This is a real life situation between a Financial Planner and a client.
SITUATION:
Mario* is 58 years of age and has three adult children. He is on a disability pension due to a heart attack and kidney transplant. A few years ago, his wife passed away and so now he lives with one of his children who is married and has a child as well.
Mario does not have any assets, but he also doesn’t have any debt. He has a whole of life policy, $30,000 in an Industry Superannuation Fund, and $30,000 in a savings account with his nominated banking institute. He agreed to meet with a financial planner to discuss his whole of life policy, and it wasn’t long before he wanted to talk about his savings and super as well.
Mario said he wanted to enjoy his money now – or give it to his grandchildren now – rather than wait for them to inherit it when he passes away. He also said he didn’t need his savings and his super due to the fact he has a surplus each month of about $1,000 and does not have any expenses.
PLANNER SOLUTION:
It was recommended to Mario that he convert his whole of life policy into an endowment policy. This was recommended so he could access funds earlier and without the need for any death benefit.
As Mario meets the conditions of release, it was recommended that he withdraw his superannuation funds and gift part of this to his children and grandchildren. Some of these funds could also be used for a funeral bond.
It was also recommended that Mario invest his savings into index managed funds for a long term growth.
This strategy was established in order to maximise Mario’s pension entitlements.
WHY THIS WAS A GREAT RESULT:
This strategy allowed Mario to obtain full pension entitlements, potentially increased the long-term growth of his investment, and reduced his contribution tax from15% down to 0%. Mario has also been able to enjoy his money now by sharing it with his family. Most importantly, Mario has now established a relationship with a financial planner who will look after his financial situation.
*Clients name has been changed
