:07,210
And then also with the emotion.

736
00:39:07,210 --> 00:39:12,030
So I have had some executors even come
to us who are clients of ours saying, I'm

737
00:39:12,030 --> 00:39:15,140
now the executor of my sister's estate.

738
00:39:15,630 --> 00:39:17,060
I have no idea what to do.

739
00:39:17,100 --> 00:39:17,960
And they're an emotional.

740
00:39:18,500 --> 00:39:20,090
You know, record as a result of it.

741
00:39:20,350 --> 00:39:23,780
So being able to get them even some
of that support and being able to go

742
00:39:23,780 --> 00:39:26,990
through that, because they're kind of
managing that estate, maybe they may even

743
00:39:26,990 --> 00:39:29,580
reach out to a lawyer to help do that.

744
00:39:29,600 --> 00:39:32,630
And some of the legal aspects, that's
where I often encourage them to say, look,

745
00:39:32,670 --> 00:39:34,220
let's get a lawyer to help with that part.

746
00:39:34,790 --> 00:39:35,430
I'm not a lawyer.

747
00:39:35,720 --> 00:39:39,220
I'm not the expert at that, but I'll help
you with the taxes side, because when

748
00:39:39,220 --> 00:39:42,840
someone passes away, you've got a few
things to think about that people aren't

749
00:39:42,840 --> 00:39:47,410
aware on the taxes side, you've got the
tax return up until the date of death.

750
00:39:47,805 --> 00:39:49,595
And what are the investment returns?

751
00:39:49,615 --> 00:39:51,015
What is that situation there?

752
00:39:51,375 --> 00:39:54,345
And then you have the
tax return of the estate.

753
00:39:54,935 --> 00:39:58,125
That can go on for usually two
years is when that period to give

754
00:39:58,145 --> 00:40:02,735
the estate time to either sell down
assets or pass those assets through.

755
00:40:03,105 --> 00:40:09,495
And this is a gain where tax advice
is critical because when you're

756
00:40:09,495 --> 00:40:13,875
flowing the assets through how
people potentially inherit those

757
00:40:14,005 --> 00:40:16,155
assets, do you sell the asset down?

758
00:40:16,355 --> 00:40:17,475
Do they inherit them?

759
00:40:17,475 --> 00:40:22,475
Does the estate deem to have
sold the asset and pay tax?

760
00:40:23,105 --> 00:40:25,435
On the asset, say it's
an investment property.

761
00:40:25,485 --> 00:40:26,805
Do they pay tax on it?

762
00:40:27,075 --> 00:40:32,495
And then the individual inherits with
a, what technical term new cost base

763
00:40:32,535 --> 00:40:33,915
of what the value is at that date.

764
00:40:33,985 --> 00:40:38,505
And the tax starts at that point,
or does the person inheriting.

765
00:40:38,920 --> 00:40:42,550
You can actually have, if it's
passed through an estate, they just

766
00:40:42,550 --> 00:40:45,790
inherit the original characteristics
of whatever that asset is.

767
00:40:46,460 --> 00:40:48,680
Now, let's think about where
that would be important.

768
00:40:49,000 --> 00:40:53,220
I've got one I'm dealing with
at the moment where they are

769
00:40:53,260 --> 00:40:54,350
looking to sell a property.

770
00:40:54,740 --> 00:40:55,850
They're in their eighties now.

771
00:40:55,910 --> 00:40:57,720
They inherited it from their mother.

772
00:40:58,150 --> 00:41:00,710
who inherited it years ago as well.

773
00:41:00,940 --> 00:41:05,700
Now, I'm actually going back to the estate
tax returns trying to work out because

774
00:41:06,010 --> 00:41:11,100
the property was originally purchased
in the 1950s before capital gains tax.

775
00:41:11,360 --> 00:41:12,790
The property's worth 12 million now.

776
00:41:12,790 --> 00:41:20,000
Now, if that was inherited before capital
gains tax and if it was throughout the

777
00:41:20,000 --> 00:41:26,480
estates just passed through at original
characteristics, there's no capital gains.

778
00:41:27,055 --> 00:41:29,735
If it wasn't, there is capital gains tax.

779
00:41:29,745 --> 00:41:37,835
So, but this is where the executives
can get advice as to how best Because

780
00:41:38,015 --> 00:41:41,855
if something is subject to tax,
you inheriting it, maybe they don't

781
00:41:41,855 --> 00:41:44,885
want to be inherited knowing that
there's a tax eventually when they

782
00:41:44,885 --> 00:41:47,255
sell, they might want to inherit it.

783
00:41:47,275 --> 00:41:51,165
No, I just want the tax paid up
till that date and then inherit it.

784
00:41:51,305 --> 00:41:54,595
If it's got a pre capital
gains tax, you want to do that.

785
00:41:54,645 --> 00:41:56,325
And also what about the planning?

786
00:41:56,325 --> 00:42:00,355
If you've got the family home that you're
inheriting versus the investment property,

787
00:42:00,355 --> 00:42:01,765
they're both worth a million dollars.

788
00:42:02,250 --> 00:42:04,710
They're both worth a million
dollars and you've got two kids,

789
00:42:04,770 --> 00:42:07,740
two adult kids saying, great,
well, we'll just take a house each.

790
00:42:07,930 --> 00:42:09,100
I know what house I want.

791
00:42:09,360 --> 00:42:13,160
I want the house that was the main
residence of the person that passed away.

792
00:42:13,160 --> 00:42:14,110
There's no tax on that.

793
00:42:14,470 --> 00:42:17,760
The other one might take the 1
million house and not realize

794
00:42:17,980 --> 00:42:19,930
underneath is capital gains.

795
00:42:20,450 --> 00:42:23,940
Tax up until that point that they're
inheriting and taking with them.

796
00:42:23,940 --> 00:42:28,400
So that's where we can work really
well at that point in time to

797
00:42:28,400 --> 00:42:33,710
make sure that you're not also
creating future unforeseen problems.

798
00:42:34,080 --> 00:42:37,700
You know, two siblings, they've inherited
a house, each of a million dollars.

799
00:42:37,900 --> 00:42:40,720
It's not really a million
dollars with no tax.

800
00:42:41,060 --> 00:42:44,720
The other one got it a million dollars
with, let's just say there's approximately

801
00:42:44,740 --> 00:42:48,240
200, 000 tax because of, you know,
they've owned the property 10 years.

802
00:42:48,760 --> 00:42:49,550
So they've only inherited.

803
00:42:49,910 --> 00:42:51,010
800, 000.

804
00:42:51,110 --> 00:42:55,820
So you want to make sure that You
know, the tax was then paid by the

805
00:42:55,820 --> 00:42:59,400
estate and somehow split, you know,
so those kind of things that I think

806
00:42:59,990 --> 00:43:04,360
often get overlooked when you don't
have a tax person and that financial

807
00:43:04,360 --> 00:43:06,090
advice person assisting with that.

808
00:43:06,130 --> 00:43:09,810
And that's why I always say that, you
know, incorporating your wills, when

809
00:43:09,810 --> 00:43:14,186
we've actually put wills together for
clients, we will actually sit down

810
00:43:14,186 --> 00:43:16,130
with the client's adult children.

811
00:43:16,470 --> 00:43:20,410
You know, any children over 18 or can
be younger, but I think more, you know,

812
00:43:20,470 --> 00:43:23,120
when they're adult children and say,
this is what the world looks like.

813
00:43:23,120 --> 00:43:25,330
This is what it is at that time.

814
00:43:25,330 --> 00:43:28,200
We hope we're not talking to
you for a very long time because

815
00:43:28,200 --> 00:43:31,250
nothing happens, but you need to
keep in the back of your mind.

816
00:43:31,640 --> 00:43:33,370
This is why you've got
a testamentary trust.

817
00:43:33,370 --> 00:43:34,580
We're protecting you from yourself.

818
00:43:35,170 --> 00:43:36,240
We're protecting you from that.

819
00:43:36,460 --> 00:43:38,310
This is why we've done
this with your parents.

820
00:43:38,740 --> 00:43:41,790
And you need to keep this in the
back of your mind that this is why

821
00:43:41,800 --> 00:43:45,510
it's been structured so that you may
forget that by that time, but you

822
00:43:45,540 --> 00:43:46,810
need to make sure you get advice.

823
00:43:46,810 --> 00:43:50,500
And that's why we always say to our
clients, you need to incorporate

824
00:43:50,820 --> 00:43:55,880
in your estate, in your will, that
it is a requirement that those

825
00:43:55,900 --> 00:43:57,220
that are inheriting your estate.

826
00:43:57,490 --> 00:44:03,190
Must seek legal and accounting
advice before it is distributed.

827
00:44:03,260 --> 00:44:07,110
And that makes it very clear, the example
you just gave then, Shannon, about the

828
00:44:07,110 --> 00:44:11,460
fact that the example of the 1 million
houses, and you think that they're

829
00:44:11,510 --> 00:44:15,760
both the same, but it's not until you
actually really speak to an expert that

830
00:44:15,760 --> 00:44:22,775
you go, Oh, I'm getting 200, 000 less
or effectively a 200, 000 tax bill.

831
00:44:22,775 --> 00:44:26,934
Yes, you don't think
about it until you sell.

832
00:44:26,935 --> 00:44:29,995
But then you then realize and you go, but
I thought we had a million dollars each.

833
00:44:30,455 --> 00:44:34,325
So, and the other siblings
probably has no idea.

834
00:44:34,715 --> 00:44:37,165
If a client came to me and said
I've got the choice of these two

835
00:44:37,165 --> 00:44:38,565
properties, which one should I take?

836
00:44:38,585 --> 00:44:40,495
I'll be telling them which
one to take, you know,

837
00:44:40,605 --> 00:44:41,175
yeah.

838
00:44:41,675 --> 00:44:45,535
And that's what's so important
to, and that's a great example to

839
00:44:45,535 --> 00:44:49,065
say, like, if you are inheriting
something, go and see someone.

840
00:44:49,565 --> 00:44:49,885
Yeah.

841
00:44:49,885 --> 00:44:53,095
Because I had a client that just
said to me, I'm not sure if I'm

842
00:44:53,095 --> 00:44:56,685
supposed to do something, but I'm
inheriting a hundred thousand from

843
00:44:56,765 --> 00:45:01,245
my dad's super from CBUS just from,
you know, and I've just received a

844
00:45:01,245 --> 00:45:02,535
check for a hundred thousand dollars.

845
00:45:02,575 --> 00:45:03,215
What do I do?

846
00:45:03,685 --> 00:45:04,535
And I said, well.

847
00:45:04,760 --> 00:45:10,540
Just know that they haven't withheld
tax that will go onto your ATO portal

848
00:45:10,550 --> 00:45:13,810
and you're getting a payment summary
and you're going to pay tax on that.

849
00:45:14,530 --> 00:45:15,870
And it's going to be about 17%.

850
00:45:15,890 --> 00:45:17,420
And I said, well, that's good
to know because otherwise

851
00:45:17,560 --> 00:45:19,000
I would have spent it all.

852
00:45:19,330 --> 00:45:23,910
Now I know I shouldn't spend about 17,
000 of it because I'm going to have tax at

853
00:45:23,910 --> 00:45:28,410
the end because sometimes the executives
look, it's, I'm sure it's in the fine

854
00:45:28,410 --> 00:45:32,575
print of the letter that they send, you
know, To know, but that's where it's

855
00:45:32,605 --> 00:45:34,795
advisable to get that kind of advice.

856
00:45:35,095 --> 00:45:39,335
But also if you are inheriting some
of this money that you're inheriting

857
00:45:39,625 --> 00:45:42,525
can be life changing for people.

858
00:45:43,365 --> 00:45:47,605
Now, when you get that, what
are you going to do to make sure

859
00:45:47,605 --> 00:45:49,255
it's longterm life changing?

860
00:45:49,715 --> 00:45:54,395
What are you going to do with it so that
you make an informed decision that, you

861
00:45:54,395 --> 00:45:56,845
know, you're not just going to spend
it on the new car, put the pool in.

862
00:45:57,190 --> 00:45:57,970
Do all of these things.

863
00:45:58,100 --> 00:46:01,590
What else can you be doing to make
sure that you've got the tax effective

864
00:46:01,590 --> 00:46:04,290
side, the asset protection, but also
how can you make sure that you're

865
00:46:04,290 --> 00:46:07,240
actually creating something that
maybe you don't go spend it all.

866
00:46:07,240 --> 00:46:09,850
Maybe you invest it and you
get a certain amount each year.

867
00:46:10,200 --> 00:46:14,840
You know, I know when my husband and I
inherited from, unfortunately, his father

868
00:46:14,850 --> 00:46:19,540
had passed away when my husband was in
his thirties, when his mother passed away.

869
00:46:19,790 --> 00:46:22,650
And so we decided to
get that and invest it.

870
00:46:23,030 --> 00:46:24,700
And we use that for our
school kids, school fees.

871
00:46:25,380 --> 00:46:30,940
We think that she would be absolutely
wrapped to know that she has paid

872
00:46:30,940 --> 00:46:32,140
for the grandkids school fees.

873
00:46:33,150 --> 00:46:33,570
Yeah, that's a

874
00:46:33,640 --> 00:46:34,350
really lovely thing.

875
00:46:34,370 --> 00:46:34,610
And

876
00:46:34,620 --> 00:46:36,500
will continue to then pay the uni.

877
00:46:36,500 --> 00:46:39,210
So that has been how we structured it.

878
00:46:39,820 --> 00:46:43,380
It made sense investment wise,
but also for us, it felt good.

879
00:46:43,825 --> 00:46:48,115
To know our kids know that as well,
that, you know, that's how they've

880
00:46:48,115 --> 00:46:50,135
been able to go to a great school.

881
00:46:50,475 --> 00:46:53,685
You know, we could have put the pool
in, we could have done all of those

882
00:46:53,685 --> 00:46:58,525
things, but being able to actually
assign it to something that also

883
00:46:58,525 --> 00:47:01,775
feels good and has a lasting impact.

884
00:47:02,145 --> 00:47:02,975
on our kids.

885
00:47:03,025 --> 00:47:04,515
That's a lifetime impact, isn't it?

886
00:47:04,525 --> 00:47:05,045
To do that.

887
00:47:05,215 --> 00:47:05,475
Yeah.

888
00:47:05,475 --> 00:47:09,675
And what a beautiful legacy that
she's given to them through you.

889
00:47:10,125 --> 00:47:10,355
Yeah.

890
00:47:10,365 --> 00:47:13,375
Which she doesn't know, but I'm sure if
she's looking, then she does, you know.

891
00:47:13,515 --> 00:47:13,955
Yeah.

892
00:47:14,145 --> 00:47:15,655
Makes us feel good to know.

893
00:47:16,005 --> 00:47:19,165
And we could have made different
decisions with that money at that time,

894
00:47:19,355 --> 00:47:21,005
especially when we did inherit that.

895
00:47:21,015 --> 00:47:24,965
That was now, unfortunately, she
passed away two months before

896
00:47:25,005 --> 00:47:26,335
my oldest was actually born.

897
00:47:26,910 --> 00:47:29,870
So she never got to meet the
grandchildren and he's nearly 20.

898
00:47:30,190 --> 00:47:34,170
So it's nearly 20 years ago, but you
know, it makes us feel good to know

899
00:47:34,200 --> 00:47:37,220
that that's what we did from day
dot so that that was going to put

900
00:47:37,280 --> 00:47:39,290
their kids through a great school.

901
00:47:39,330 --> 00:47:44,880
And so they're the types of things that
estate planning and inheriting the money.

902
00:47:45,570 --> 00:47:50,090
There's just so many good things
that can come out of a really tragic

903
00:47:50,210 --> 00:47:55,640
situation that with planning and the
advice can just make a difference,

904
00:47:55,770 --> 00:47:57,080
you know, a difference for the future.

905
00:47:57,120 --> 00:48:00,280
I mean, at that time, 20 years ago,
honestly, that money on our mortgage would

906
00:48:00,280 --> 00:48:05,670
have been Fabulous, but I am so glad we
made the decision that we did to not put

907
00:48:05,670 --> 00:48:10,130
that money on our mortgage and put that
aside to invest and pay for our kids.

908
00:48:10,130 --> 00:48:14,100
School fees like that now was
the smartest decision we made.

909
00:48:14,100 --> 00:48:16,740
Hence my business is called
smart, but it's funny.

910
00:48:16,740 --> 00:48:17,750
You make those decisions.

911
00:48:17,750 --> 00:48:19,850
You don't realize how
smart they are at the time.

912
00:48:20,130 --> 00:48:22,840
But yes, that would have been
really nice on our mortgage, but I

913
00:48:22,890 --> 00:48:24,350
am so wrapped with that decision.

914
00:48:24,350 --> 00:48:27,410
And that's where I think if you're doing
your estate planning and looking at

915
00:48:27,410 --> 00:48:28,810
that, there's so many things you can do.

916
00:48:28,840 --> 00:48:32,070
And then if you're on the flip side of
inheriting, it's not just about what

917
00:48:32,070 --> 00:48:33,750
you're going to do with the money per se.

918
00:48:33,750 --> 00:48:36,160
It's what's going to be
better for your family.

919
00:48:36,160 --> 00:48:39,010
And our kids know that their grandparents.

920
00:48:39,315 --> 00:48:40,335
paid for their school fees.

921
00:48:40,625 --> 00:48:44,055
And I think, well, I'll come back to
business owners in a moment because

922
00:48:44,055 --> 00:48:46,905
we, we've touched a little bit on
that, but I'd really like to talk about

923
00:48:46,905 --> 00:48:51,955
what we can do in relation to business
continuity plans and things like that.

924
00:48:52,145 --> 00:48:56,115
But just capping off on, on
really sort of like more of a

925
00:48:56,165 --> 00:48:57,635
personal and a state matter.

926
00:48:58,315 --> 00:49:02,815
So things that some people may not be
aware of is that superannuation does

927
00:49:02,815 --> 00:49:04,225
not actually form part of the SSI.

928
00:49:04,805 --> 00:49:09,275
So that's an interesting aspect that I
think comes as a surprise to many people.

929
00:49:09,865 --> 00:49:14,055
And when we think of superannuation, like
that is the largest sum of money most

930
00:49:14,055 --> 00:49:16,135
of us will ever accumulate in our life.

931
00:49:17,405 --> 00:49:19,445
So can you talk a little bit about that?

932
00:49:19,465 --> 00:49:23,395
And also the other way in which I
think a lot of people receive money

933
00:49:23,435 --> 00:49:27,155
when someone dies is also through
life insurance policies as well.

934
00:49:27,505 --> 00:49:30,095
So what sort of things have
you seen around that Shannon?

935
00:49:30,385 --> 00:49:31,445
that you can help us with.

936
00:49:31,615 --> 00:49:34,525
Well, so definitely that's a really
good point because the life insurance

937
00:49:34,545 --> 00:49:36,175
often is held by the super fund.

938
00:49:36,175 --> 00:49:39,765
It may not be, but my recommendation would
be that you would have it in your super.

939
00:49:40,465 --> 00:49:44,515
But if that goes into your super, some
people think, oh, well, maybe how much

940
00:49:44,515 --> 00:49:46,055
money I've got in super is not that much.

941
00:49:46,055 --> 00:49:49,465
When you add your life insurance policy
in there, there can be a really so, so

942
00:49:49,465 --> 00:49:51,765
some people say, well, I haven't got that
much that people are going to inherit.

943
00:49:51,765 --> 00:49:54,825
And we put the life insurance in there
and you're like, well, actually you do

944
00:49:55,235 --> 00:49:58,975
have a lot of money that is potentially
going to be inherited as part of that.

945
00:49:59,015 --> 00:49:59,215
And.

946
00:49:59,530 --> 00:50:04,120
The other challenge I've seen with
superannuation and life insurance

947
00:50:04,200 --> 00:50:08,210
is the fact that people don't
update who the recipient of that is.

948
00:50:08,650 --> 00:50:13,920
So I have unfortunately seen, and
there's been nothing that in some clients

949
00:50:13,920 --> 00:50:18,810
case they've been able to do, the life
insurance has been to the ex spouse.

950
00:50:19,455 --> 00:50:23,055
And not the current spouse because
no one updated their superannuation.

951
00:50:23,455 --> 00:50:24,065
And so it's gone.

952
00:50:24,305 --> 00:50:27,165
There is nothing that
can be done in that case.

953
00:50:27,275 --> 00:50:31,875
You would only hope that the good nature
of the ex would be to give it to the

954
00:50:31,875 --> 00:50:37,135
appropriate person, but I have seen
situations where the ex has inherited

955
00:50:37,585 --> 00:50:42,225
all of those and the adult children
have been left out of all of that.

956
00:50:42,765 --> 00:50:48,495
And so, you know, it's making sure that
you and, you know, anyone listening

957
00:50:48,505 --> 00:50:51,015
now go and get your superannuation.

958
00:50:51,025 --> 00:50:54,375
Have a look at if you're with a retail
fund, which is the retail industry

959
00:50:54,375 --> 00:50:55,735
fund, which is your kind of general.

960
00:50:55,735 --> 00:50:56,915
So it's not self managed super.

961
00:50:57,345 --> 00:51:01,335
Have a look and see what your binding
death benefit nomination says.

962
00:51:01,595 --> 00:51:03,975
You're probably going to say, I
don't even know what a binding

963
00:51:03,975 --> 00:51:05,125
death benefit nomination is.

964
00:51:05,125 --> 00:51:06,789
I'm sure I've never
filled out one of those.

965
00:51:06,790 --> 00:51:10,850
You probably did the first day you set
up that superfund 20 years ago, that you

966
00:51:10,850 --> 00:51:14,290
put it to your best friend or whoever
else you did at that part time or, or the

967
00:51:14,290 --> 00:51:18,450
boyfriend back then at that time, go and
have a look at that and make sure that's

968
00:51:18,460 --> 00:51:20,890
going to the person you want it to do.

969
00:51:20,890 --> 00:51:23,170
And this is where we look
at even blended families.

970
00:51:23,390 --> 00:51:26,160
We'll often say, well, why don't
you, you've got your family home,

971
00:51:26,160 --> 00:51:27,320
you've got blended families.

972
00:51:27,530 --> 00:51:29,800
Why not put your super
to your adult children?

973
00:51:29,810 --> 00:51:32,360
Why not put your life insurance
to your adult children?

974
00:51:32,370 --> 00:51:35,540
If you've got the family home
with that blended situation.

975
00:51:35,590 --> 00:51:39,960
So this is where you then
know upon your passing.

976
00:51:40,320 --> 00:51:43,260
That your blended family spouse is
still going to be able to live in the

977
00:51:43,260 --> 00:51:48,310
house that you jointly held, but your
life insurance is going to your kids.

978
00:51:48,340 --> 00:51:50,320
Your superannuation is going to your kids.

979
00:51:50,330 --> 00:51:54,820
So these are the types of things that
really need from a personal perspective

980
00:51:55,090 --> 00:51:58,340
to make sure you're checking because
often people are checking them or

981
00:51:58,340 --> 00:52:01,910
they're not and it's coming up too
late and there's nothing they can do.

982
00:52:02,505 --> 00:52:03,575
from that perspective.

983
00:52:03,825 --> 00:52:08,255
And that doesn't actually involve
a lawyer or a financial advisor.

984
00:52:08,355 --> 00:52:10,375
It's just something that
you can go and check.

985
00:52:10,895 --> 00:52:12,905
You go and check and
you can do it yourself.

986
00:52:13,435 --> 00:52:18,075
You know, so that is something you can
split it to your two kids two ways.

987
00:52:18,115 --> 00:52:19,655
You can split it three ways.

988
00:52:20,185 --> 00:52:22,635
Whichever way, but you
can do that right now.

989
00:52:23,095 --> 00:52:26,945
And many times when I've actually just at,
you know, barbecue chatted about this, I

990
00:52:26,945 --> 00:52:30,095
can see people already scrambling, trying
to look up their super to see what it is.

991
00:52:30,715 --> 00:52:35,155
Because these are little things that can
make a really, really big difference,

992
00:52:35,265 --> 00:52:38,075
you know, and, and again, especially
in the blended family situation.

993
00:52:38,425 --> 00:52:38,765
You know.

994
00:52:39,015 --> 00:52:39,595
Yeah.

995
00:52:40,065 --> 00:52:43,645
And now let's remove our
focus to business owners.

996
00:52:44,105 --> 00:52:49,415
So what I found rather amazing is
that there's not a lot of information

997
00:52:49,545 --> 00:52:54,955
out there, you know, on Business
Victoria or really anything about what

998
00:52:54,965 --> 00:52:57,425
happens when a business partner dies.

999
00:52:57,725 --> 00:53:00,065
How do you finalize the business?

1000
00:53:00,345 --> 00:53:02,425
How do you go about a
business continuity plan?

1001
00:53:02,455 --> 00:53:04,545
There's not a lot of
information out there.

1002
00:53:04,875 --> 00:53:05,155
Yeah.

1003
00:53:05,265 --> 00:53:05,665
So.

1004
00:53:05,975 --> 00:53:06,955
What do we do?

1005
00:53:07,305 --> 00:53:07,565
Yes.

1006
00:53:07,605 --> 00:53:09,235
So there's a few situations on that.

1007
00:53:09,235 --> 00:53:14,465
Now, if you are a sole business
owner, so the sole director, you

1008
00:53:14,465 --> 00:53:18,185
really need to think about what
we call is a successor director.

1009
00:53:18,655 --> 00:53:20,195
And actually you might
be a sole business owner.

1010
00:53:20,195 --> 00:53:21,515
You might have a spouse as well.

1011
00:53:21,765 --> 00:53:23,935
And you think that if something
happened to you, that's okay.

1012
00:53:23,935 --> 00:53:26,565
My spouse can jump in and be the director.

1013
00:53:26,605 --> 00:53:26,985
Guess what?

1014
00:53:27,095 --> 00:53:28,545
They actually cannot be.

1015
00:53:28,795 --> 00:53:32,215
The director, unless we have a
successor director, successor

1016
00:53:32,215 --> 00:53:35,365
director, your accountant should
be able to assist you with that.

1017
00:53:35,365 --> 00:53:38,445
I'll go, probably not all accountants
know about it, but you should be able

1018
00:53:38,445 --> 00:53:41,765
to, that is a document that you're
saying, if something was to happen to

1019
00:53:41,765 --> 00:53:44,525
me, this person is a successor director.

1020
00:53:44,555 --> 00:53:45,875
They take over as director.

1021
00:53:45,925 --> 00:53:48,815
Now they may not want to
run your business, but they

1022
00:53:48,815 --> 00:53:49,915
can get professional advice.

1023
00:53:50,005 --> 00:53:52,335
But at least you've got
someone who can still.

1024
00:53:52,630 --> 00:53:54,950
Access the bank account because
I can go to the bank and say,

1025
00:53:55,040 --> 00:53:56,550
I am the successor director.

1026
00:53:56,890 --> 00:54:00,620
I need access to that bank account
so I can keep paying those staff.

1027
00:54:00,960 --> 00:54:05,950
Now I know of a situation and I had the
people come to me after it happened and

1028
00:54:05,950 --> 00:54:08,910
they weren't a client of mine, but I've
had some of the people associated with

1029
00:54:08,960 --> 00:54:10,880
the business come to me after it happened.

1030
00:54:11,310 --> 00:54:17,300
50 year old business owner passed away, 40
employees, no successor director in place.

1031
00:54:17,300 --> 00:54:19,440
How do we pay the staff?

1032
00:54:19,720 --> 00:54:20,780
What do we do?

1033
00:54:20,830 --> 00:54:22,180
How do we keep the business going?

1034
00:54:22,550 --> 00:54:25,950
You know, and then you have to
go to the court to go and get

1035
00:54:26,390 --> 00:54:28,780
the authority to, to be that.

1036
00:54:28,780 --> 00:54:32,220
Now, the reason an accountant would
not just say, Oh, you're the spouse.

1037
00:54:32,320 --> 00:54:36,260
I'm going to put you on as a
successive director, because about

1038
00:54:36,260 --> 00:54:39,780
two years ago, an accountant was
taken to court for doing that thinking

1039
00:54:39,780 --> 00:54:40,670
they were doing the right thing.

1040
00:54:40,670 --> 00:54:42,190
I've just put the wife on
so that we can do this.

1041
00:54:42,770 --> 00:54:46,550
And you've actually had others
challenge it and they were

1042
00:54:46,640 --> 00:54:47,850
told you didn't have authority.

1043
00:54:48,045 --> 00:54:49,855
They didn't have a
successor director in place.

1044
00:54:50,165 --> 00:54:51,135
So you have to do that.

1045
00:54:51,135 --> 00:54:54,295
We really strongly recommend how
everyone has a successor director.

1046
00:54:54,715 --> 00:54:58,735
Now, let's just say that you are in
business partnership with someone, whether

1047
00:54:58,735 --> 00:55:01,815
it's an official partnership per se, or
it's a company you've got shareholding.

1048
00:55:02,385 --> 00:55:06,745
I only recommend anytime there's
more than one business owner in it.

1049
00:55:06,805 --> 00:55:08,955
And you may actually do this
even if you're a sole business

1050
00:55:09,185 --> 00:55:13,435
owner, but you actually go and get
what we call buy sell insurance.

1051
00:55:13,865 --> 00:55:18,495
Now, buy sell insurance means that
if something happens to, from a life

1052
00:55:18,535 --> 00:55:23,475
TPD, could also be a trauma event,
but if something happens to one of the

1053
00:55:23,485 --> 00:55:28,275
business owners, there is an insurance
policy that pays an amount, the

1054
00:55:28,285 --> 00:55:30,505
value of their share of the business.

1055
00:55:30,815 --> 00:55:33,875
So what happens is, the shares
in the business will go to

1056
00:55:33,875 --> 00:55:35,765
the remaining business owner.

1057
00:55:35,885 --> 00:55:40,095
So they end up owning the whole business,
through no cost to them to have to buy,

1058
00:55:40,135 --> 00:55:41,305
because they may not have the funds.

1059
00:55:41,755 --> 00:55:44,765
If something happens, they don't
have the funds to pay the family out.

1060
00:55:45,315 --> 00:55:48,145
Well, if they don't have the funds to pay
the family out, what does the family do?

1061
00:55:48,145 --> 00:55:49,985
They're getting nothing for the business.

1062
00:55:50,115 --> 00:55:54,095
Or there could be games that go on, which
I've seen a number of times as well.

1063
00:55:54,425 --> 00:55:56,875
So if you've got the buy, sell insurance.

1064
00:55:57,230 --> 00:56:00,500
where you've got, and it gets updated each
year based on the value of the business.

1065
00:56:00,780 --> 00:56:04,370
You can have a buy sell then agreement,
please make sure you do the agreement

1066
00:56:04,370 --> 00:56:06,800
and don't just get the insurance
because I've seen that and people

1067
00:56:06,800 --> 00:56:09,940
have been able to double dip because
they didn't have the agreement, but

1068
00:56:09,940 --> 00:56:14,580
you have a buy sell insurance that
basically pays the shareholder.

1069
00:56:15,470 --> 00:56:20,220
Of those shares or units, that will be
the family that the person that's passed,

1070
00:56:20,310 --> 00:56:25,560
let's just say passed, or had a TPD event,
so, or a trauma event, they get the money.

1071
00:56:25,560 --> 00:56:29,800
So let's just say the business was
worth a million dollars, so each of the

1072
00:56:29,890 --> 00:56:34,990
shareholders had insurance up to 500,
000 to cover theirs, business owner A

1073
00:56:35,300 --> 00:56:40,170
passes away, business owner A's family,
or the shareholder, might be their family

1074
00:56:40,170 --> 00:56:44,230
trust, gets 500, 000 from the insurance
company, the value of the business.

1075
00:56:44,735 --> 00:56:45,325
They get that.

1076
00:56:45,335 --> 00:56:50,035
So their family is okay because
their family may not want to run

1077
00:56:50,035 --> 00:56:54,365
the business and still own half
the business business owner be it.

1078
00:56:54,375 --> 00:56:57,745
That may be the worst nightmare to
have business owner A's family come

1079
00:56:57,745 --> 00:57:01,615
in and run the business, you know,
so they've actually been able to get.

1080
00:57:02,255 --> 00:57:05,565
The whole business through no
additional funds that they may not

1081
00:57:05,565 --> 00:57:07,775
have had to buy out that family.

1082
00:57:08,085 --> 00:57:12,375
So both families end up in a
good financial position and I've

1083
00:57:12,375 --> 00:57:14,675
seen that situation pan out.

1084
00:57:15,155 --> 00:57:19,345
And what has been, I guess I say,
beautiful about that situation is

1085
00:57:19,585 --> 00:57:23,865
that it doesn't lead to any anger, any
fighting over money and that because.

1086
00:57:24,390 --> 00:57:28,980
Family A is grieving, did get the
money for the value of the business

1087
00:57:29,390 --> 00:57:32,080
and they're able to move on in life
and they didn't want the business.

1088
00:57:32,370 --> 00:57:37,300
Family B will also be grieving at
the loss of the business partner,

1089
00:57:37,600 --> 00:57:40,510
but they have still got the business
and haven't had to struggle and

1090
00:57:40,510 --> 00:57:43,730
financially find how they're going to
buy the other share of the business.

1091
00:57:44,110 --> 00:57:47,600
So it's buy sell insurance, but
you really need to make sure

1092
00:57:47,660 --> 00:57:49,230
because I've seen this many times.

1093
00:57:49,600 --> 00:57:51,650
Where someone will come to me as
a new client, they'll be like, Oh,

1094
00:57:51,650 --> 00:57:52,850
yes, we've got buy sell insurance.

1095
00:57:52,850 --> 00:57:53,150
We're all good.

1096
00:57:53,150 --> 00:57:56,000
I'm like, and so the buy sell agreement,
what do you mean an agreement?

1097
00:57:56,420 --> 00:58:00,090
If you don't have an agreement,
the insurance policy is normally

1098
00:58:00,090 --> 00:58:01,640
in the shareholder's name.

1099
00:58:02,140 --> 00:58:03,920
Now they may have the business pay for it.

1100
00:58:03,950 --> 00:58:06,580
And then we put that through the
director's loan, a few little

1101
00:58:06,580 --> 00:58:10,440
accounting terms there, but it's
in usually the shareholder's name.

1102
00:58:10,640 --> 00:58:15,540
If you don't have the agreement,
guess what family A's gets the money.

1103
00:58:15,935 --> 00:58:19,075
Because that's the insurance policy,
but there's no obligation for

1104
00:58:19,075 --> 00:58:21,680
them to Change the shareholding.

1105
00:58:21,680 --> 00:58:22,990
So they just got a double dip.

1106
00:58:23,100 --> 00:58:24,390
That wasn't the intention.

1107
00:58:24,730 --> 00:58:28,280
Now you would hope they do the right
thing, but when money gets involved, I

1108
00:58:28,280 --> 00:58:30,340
can tell you people act very differently.

1109
00:58:30,430 --> 00:58:34,680
Business owner A and B may have got along
famously, but maybe their partners don't.

1110
00:58:35,070 --> 00:58:39,190
So you need buy sell insurance
and a buy sell agreement.

1111
00:58:39,200 --> 00:58:42,650
So we facilitate clients with
doing all of that as well to make

1112
00:58:42,650 --> 00:58:43,570
sure you've got that in place.

1113
00:58:43,880 --> 00:58:47,875
Now I've actually had situations
where also single business owners.

1114
00:58:48,405 --> 00:58:53,735
have actually had in a sense, kind of a
buy sell where they've had insurance on

1115
00:58:53,735 --> 00:58:59,845
themselves that if something was to happen
to them, there is insurance in place that

1116
00:58:59,845 --> 00:59:05,115
will enable the money for the value of the
business kind of to go to the family and

1117
00:59:05,115 --> 00:59:07,565
for the business to get a management in.

1118
00:59:07,785 --> 00:59:10,905
So that's kind of a revenue
replacement or a capital replacement.

1119
00:59:10,905 --> 00:59:15,135
So a few little technical terms, but
it's making sure and we always discuss

1120
00:59:15,135 --> 00:59:16,975
it with clients if this happened.

1121
00:59:17,285 --> 00:59:17,865
What would happen?

1122
00:59:17,915 --> 00:59:18,525
What would you do?

1123
00:59:18,525 --> 00:59:19,575
What would you like to happen?

1124
00:59:19,625 --> 00:59:21,445
If this happened, what
would you like to happen?

1125
00:59:21,485 --> 00:59:26,045
So, you know, because if the single
business owner was to pass away.

1126
00:59:26,455 --> 00:59:27,625
What happens to the business?

1127
00:59:27,925 --> 00:59:31,955
The business needs money to put
management in place straight away and

1128
00:59:31,955 --> 00:59:36,395
to have cash to survive that there will
be a drop in revenue probably because

1129
00:59:36,405 --> 00:59:38,135
maybe that key person isn't there.

1130
00:59:38,465 --> 00:59:43,375
So it's this insurance to have that
in place can be really important

1131
00:59:43,455 --> 00:59:47,815
around that to not have the stress
because the family may be very reliant

1132
00:59:47,815 --> 00:59:49,085
on that income from the business.

1133
00:59:49,085 --> 00:59:52,905
But the key person in the business
goes away being the business owner.

1134
00:59:53,545 --> 00:59:55,105
Maybe the revenue drops overnight.

1135
00:59:55,385 --> 00:59:57,555
Maybe the revenue drops over six months.

1136
00:59:57,565 --> 01:00:01,175
Maybe there's enough in the pipeline
and employees, it keeps going for six

1137
01:00:01,175 --> 01:00:02,775
months and after that it drops down.

1138
01:00:02,775 --> 01:00:06,605
So they're the kind of conversations
that are not fun to have with clients

1139
01:00:06,605 --> 01:00:11,245
but I'd rather have that than not have
it because I have unfortunately had

1140
01:00:11,255 --> 01:00:16,915
to see these insurance policies come
into play and whilst I always call

1141
01:00:16,945 --> 01:00:19,305
insurance, it's like a necessary evil.

1142
01:00:19,315 --> 01:00:20,695
We all hate paying insurance.

1143
01:00:20,945 --> 01:00:25,950
When I see It happening, it's life
changing for the families that are

1144
01:00:25,950 --> 01:00:30,230
behind, especially when most of them
don't even know that they had the

1145
01:00:30,230 --> 01:00:33,360
insurance policies, they've forgotten
about it, they were never aware.

1146
01:00:34,030 --> 01:00:37,380
These are life changing to make
sure that you're leaving, you

1147
01:00:37,380 --> 01:00:38,900
know, leaving things in a way.

1148
01:00:39,100 --> 01:00:42,090
And look, what you want, I always say
to clients, I want you to get to a

1149
01:00:42,090 --> 01:00:43,260
position where you're self insured.

1150
01:00:43,685 --> 01:00:46,115
Where you get to a point where
you cancel all your insurance

1151
01:00:46,135 --> 01:00:50,025
policies and you're self insured
and you don't need them anymore.

1152
01:00:50,035 --> 01:00:52,825
And you know, my husband and
I are fortunate to have got

1153
01:00:52,825 --> 01:00:53,965
ourselves to that position.

1154
01:00:53,975 --> 01:00:57,785
However, I refused to cancel my
life insurance because I thought

1155
01:00:57,815 --> 01:00:59,125
Murphy's Law if I cancel it.

1156
01:00:59,605 --> 01:01:00,445
Something might happen.

1157
01:01:00,455 --> 01:01:02,925
So I'm not canceling my life insurance.

1158
01:01:03,215 --> 01:01:04,705
I'm going to keep that one there.

1159
01:01:04,705 --> 01:01:05,965
I don't want to jinx myself.

1160
01:01:06,365 --> 01:01:08,995
I can't believe that you're
so superstitious, Shannon.

1161
01:01:08,995 --> 01:01:09,825
That's amazing.

1162
01:01:10,455 --> 01:01:11,785
I'm just not doing my husband's life.

1163
01:01:11,825 --> 01:01:12,515
That's crazy.

1164
01:01:12,515 --> 01:01:13,265
I'm like, no, no, no.

1165
01:01:13,765 --> 01:01:16,715
So I'm going to keep my life insurance
and I'm going to keep that going.

1166
01:01:17,185 --> 01:01:21,215
But you want to get to a point where
your insurance literally has then

1167
01:01:21,225 --> 01:01:23,685
been the biggest waste of money
because you haven't needed to use it.

1168
01:01:24,255 --> 01:01:28,755
That's what you want, but it protected
at a time when had you wanted to

1169
01:01:28,755 --> 01:01:33,005
use it, it can be life changing for
families that I've seen where we've

1170
01:01:33,005 --> 01:01:37,075
had situations with, you know, a 37
year old mother of two passing away,

1171
01:01:37,355 --> 01:01:39,565
you know, and what happens then.

1172
01:01:39,585 --> 01:01:42,165
And it's been life changing
for some of those clients.

1173
01:01:42,185 --> 01:01:45,805
So I want it to be the biggest waste of
money because you've never had to use it.

1174
01:01:46,435 --> 01:01:49,225
But it was there should
something have happened.

1175
01:01:49,465 --> 01:01:53,645
And look, I could totally, you
know, be testifying to that because

1176
01:01:53,645 --> 01:01:57,475
of, you know, I was with the Royal
Botanic Gardens for 13 years.

1177
01:01:57,755 --> 01:02:01,715
I signed, you know, documents
for my superannuation years ago

1178
01:02:01,755 --> 01:02:03,295
when I first started with them.

1179
01:02:03,305 --> 01:02:07,935
And Then, I don't know, for some reason
I looked at it again a few years ago,

1180
01:02:07,935 --> 01:02:12,295
I think when we got married and I was
so glad I did that I updated everything

1181
01:02:12,665 --> 01:02:16,955
because when I had my car accident in
2019, you know, the things that came into

1182
01:02:16,955 --> 01:02:19,585
play there was the income protection.

1183
01:02:19,815 --> 01:02:24,065
Insurance that I had through my
superannuation then, you know that lasted

1184
01:02:24,065 --> 01:02:29,295
for two years, which was just brilliant
And then it was the you know, the TPD

1185
01:02:29,295 --> 01:02:33,125
that you're referring to It's the total
and permanent disability payout that I

1186
01:02:33,125 --> 01:02:37,515
received, you know and the superannuation
as part of that and these are things

1187
01:02:37,515 --> 01:02:39,440
that I never really thought about it.

1188
01:02:39,440 --> 01:02:43,030
It was a document, you know, you were
mentioning earlier how it was a document

1189
01:02:43,040 --> 01:02:47,890
that people sign that they never really
pay attention to ever again, and I

1190
01:02:47,890 --> 01:02:52,140
was just so happy that I had actually
revised everything and, and, you know,

1191
01:02:52,170 --> 01:02:56,225
it's making sure also that When you
look at these insurance policies that

1192
01:02:56,225 --> 01:03:00,655
it actually, you do pay attention to the
fine print and it's actually making sure

1193
01:03:00,655 --> 01:03:03,985
you have allowed yourself enough money
to cover your running costs if you're

1194
01:03:03,985 --> 01:03:08,095
running a business or, you know, cover
your weekly budget or whatever, because

1195
01:03:08,375 --> 01:03:12,405
there may be a time, and it doesn't
have to be death, you know, it may be a

1196
01:03:12,405 --> 01:03:17,245
time where you just actually need, you
know, to rely and apply for those and

1197
01:03:17,285 --> 01:03:19,135
you'll be very happy you did, people.

1198
01:03:19,215 --> 01:03:19,865
Happy you did.

1199
01:03:20,095 --> 01:03:20,495
Yes, exactly.

1200
01:03:20,515 --> 01:03:22,135
I can tell you very much so.

1201
01:03:23,225 --> 01:03:26,385
And what happens when it comes to
when you think of like a sole trader?

1202
01:03:26,395 --> 01:03:31,795
Cause a lot of the examples you've
given have been a PTYLTD company.

1203
01:03:32,255 --> 01:03:35,425
So what about things that a sole
trader may need to consider?

1204
01:03:35,915 --> 01:03:40,695
Yeah, look, I guess also, well, even
having someone that then can be, you know,

1205
01:03:40,695 --> 01:03:43,765
and that might be an under a power of
attorney and you're in power of attorney,

1206
01:03:43,945 --> 01:03:47,385
because that's kind of covering the
legal and financial aspect of things that

1207
01:03:47,385 --> 01:03:49,025
they, you know, they're the sole trader.

1208
01:03:49,550 --> 01:03:53,540
You know, you want someone who can keep
doing things with your business and

1209
01:03:53,540 --> 01:03:56,980
making sure that if you do have these
aspects, because, you know, I've even seen

1210
01:03:56,990 --> 01:04:02,520
situations where people have tried to sue
the wife related to then the business,

1211
01:04:02,920 --> 01:04:04,600
you know, after the person's passed away.

1212
01:04:04,600 --> 01:04:07,030
I mean, there are evil
people out there, honestly.

1213
01:04:07,250 --> 01:04:10,280
So you want to make sure you've got
those types of things in play and

1214
01:04:10,300 --> 01:04:12,070
the sole trader can be challenging.

1215
01:04:12,605 --> 01:04:15,405
A lot of people might have
income protection, you know,

1216
01:04:15,405 --> 01:04:16,465
look, income protection.

1217
01:04:16,465 --> 01:04:19,315
And this is where you want to try and make
sure that you've got the right insurance,

1218
01:04:19,655 --> 01:04:22,035
a sole trader with income protection.

1219
01:04:22,035 --> 01:04:26,065
Let's face it, the average person,
they'll be nearly like half dead

1220
01:04:26,065 --> 01:04:28,275
before they actually stopped
working when they're a sole trader.

1221
01:04:28,525 --> 01:04:29,825
They're going to keep working and that.

1222
01:04:30,015 --> 01:04:33,625
So how valuable is that money you're
paying on this income protection?

1223
01:04:33,945 --> 01:04:35,205
How valuable is that?

1224
01:04:35,355 --> 01:04:39,705
What else can you put in play to
protect yourself that if you can't work?

1225
01:04:39,725 --> 01:04:43,065
Because it's really hard for you to
prove that you're a sole trader and

1226
01:04:43,065 --> 01:04:44,355
now you can't, you're not working.

1227
01:04:44,365 --> 01:04:47,795
If you're an employee or employee
of your business, it's very easy

1228
01:04:47,805 --> 01:04:50,135
to say, well, I'm not working
and that's why I can claim this.

1229
01:04:50,675 --> 01:04:53,715
That's where you've got to look at it
from those aspects and making sure that

1230
01:04:53,715 --> 01:04:57,415
you've got those types of things in
place, but the enduring power of attorney

1231
01:04:57,415 --> 01:05:01,155
is something you can from a legal and
financial, you don't have that success of

1232
01:05:01,155 --> 01:05:05,055
director, you know, with a sole trader,
but that actually gives a framework

1233
01:05:05,345 --> 01:05:10,085
to say, if something was to happen to
me, I want this person to be able to

1234
01:05:10,085 --> 01:05:12,795
step in on my business side of things.

1235
01:05:12,795 --> 01:05:16,035
You might have someone else or however you
want to structure that just to make sure.

1236
01:05:17,035 --> 01:05:19,125
That you've got that
kind of in play as well.

1237
01:05:19,435 --> 01:05:22,525
And I suppose the other thing is that
we haven't talked about, and it's not

1238
01:05:22,525 --> 01:05:26,875
necessarily something that falls under
your area of specialty, but it's also

1239
01:05:26,905 --> 01:05:31,945
having those information documented that
what you do, so other people can step into

1240
01:05:31,945 --> 01:05:35,605
those places when you're not there and
you're not functioning and you may not.

1241
01:05:37,030 --> 01:05:41,610
It's actually having, you know, your
role and what you do and the roles of

1242
01:05:41,610 --> 01:05:45,930
other people within your organization
documented so we can have some sort

1243
01:05:45,930 --> 01:05:47,810
of idea when we do have to step up.

1244
01:05:48,130 --> 01:05:50,210
Yeah, and it's, it's
funny systems and process.

1245
01:05:50,210 --> 01:05:52,910
Look, I started work as a
15 year old at McDonald's.

1246
01:05:52,920 --> 01:05:55,190
So I have been trained on
how to systemize my business.

1247
01:05:55,190 --> 01:05:58,390
My business is systemized
to the extent of McDonald's.

1248
01:05:58,795 --> 01:06:01,425
And actually, I will give you
to put in the show notes a link

1249
01:06:01,475 --> 01:06:03,435
to the platform that I use.

1250
01:06:03,755 --> 01:06:06,585
It's a little plug for him, but I
look, it's, I've been using it for

1251
01:06:06,595 --> 01:06:08,785
six, seven years, this system hub.

1252
01:06:08,805 --> 01:06:12,985
And I'll give you that because it
had been a game changer for us in

1253
01:06:13,015 --> 01:06:16,510
even systemizing, you know, I've
got over 20 staff now we need.

1254
01:06:16,780 --> 01:06:20,740
Things to be systemized using videos
and being able to write things up

1255
01:06:20,740 --> 01:06:21,860
because people are different learners.

1256
01:06:22,180 --> 01:06:27,380
And so you some want the video so they can
visualize it, but also the written notes.

1257
01:06:27,380 --> 01:06:29,950
And how can you use chat
GPT to help you with that?

1258
01:06:29,960 --> 01:06:32,800
So I'm going to give you some
links to put in, but people should

1259
01:06:32,800 --> 01:06:34,000
be systemizing your business.

1260
01:06:34,020 --> 01:06:37,880
Now, a lot of people go to start doing
that, and we actually, it's ironically

1261
01:06:37,880 --> 01:06:40,830
say that we, we actually are working
with clients to help them systemize

1262
01:06:40,830 --> 01:06:43,270
their business because a lot of them
say, Oh, I'm going to, or it's too hard.

1263
01:06:43,580 --> 01:06:44,000
Okay.

1264
01:06:44,030 --> 01:06:45,710
Most business owners are wearing 10 hats.

1265
01:06:45,940 --> 01:06:46,580
I get that.

1266
01:06:46,610 --> 01:06:50,260
I used to wear 10 hats, but
slowly over time, I'm passing

1267
01:06:50,260 --> 01:06:51,700
those hats to different people.

1268
01:06:52,150 --> 01:06:55,390
Now, as you go through your business,
you might say, great, I'm going to

1269
01:06:55,390 --> 01:06:57,610
systemize just this piece of my business.

1270
01:06:57,700 --> 01:06:59,930
And I'm going to give
myself two months to do it.

1271
01:07:00,110 --> 01:07:03,380
Don't try and conquer the world all at
once, which is what we all try and do.

1272
01:07:03,380 --> 01:07:05,030
I like to try and do everything at once.

1273
01:07:05,040 --> 01:07:08,570
And then I realized, I got 90 percent
of everything done and nothing finished.

1274
01:07:08,900 --> 01:07:13,170
So try and pick out one piece and go,
I am going to systemize this piece of

1275
01:07:13,170 --> 01:07:15,330
my business and here's how to do it.

1276
01:07:15,340 --> 01:07:19,510
So I'm going to give you those links
because that was a game changer for me

1277
01:07:19,710 --> 01:07:24,770
on being able to systemize my business
quickly, where I always thought,

1278
01:07:24,840 --> 01:07:25,950
Oh, but this is going to take me.

1279
01:07:25,965 --> 01:07:29,485
Days to work out how to systemize
it and to give a framework.

1280
01:07:29,485 --> 01:07:32,255
So that was, I think I've been
using it for six, seven years,

1281
01:07:32,615 --> 01:07:35,595
and it was a game changer for me
to really systemize my business.

1282
01:07:35,875 --> 01:07:40,235
Well, to the extent now, and
everyone in our office uses it.

1283
01:07:40,385 --> 01:07:42,195
If people update the processes.

1284
01:07:42,305 --> 01:07:45,055
As things change, cause software's
changed, then we need to change

1285
01:07:45,095 --> 01:07:46,705
something, but you're right.

1286
01:07:46,715 --> 01:07:51,235
Systemizing your business and having those
aspects, because what you want to do is

1287
01:07:51,245 --> 01:07:53,095
make yourself redundant in your business.

1288
01:07:53,325 --> 01:07:56,915
Have it so that, and if you
do that, you then can delegate

1289
01:07:56,915 --> 01:07:57,865
that part of your business.

1290
01:07:57,875 --> 01:07:59,575
So I'll give you those details.

1291
01:07:59,575 --> 01:08:01,635
I think that's really great
for the listeners to do it.

1292
01:08:01,945 --> 01:08:06,885
A business that is systemized
is worth more to sell.

1293
01:08:06,895 --> 01:08:11,085
So if something was to happen to
you, And you want the best then

1294
01:08:11,455 --> 01:08:14,915
for your family and you want your
baby, your business is your baby.

1295
01:08:15,145 --> 01:08:18,945
You want that to continue
having that systemized and

1296
01:08:18,945 --> 01:08:21,005
having that legacy continue on.

1297
01:08:21,565 --> 01:08:24,485
You're going to put yourself,
your family and your business

1298
01:08:24,485 --> 01:08:25,975
in a better position as well.

1299
01:08:26,005 --> 01:08:28,605
So that's a really, really important step.

1300
01:08:29,170 --> 01:08:30,530
Well, that's fantastic, Shannon.

1301
01:08:30,530 --> 01:08:35,970
Is there anything else that you would like
to share as your last bit of wisdom to us?

1302
01:08:36,180 --> 01:08:40,090
Yeah, look, I just think taking the
time to actually think about these

1303
01:08:40,110 --> 01:08:43,340
aspects because it's often something
that's put on the back burner.

1304
01:08:43,390 --> 01:08:44,370
Okay, I'll do my wills.

1305
01:08:44,450 --> 01:08:45,890
I will do it at some point in time.

1306
01:08:45,920 --> 01:08:49,240
I will do my you know, estate
planning, or I've done my wills.

1307
01:08:49,240 --> 01:08:51,300
I got my will kit and I
just, you know, did that.

1308
01:08:51,600 --> 01:08:55,070
No, take a time to actually
think, what are all my assets?

1309
01:08:55,290 --> 01:08:56,350
What do we have?

1310
01:08:56,540 --> 01:08:59,150
How do I want it to be distributed?

1311
01:08:59,220 --> 01:09:03,520
And then get the professional
advice, see it as an investment.

1312
01:09:03,540 --> 01:09:04,970
You know, how often do you update it?

1313
01:09:04,970 --> 01:09:08,250
Look, you know, you update it
when major things changes, but

1314
01:09:08,250 --> 01:09:09,890
at the very least get something.

1315
01:09:10,215 --> 01:09:14,915
in place that is reflective of what you
want now and in a really good structure.

1316
01:09:14,955 --> 01:09:18,335
And because maybe these updates, maybe
you don't need to update it that often.

1317
01:09:18,415 --> 01:09:21,845
If there hasn't been any major changes,
maybe you've got new assets and you

1318
01:09:21,845 --> 01:09:24,575
can make the will loosely enough.

1319
01:09:24,595 --> 01:09:27,035
You know, I've had some clients
that have had one child.

1320
01:09:27,035 --> 01:09:28,045
They know they're going to have more.

1321
01:09:28,335 --> 01:09:31,195
We incorporate, you know, we get the
lawyer too, cause I'm not the lawyer

1322
01:09:31,455 --> 01:09:35,555
to incorporate into the will that this
then applies to additional children

1323
01:09:35,555 --> 01:09:38,695
that come in because you don't want
to be paying the larger lawyer fees.

1324
01:09:38,850 --> 01:09:41,570
every few years to get this
updated, but you also want to

1325
01:09:42,230 --> 01:09:43,340
update it if that makes sense.

1326
01:09:43,350 --> 01:09:47,070
So, you know, making sure that you can
incorporate some of those, but get it

1327
01:09:47,070 --> 01:09:51,280
in place because again, going to my,
why am I keeping my life insurance?

1328
01:09:51,300 --> 01:09:54,610
I figure if I've got all of that
sorted, I won't probably have

1329
01:09:54,620 --> 01:09:55,910
to need it for a very long time.

1330
01:09:56,480 --> 01:10:00,090
So if I got all of my estate planning
in place, so maybe, you know, it's

1331
01:10:00,090 --> 01:10:02,850
just one of those things that, you
know, I feel like if you're always

1332
01:10:02,850 --> 01:10:04,380
going to do it and I don't know.

1333
01:10:04,430 --> 01:10:11,405
So you just don't want to put that burden
On to those that that and make sure

1334
01:10:11,405 --> 01:10:13,395
they're all looked after, you know, so

1335
01:10:14,275 --> 01:10:18,745
because you know, what we've been talking
about is, you know, you need a lot of

1336
01:10:18,755 --> 01:10:20,505
headspace to get your head around it.

1337
01:10:20,745 --> 01:10:24,075
And that's the one thing that we know
that when you've lost a loved one.

1338
01:10:25,020 --> 01:10:28,320
That is not something that you have
the capability or the capacity for.

1339
01:10:28,330 --> 01:10:31,910
So it's much better to actually do
all of that before you really need it.

1340
01:10:31,960 --> 01:10:32,140
It's

1341
01:10:32,140 --> 01:10:35,800
just funny the number of times when we've
gone through this process and clients

1342
01:10:35,800 --> 01:10:37,660
have said, we're preparing our wheels.

1343
01:10:37,680 --> 01:10:42,970
And this has been a really, really
enjoyable process and their peace of mind.

1344
01:10:43,690 --> 01:10:45,980
They know they've got all the
entities they know exactly.

1345
01:10:45,980 --> 01:10:46,350
I think the.

1346
01:10:46,940 --> 01:10:50,300
Having the pictures and going through and
following the flow chart and what would

1347
01:10:50,300 --> 01:10:53,760
that look like and things like that, the,
you know, the peace of mind that it can

1348
01:10:53,760 --> 01:10:58,370
give you in going through knowing we hope
never to have to use it for such a long

1349
01:10:58,370 --> 01:11:02,160
time, but it's there and it's, it's done.

1350
01:11:02,625 --> 01:11:02,845
Yeah.

1351
01:11:02,875 --> 01:11:03,325
Yeah.

1352
01:11:03,455 --> 01:11:04,425
And that's it, you know.

1353
01:11:04,885 --> 01:11:06,645
You just have to review
it every few years.

1354
01:11:06,645 --> 01:11:07,195
That's it.

1355
01:11:07,455 --> 01:11:07,795
Yep.

1356
01:11:08,345 --> 01:11:08,515
Yeah.

1357
01:11:08,515 --> 01:11:08,875
Yeah.

1358
01:11:09,295 --> 01:11:11,635
Well, thank you so much for
being with us today, Shannon.

1359
01:11:11,635 --> 01:11:12,755
I've really appreciated it.

1360
01:11:13,215 --> 01:11:13,235
Yeah.

1361
01:11:13,245 --> 01:11:15,575
Thanks very much for having
me and allowing to talk all

1362
01:11:15,575 --> 01:11:16,545
about things that I love doing.

1363
01:11:18,275 --> 01:11:18,795
Thanks, Shannon.

1364
01:11:21,550 --> 01:11:24,970
We hope you enjoyed today's
episode of Don't Be Caught Dead,

1365
01:11:25,280 --> 01:11:26,850
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1366
01:11:27,800 --> 01:11:32,060
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1367
01:11:32,060 --> 01:11:33,980
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1368
01:11:34,160 --> 01:11:36,560
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1369
01:11:36,700 --> 01:11:39,440
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1370
01:11:39,690 --> 01:11:43,820
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1371
01:11:43,820 --> 01:11:45,530
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1372
01:11:45,860 --> 01:11:47,240
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1373
01:11:47,330 --> 01:11:48,320
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1374
01:11:48,320 --> 01:11:52,250
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1375
01:11:52,250 --> 01:11:58,470
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