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This year’s Federal Budget covers a range of measures aiming to reduce the pressure from increased costs of living and help more people into homes. Note: These changes are proposals only and may or may not be made law. Personal taxation Cost of living tax offset: The Low and Middle Income Tax Offset (LMITO) will increase, providing an additional $420 to reduce tax payable for eligible taxpayers in the 2021/22 financial year. This offset is non-refundable and available to those earning up to $126,000 per annum. However, individuals earning over $126,000 per annum will not benefit. Further, LMITO was not extended, meaning it will not apply for the 2022/23 or later financial years. Halving of fuel excise: For six months from 12:01am 30 March 2022, the excise on fuel and petroleum-based products will be halved. Whilst not a direct tax, the expectation is this should result in lower fuel prices during this period. Half the current excise on fuel and diesel is 22.1 cents per litre. Indexation of the Medicare Levy thresholds: The Medicare Levy low-income thresholds are indexed each year. From 1 July 2021, the thresholds are expected to be as follows: For singles $23,365 (increased from $23,226) For families $39,402 (increased from $39,167) plus $3,619 per dependent (increased from $3,597) For single seniors and pensioners $36,925 (increased from $36,705) For family seniors and pensioners $51,401 (increased from $51,094) plus $3,619 per dependent (increased from $3,597) Home ownership Affordable housing measures: The First Home Loan Deposit Scheme and Family Home Guarantee allow eligible individuals to purchase a home with as little as a 2% deposit, and the Government will guarantee the loan removing the need for lenders mortgage insurance. Currently, guarantees are limited to 10,000 per year. From 1 July 2022, changes to the existing home guarantee schemes will be made by allocating a total of 50,000 guarantees as follows: 35,000 places under the First Home Guarantee (formerly the First Home Loan Deposit Scheme) 5,000 places under the Family Home Guarantee targeting single parents regardless of any previous home ownership 10,000 places under a new Regional Home Guarantee targeting individuals who have not owned a home in five years who relocate to a regional location and can supply a 5% deposit. The Family Home Guarantee and Regional Home Guarantee places are provided until 30 June 2025, whilst the 35,000 First Home Guarantee places are proposed to continue indefinitely. Business taxation Small business training deductions: The Government is proposing to allow a deduction of 120% of eligible costs incurred in training staff in small businesses (ie businesses with an aggregated annual turnover less than $50 million). Generally, training must be delivered by an external registered training organisation in Australia and is only deductible if it relates to employees. For example, if an employer pays an external training company $5,000 to deliver eligible training to its employees, the employer can deduct $6,000 in its tax return. This measure is proposed to apply from 29 March 2022 to 30 June 2024. Small business technology deductions: Small businesses may be eligible to deduct up to 120% of eligible business costs which support the business adopting digital technologies, such as cloud services or cyber security systems. Eligible expenditure will be capped at $100,000 per financial year and the measure is expected to operate from 29 March 2022 to 30 June 2023. Changes to Pay As You Go (PAYG) instalments: The Government proposes to allow PAYG instalments for businesses to be calculated from approved software systems, based on current financial performance from 1 January 2024, subject to industry feedback. This aims to calculate more accurately withholding rather than having businesses wait until they have lodged a tax return to receive a refund of over-withheld amounts. Increase to JobTrainer: The Government has proposed an additional 15,000 places in their JobTrainer program, which provides free or subsidised vocational training in select industries such as aged care and disability support. Superannuation Continuation of the reduced minimum pension drawdown: The budget proposes to extend the minimum amount that needs to be drawn from account-based income streams to the 2022/23 financial year. This means individuals with account-based pensions or term allocated pensions will be required to draw less from their savings, in line with the current year minimums. Social Security Cost of living payment: Eligible social security recipients resident in Australia will receive a one-off $250 payment in April 2022. Eligible payments include the Age Pension, Disability Support Pension, Carer Payment and Allowance, JobSeeker Payment (and equivalent DVA payments), as well as individuals holding a Pensioner Concession Card or Commonwealth Seniors Health Card. Like previous relief, the payments will not be means tested and will be tax-free. Individuals will only receive one payment even if they receive multiple qualifying benefits. Paid parental leave changes: Parental leave pay is proposed to be combined with Dad and Partner Pay resulting in a single scheme of up to 20 weeks leave which can be shared between parents as they see fit. This leave can be taken at any time within two years of birth or adoption. The new payment is proposed to be subject to an additional household income test designed to increase eligibility. Single parents are also expected to be able to access an additional two weeks of leave. Lowering the Pharmaceutical Benefits Scheme (PBS) safety net: From 1 July 2022, the Government proposes the PBS safety net to come into effect earlier, with 12 fewer scripts being required for concessional patients and 2 fewer scripts for general patients each calendar year before the safety net activates. Once within the safety net, concessional patients do not pay for PBS medicines whilst general patients only pay the concessional co-payment rate (currently $6.80 per script). Source: IOOF

Being more engaged with your super investments could help you make the most of the time you have to grow your wealth for retirement – and navigate share market falls. Depending on your life stage, it can be helpful to remember that you’ll likely have time to ride out changeable market conditions to generate investment returns over the long term. Markets regularly experience volatility for various reasons as we’ve already seen this year, with inflation climbing and expectations rising that the RBA will lift interest rates in Australia and that the Federal Reserve will start to increase interest rates in the US. History shows us that markets do recover from disruptive influences – for example, the Global Financial Crisis. In the decade following the crisis, global share markets recovered and delivered returns of roughly 10% per annum to investors. Last year, markets also experienced volatility due to the Coronavirus, concerns about interest rates and geopolitics. However, investors in share markets were rewarded over the year as markets recovered from the steep declines experienced in early 2020 – with Australian and global shares delivering exceptionally strong returns of 17.5% and 25.8% respectively in 2021. Market volatility can present investors with investment opportunities when maintaining a long-term view of investing. For example, buying into share markets when they’re down (and cheaper) could mean the value of those investments rises when markets recover over time. But this doesn’t mean you should buy anything and everything that’s on sale. A company’s share price may be falling because of other factors (such as a management change) that could erode its long-term potential. It’s important to consider these factors and to be confident that a company’s value will rise in the future. At the same time, it can still be sensible to continue budgeting and saving for a rainy day – particularly in the current environment, where regular day-to-day life may be disrupted. Having a separate savings fund can offer some peace of mind in uncertain times, especially when our day-to-day lives can be impacted at short notice and as we have seen over the last two years. It’s generally recommended that super fund members stick with their long-term strategy and ride out short-term volatility in financial markets. But while investing for super can often require a long-term view, it isn’t a set-and-forget scheme. Retirement may feel like a long time away if you’re navigating and building your finances. Being more engaged with your fund now – even in simple ways – could be helpful later on in life when you do reach retirement. Things you can do include: regularly reading fund updates staying up-to-date on the latest market developments regularly reviewing your super fund to ensure it aligns with your unique risk profile and financial objectives as your personal circumstances change. Source: Colonial First State

The days when ‘green’ investors were the ones who cycled to see their adviser and carried home their investment brochures in a hemp bag are long gone (if they ever existed). Responsible Investing is now the preferred approach for a growing base of investors. As of January 2021, 30% of all professionally managed assets – owned by pension, superannuation and managed funds across the globe – used some combination of Environment, Social and Governance (ESG) or Responsible Investing criteria. That’s around $30 trillion dollars’ worth of assets. Behaving responsibly How did we get here? As often occurs with major trends, there’s a mix of forces pulling in the same direction. Institutions. Many of the world’s biggest managers of money understand the power and attraction of Responsible Investing. That includes the world’s largest for-profit investment management companies, plus huge pension fund managers like California Public Employees’ Retirement System (CALPERS) and the Japanese Government Pension Fund and major charitable foundations like the Ford or Rockefeller Foundations. Generational change. Today, many young people want to invest in a way that aligns with their values. With an estimated $2.6 trillion set to transfer across the generations in Australia in the next 20 years it’s likely a large proportion of that money will be invested responsibly. Sheer weight of money will encourage investment houses to offer a better and wider range of Responsible Investing options. Returns. Perhaps most importantly, as Responsible Investing evolves, there’s more evidence that you don’t need to sacrifice returns. And that’s important. A Perpetual survey of advised High Net Worth investors found 31% wanted their adviser to avoid all companies that do harm to the environment or society. The same amount wanted to invest in the companies that simply generated the best return. A Complex Responsibility? The tide of history – and money – is moving towards Responsible Investing, but attitudes to sustainability and ESG issues are complex. How to invest responsibly – and successfully Now that Responsible Investing is entrenched, the question for many investors is not “should I do it” – but “how do I do it?” Over the past five years we’ve seen a trend away from funds that screen out companies with undesirable features towards an integrated – and active – approach where investment managers consider environmental, social and governance (ESG) factors alongside assessments of the company’s finances, market position and management. A key to this approach is ‘materiality’ – making sure you invest in companies focused on the ESG issues that matter to their business (for example water management for a mining company) rather than just trying to “do good.” Some argue that the Responsible Investing space is an area where fund manager skill can make a real difference. “We think an active approach is more effective in the Responsible Investing segment,” says Sarah Fox, a Senior Research Analyst in Perpetual Private’s investment management team. “For a start, an active approach means we can better manage risk and diversification. More importantly, it’s reductive to focus just on excluding companies that don’t meet our ESG criteria. We’d rather make forward-looking judgements and focus on companies that are changing their approach or innovating and investing in Research & Development to build products and services that have a socially positive effect. As those initiatives gain traction – and are recognised by the market – they can turn into investment returns that really make a difference for our clients.” “The key point for our investors is that the fund managers that own these companies are at the very least generating a market return, but the goal is to beat the market over the long term,” says Sarah Fox. “So we are happy to invest in these funds – not just because they are ESG.” Source: Perpetual

Negotiating a pay rise or salary package is nerve wracking at the best of times, let alone during a pandemic. And, while you should always ask for what you think you’re worth, the economic climate may prevent you from getting it. Slow wage growth has been an issue in Australia for several years, even before the COVID-19 pandemic sent it tumbling to a record low of 1.4 per cent in 2021. Fortunately, employers are increasingly offering non-financial benefits to help entice employees to join or stay with their business. If your company has a wage freeze in place, and you don’t expect to be granted a raise this year, it might be time to think outside the box. Here’s some things to keep in mind when you’re negotiating non-financial benefits. How to negotiate better employee benefits Identify which benefits you want most Before approaching your employer, think about the benefits that would be most valuable to you. What would enhance your lifestyle and wellbeing? What would you be happy to accept in lieu of a pay rise (at this time)? The perk that’s consistently rated as the most desirable in Australia is flexible working hours. Whether you need to balance family commitments, study, a side hustle or just want the chance to exercise and recuperate after work, employees value having the ability to choose the hours they work. Seek research also has found that time in lieu, the ability to work from home, health insurance and subsidised education and training courses are among our top five most desired benefits. If these don’t appeal, you might want to consider asking for extra annual, sick or carers leave, health and wellness programs, employee share options, a better commission structure, even a new job title. Whatever is most important to you is worth asking for. Understand what you have to offer Understanding how much value you bring your employer will help you make your case. Get granular and find examples to clearly demonstrate the value you bring. This might include things like results you’ve achieved, sales you’ve made, accounts you’ve won or projects you’ve completed. You could also consider how valuable your knowledge of the company’s systems and processes is, as well as the nature of your role within the business. Research the market Next look at job ads for your role and see what type of benefits companies are offering. Is it something your employer could match? You might also like to research your value in the wider job market, as it may give you a stronger negotiating position. Are your skills in high demand? Is there a shortage of workers to fill your role? Would it be difficult for your employer to hire a candidate with your skills and experience? This information can all offer you support to back up your request for better benefits. Set up a discussion It’s best to set up a meeting to talk about your request. Talk to your boss about the ways your work is benefitting the business, and have your list of non-financial perks ready to discuss. If you’re asking for these in lieu of a pay rise, make that clear at the time. Try to spell out the benefits your non-financial rewards would have for the business, as well as for yourself. For example, flexible work hours might mean you can start early when you’re most fresh and focused. Plan for the best and worst outcomes Whether or not your request is granted, have a back-up plan ready. Ask for a follow-up meeting to discuss your salary and benefits in three to six months’ time. And get feedback on exactly what you need to do until then to put yourself in a better position for next time. In an uncertain economy and tightening job market, many employers are having to rethink how best to incentivise staff. If non-financial rewards would make your life better, it’s worth including them in your salary discussions. Source: Money and Life

New super rules introduced in November of 2021 mean employees are now ‘stapled’ to their existing superannuation fund, unless they choose otherwise. That’s why it’s more important than ever to consolidate your super and take control of your retirement savings. Here’s what you need to know about the super stapling rules. From 1st November 2021, workers will automatically keep the same superannuation fund when they switch jobs, unless they actively nominate a new fund. The reform aims to limit the number of superannuation accounts Aussies accrue over their working life. Under the old system, people often received a new super account every time they changed employers. That’s a problem because having multiple accounts eats away at your retirement income, due to the fees and premiums attached to each account. If you’ve done your homework and set up your super fund the way you want, being stapled to the one super fund can be useful. However, if you haven’t consolidated your super, or you’re not sure whether your fund is right for you, now is a perfect time to review your superannuation. Which superannuation account will I be stapled to? If you have more than one superannuation fund, you’ll automatically be linked to the fund that most recently received a contribution (active fund). That may not be the fund you prefer, or even the best fund for you, so it’s important to review your super. How will my employer know which fund I’m stapled to? When you start a new job, your employer is required to offer you a choice of superannuation fund by giving you a superannuation Standard Choice form to fill out within 28 days of starting work. If you don’t fill out the form, they’re now required to check an ATO database to see whether you have a stapled fund. If you do, they must pay your super contributions into that fund. What if I don’t have a stapled fund? If you don’t have a stapled superannuation fund, and you don’t nominate a fund of your choice, your employer must pay your contributions to a new account in their default workplace super fund. This will become your stapled superannuation fund and will follow you to your next employer. Can I still change superannuation funds? Yes, absolutely. Employees can still open a new superannuation fund whenever they choose to. If you want your superannuation payments to go into your new super fund, you’ll need to notify your employer, usually by filling out a super Standard Choice form. The new fund you select to receive your contributions will become your new stapled superannuation fund. You don’t need to do anything to change your stapled fund, it will update automatically. Why it’s important to consolidate your super Consolidating your super into one account makes it easier to manage and reduces the fees you pay. That results in a higher account balance when you retire, so it’s worth doing. Consolidating your super now also means that you’ll have the correct super fund ‘stapled’ to your profile, so it will travel with you for life. It’s easy to consolidate your super using the Australian Taxation Office’s (ATO) online services, accessed via your MyGov account. Source: Money and Life

When you take out an insurance policy, the provider will determine how much you’ll be required to pay in premiums. This process, called underwriting, assesses the insurance risk, and usually requests information about occupation, medical history, pursuits, hobbies and financial situation. Essentially, it means you’ll only be paying the premiums that are required for the amount of cover you need. During this process, a provider may need more information about your medical wellbeing in order to make a properly informed decision about your application. For example, if you have a pre-existing condition, you may have to go through a medical examination before you’re approved for cover. What is a medical examination? Generally, medical examinations are pretty straightforward, and only required to ensure the information you have provided is correct so the insurance provider can make an informed decision in relation to your application. You can think of it as a form of risk protection, making sure the insurer has all the facts before they decide to offer a policy. The exam isn’t usually an invasive process. Rather, it’s generally a quick check-up with a medical professional who will ask you some questions and also do a quick examination. There are usually a couple of steps involved: A verbal questionnaire – some of these questions will relate directly to your insurance application and others will be more general in nature. It’s crucial to remain open and honest during this process. Sample collection – some insurance providers may require you to provide samples including urine, blood and saliva. General information will also be collected including height, weight, blood pressure and pulse. In some cases, an insurance provider may require further tests such as x-rays or ECGs. If insurance providers have more cause for concern, they may require a more in-depth examination. Again, it’s to assess risk and to make sure both you and the provider have a full understanding of your health before implementing a policy. What is being checked in a medical examination? Generally speaking, a medical examination is looking for chronic conditions and overall health. It’s also looking at whether there is the likelihood that something may develop in the future. Of course, no one has a crystal ball but your overall health can show a few indicators. Of course, there are many other issues that medical professionals look for when it comes to insurance. Your examination is compared against your application form as well so the insurance provider has a thorough understanding of your situation. Preparing for a medical examination There’s not much to do by way of preparing for an examination. First and foremost, you must ensure you answer all questions on your application form honestly. This means the medical professional knows what to expect. A good tip is to schedule your medical examination first thing in the morning as you may be required to fast. Have all paperwork ready and ensure you have a list of your medications. Taking out a life insurance policy While medical examinations aren’t mandatory in Australia, some insurance providers will require applicants to undergo one. At the end of the day, your insurance policy is there to financially protect you and your family, providing peace of mind. Remaining honest through the whole application process is important to ensuring you are paying the right premiums and also, that the insurance provider is covering you for the amount you and your loved ones need. Source: TAL  

New to budgeting? You may know how much money you make and have a rough idea of how much you spend. But do you know what you’re actually spending it on, or if your spending patterns will benefit you in the long run? The good news is, you don’t need complicated spreadsheets and formulas to get your personal finances in check. Enter the 50/20/30 budget rule, a kind of yardstick to guide your spending patterns. What is the 50/20/30 rule? Needs: Ideally, you’d spend 50% of your after-tax income on essential living expenses, like rent or your mortgage, other loan payments, groceries, bills, insurance and transport. Savings: Next, you’d channel 20% of your income into your financial goals, whether that’s building an emergency fund, boosting your superannuation or saving for a house deposit. Wants: The final 30% of your money would be allocated to things that make your life a little more enjoyable but aren’t necessary to get by. Think new clothes, concert tickets, a holiday or a meal out with friends. Consider the figures for needs and wants as a guiding principle – if you spend less than what you budgeted for in either category, the surplus can be channelled into things such as extra mortgage repayments, general savings or investments. How to create a 50/20/30 plan To put this budgeting plan into action, you need to have more than a rough idea of what you spend. Make a list and tally up your monthly expenses – remember to include averages for bills that might be infrequent – and then break them up into ‘needs’ and ‘wants’. If you’re currently spending 60% of your income on needs and 40% on wants, you probably won’t be surprised to find you’re not saving anything for your future. Take some time to reassess where you can cut back to start saving more in each category. Needs: Can you get a better deal on your phone plan? Can you plan weekly menus to reduce your grocery bills? Do you need to take more drastic measures, like moving to a new house to reduce the amount you spend on rent or your mortgage? Wants: Can you go without takeaway coffee this month? Do you really have to go out to dinner three times a week? Is that new jacket a must-have? One way to make sure you stay on track with saving money is by splitting your pay packet as soon as you get paid. You could keep your everyday bank account for your needs, for frequent and easy access. Then consider additional accounts, for wants and savings. Set up an automated direct debit for the day after you get paid, so that the cash split from your everyday bank account happens without you having to do a thing. How to put aside $1,000 Let’s say you earn $5,000 a month, after tax. If the above 60/40 percentages ring true, you’re currently spending $3,000 of your monthly income on needs and $2,000 on wants, with no savings. If you apply the 50/20/30 rule, you’ll have $2,500 for needs, $1,500 for wants and $1,000 a month going towards savings. By trimming $500 from the amounts you normally spend on both essential and non-essential items, and sticking to it, you’re looking at savings of $12,000 in a year, or $60,000 in five years.   Why the 50/20/30 rule works The 50/20/30 budget rule is popular because it may allow you to manage your money without making too many sacrifices. You pay your bills, grow your savings and still get to have some fun. It also gives you a way to look at your spending in a different light – would you have moved to a cheaper apartment sooner if you’d realised what a large chunk of your income your rent was consuming? Having a new perspective of what’s absolutely necessary can be refreshing and rewarding. When the 50/20/30 rule doesn’t work Like all rules, the 50/20/30 rule was made to be broken – in some situations. If you have a hard time separating your needs from your wants, you’ll probably find this form of budgeting tricky to stick to. And it can be downright detrimental if, for example, you have large debts but are still stashing away 30% of your pay for personal splurges. This is the time to consider shifting some of the money in your ‘wants’ column to your ‘needs’ column – not forever, but just until you get your spending on essentials down to a more manageable level.   Source: AMP

Key Points Ukraine tensions have escalated with Russia ordering troops into Ukraine regions already occupied by Russian separatists. Share markets are at high risk of more downside on fear of further escalation and uncertainty about sanctions/gas supply to Europe. The history of crisis events typically shows a short term hit to markets followed by a rebound over 3 to twelve months. Given the difficulty in timing market reactions to geopolitical developments, the best approach for most investors is to stick to an appropriate long term investment strategy. Introduction The last few days have seen a sharp escalation in the situation between Russia and Ukraine, with Russia recognising the independence of two regions in the Donbas area of eastern Ukraine controlled by Russian separatists and ordering Russian “peacekeeping” troops into the regions. At this stage it’s unclear how big the force will be, whether it will push beyond the areas controlled by the separatists and, if so, how far. Although President Putin continues to deny plans to invade Ukraine, his comments suggest a move into the areas of Donetsk and Luhansk in the Donbas that the rebels do not yet control. As a result, share markets have fallen further with US and global shares falling just below their January lows and Australian shares also under pressure, although so far they have held up a bit better. Bond yields have also fallen due to “safe haven” demand and oil prices have pushed to new post 2014 highs. The market reaction reflects a combination of uncertainty around how far the conflict will go, with Ukraine being Europe’s second biggest country (after Russia), the threat of further sanctions, and uncertainty about how severe their economic impact will be. There is also the risk Russia cuts off its supply of gas to Europe where prices are already very high, with a potential flow on to oil demand at a time when conflict may threaten supply. In short, investors are worried about a stagflationary shock to Europe and, to a lesser degree, the global economy generally. Possible scenarios Trying to work out which way this goes is not easy, but it seems there are four possible scenarios, some of which may overlap: Russia stands down. This would provide a brief boost for share markets, including Australian shares, (eg +2 to +4%) as markets reverse recent falls that were driven by escalating tensions. Russia moves in to occupy the Donbas areas that are already controlled by Russian separatists with sanctions from the West, but not so onerous that Russia cuts off gas to Europe. This could see a further hit to markets (say -2%), although it looks like it may be getting close to priced-in. This may be similar to what happened in the 2014 Ukraine crisis (with Crimea) and if that’s all that happens then markets would soon forget about it and move on to other things. Much as occurred in 2014. Russian invasion of all of Ukraine with significant sanctions and Russia stopping gas to Europe but no NATO military involvement. This would cause a stagflationary shock to Europe and to a lesser degree globally, as oil prices rise further and could see a bigger hit to markets (say -10%) followed by a recovery over six months. Invasion of all of Ukraine with significant sanctions, gas supplies cut and NATO military involvement. This could be a large negative for markets (say -15-20%) as war in Europe, albeit on its edge, fully reverses the “peace dividend” that flowed from the end of the cold war in the 1990s. Markets may then take longer to recover, say 6 to twelve months. Given the path Russia has gone down and the stridency of President Putin’s recent comments, Scenario 1 is looking less and less likely, but is still possible if there is a breakthrough in talks. Scenario 2 looks to be already on the way, with Putin ordering “peacekeeping” troops into the Donbas region. This may be the “military-technical” action that Russia referred to last week. At the other extreme, it’s still hard to see Russia undertaking a full invasion of Ukraine given the huge cost it would incur. And it’s hard to see NATO troops being involved, particularly given limited public support for it in Europe and the US. The US has said US forces would not go into Ukraine. However, some combination of scenario 2 and 3 is possible whereby the crisis escalates further, if say; the Donbas separatists and the Russian “peacekeepers” push into Donbas territory that the separatists do not yet control and beyond. And of course, with Russian troops moving into the Donbas region of Ukraine, investment markets will worry that we will move on to a wider invasion of Ukraine (until signs appear to the contrary). So we could still see share markets fall further and oil prices rise further in the short term. Crisis and share markets Of course, there is a long history of various crisis events impacting share markets. This includes major events in wars, terrorist attacks, financial crisis, and so on. The pattern is pretty much the same for most events, with an initial sharp fall in the share market followed by a rebound. Since World War Two the average decline has been 6%, but six months later the share market is up 9% on average and 1 year later its up around 15%. What does it all mean for investors? We don’t have a perfect crystal ball and its even hazier when it comes to events around wars. But from the point of sensible long-term investing, the following points are always worth bearing in mind in times of investment market uncertainty like the present: Periodic sharp falls in share markets are healthy and normal, but with the long-term rising trend ultimately resuming and shares providing higher long term returns than other more stable assets. Selling shares or switching to a more conservative investment strategy after a major fall just locks in a loss and trying to … Read more

If you want to protect your family and assets, it’s worth documenting what you’d like to happen if you can’t make your own decisions later in life or if you pass away. If you’ve got people in your life who you love and assets you’d like to be distributed in a certain way, you might be at a point where you’re thinking an estate plan would probably make good sense. What is an estate plan?  An estate plan involves drawing up a will, but also much more. It involves formalising how you want to be looked after (medically and financially) if you’re unable to make your own decisions later in life, as well as documenting how you want your assets to be protected while you’re alive and distributed after you pass away. How does an estate plan help? You can make your wishes known One of the benefits of a solid estate plan is you can formalise your wishes in writing. This can help if someone challenges what you said you wanted after you pass away, or if you’re unable to speak for yourself. You could minimise disagreements Unfortunately, disputes can happen when assets need to be distributed among people when no clear guidelines have been set. Being prepared with an estate plan could go a long way in preventing such disagreements should family members need to divide assets among themselves or make other hard decisions on your behalf. You may improve tax consequences for your heirs As the distribution of assets (including your income) can come with different tax obligations, a good estate plan could minimise any tax that your heirs may need to pay. If they decide to sell something they’ve inherited, for instance, they may need to pay capital gains tax depending on what type of asset it is. Considerations when creating an estate plan Do you want your will to be legally binding? A solicitor or estate planning lawyer can help you draw up a will that is legally binding and covers what you’d like to happen with your assets, children (if you have any) and funeral when you pass away. It’s important this document is kept up to date and that any changes to your situation (marriage, divorce, separation or otherwise) are accounted for, so those who matter most are taken care of. While it’s also possible to draw up your own will (there are various kits available online), these may not be adequate in complex situations, which is why engaging an estate planning professional, even if you think your situation is relatively simple, will generally be worthwhile. Keep in mind, if your will is deemed invalid, your estate will be distributed according to the law in your state, which may not align with your wishes, and claims could be made by unintended recipients. Who are your nominated super and insurance beneficiaries? You might assume that how and in what proportions you want your super to be distributed can be included in your will, but this isn’t necessarily the case. You’ll need to nominate your beneficiaries with your super fund and you’ll also want to make sure you’re across how long different nominations are valid for. If you don’t make a nomination, the super fund trustee could use their discretion to determine who your super money goes to. Meanwhile, if you have insurance outside of super, you’ll also want to make sure you’ve listed your beneficiaries on your insurance policy and that those beneficiaries are also kept up to date. Will you appoint an enduring power of attorney to make decisions if you can’t? There may come a time when you’re unable to make legal or financial decisions on your own because of advanced age or medical issues. Granting power of attorney means you assign someone to make these decisions on your behalf should a situation like this arise. For this reason, it’s important to choose someone you trust, as they’ll be responsible for looking after your bank accounts, ongoing bills, and even selling your house if you need to move into a care facility. It’s also worth noting that you may be able to appoint a different type of power of attorney depending on what tasks you’d like this person to carry out on your behalf. For example, you may want your son or daughter to make general lifestyle decisions for you, while you appoint a financial adviser to make financial decisions. Have you chosen an executor to help carry out your wishes when you’re gone? Generally, an executor is the person legally in charge of managing and distributing your estate, according to the terms set out in your will, with the assistance of a solicitor. When you nominate an executor in your will, which your solicitor should also have a copy of, it’s important to let your family know, to avoid disputes after you pass away. The executor should also have a good understanding of their duties and where your will and other important documents are kept. You may also want to let your family know where this information is stored. The executor will typically be responsible for things like making funeral arrangements, ensuring your debts are paid and bank accounts closed, and collecting any life insurance. They’ll also usually need to apply to the court for a grant of probate, which is a legal step that’s required before your estate can be distributed. A grant of probate certifies that your will is valid. Do you need help with your estate plan? Estate planning can be a complex process and there could be legal and tax implications if you don’t set things up correctly and understand the fine print. For these reasons, it’s important to speak to a legal professional and your financial adviser before making any decisions and signing on any dotted lines. Source: AMP

The Australian Institute of Health and Welfare recently released a report covering the impacts of COVID-19 on Australians during the first year of the pandemic. The report highlights that many of the measures necessary to contain the spread of the virus, have had a negative impact on mental health. Among these measures, restrictions put in place to protect our communities from the spread of COVID-19 have significantly impacted the way businesses operate and the way many people work. Research has revealed that this has been felt across many industries who have been hit hard by job losses during the pandemic, contributing to economic insecurity and high levels of financial stress. Financial and mental health are closely linked Working together as part of TAL’s Health Services team, Jo Hetherington, Head of Financial Health and Glenn Baird, Head of Mental Health, understand that for many people, financial and mental health are closely linked. “Financial stress can have a significant impact on mental wellbeing, and adversely affect overall health and relationships.” says Baird. “There are a number of warning signs that financial stress could be affecting you or those around you. Some common signs can include arguing about money, feelings of guilt about purchases and worrying about making ends meet.” Long-term impacts on financial health Nearly 2.8 million people withdrew superannuation from their retirement savings as part of the Australian Government’s COVID-19 early release program. The Australian Bureau of Statistics reports that most people who accessed their superannuation early due to financial hardship caused by COVID-19, used it to pay their mortgage, rent or other household bills. “While many people welcomed the opportunity to withdraw funds to tide them over, the long-term implications of accessing super early need to be carefully considered”, warns Hetherington. “Accessing super early can drastically impact your future retirement income, and insurance cover may not be available on accounts that have a low balance.” She explains, “It’s important to seek independent financial advice before deciding to access funds early so that you can protect your financial security in retirement.” Simple steps to financial piece of mind It may seem overwhelming at first but taking steps to address your financial future can be an empowering experience, reducing levels of stress and putting you back in control. A great place to start is with a financial professional who can support you on your journey to better financial health. They will be able to help you identify the areas that are causing you the most stress which can help provide guidance on where to focus first. Getting help These are challenging times for our community and TAL is here to support our customers when they need us most and are facing immediate financial hardship. Find out more about our additional Financial Hardship Support during COVID-19 on our website. There are also a number of organisations ready to help you take control and get your financial future back on track. MoneySmart is a government website that offers simple tools, tips and calculators. The National Debt Helpline is a not-for-profit service that offers free, independent and confidential assistance from professional financial advisers to tackle debt problems. SANE Australia also have a COVID-19 mental wellbeing support service which can assist people who are struggling to cope during the pandemic. Source: TAL