Tag Archives: Financial Adviser

Reviewing Your Personal Insurance

At a time of mass media, there is an abundance of stories and ads about the importance of insurance cover. But what happens when you’ve had your cover put in place?

With the pace of day to day life, there is a tendency for people to set and forget about their cover. However, it is imperative that your personal insurance policies are reviewed on a regular basis to ensure you’re adequately covered.

How do you know when it’s time to review your insurance policies?

There are several life stages and events, which should act as a trigger for you to review your insurance policies.  Whether it be more responsibility such as starting a family, buying a house or even stressful events such as divorce or the death of a family member; these events should be treated as a call to action to review your insurance policies.

Starting a family and/or buying a family home
Whether you are having your first child or buying your first home these are memorable moments of your life; with these milestones comes the desire to protect the things that are most important to you.  Personal insurance policies can often be complicated and may require lengthy amounts of time to put in force.  It’s a good idea to review and implement adequate insurance cover before life’s adventures occur.

Death of family members
With it is the loss of a loved one or someone close to you taking ill, it is in moments like these we consider our own mortality and what we can do to prepare for life’s unexpected eventualities.  Ask yourself, do I have adequate insurance in place if something was to happen to me?

Personal insurance cover should be reviewed but not limited to the following situations:

  • Marriage or divorce
  • Starting a family
  • Buying a house
  • New job
  • Kids enrolling in a new school or completing their education
  • Illness or death in the family

By being proactive you are fulfilling your wish to protect the people around you financially should something occur to you.

Case Study:

Jody is a 28-year-old working as a nurse and wants to provide funds to look after herself should something happen so she has implemented a Total & Permanent Disability (TPD) cover. This gives Jody peace of mind knowing that she has the cover the will support her in a difficult time.

Mark is a married 40-year old that needs to make sure income keeps coming in to provide for his living expenses if he can’t work. He worked with the JBS Financial team to assess his situation and has now implemented income protection cover. In our discussion with Mark, we discovered that Mark is a small business owner so not only is important to have the appropriate insurance in place to support his family but we also discussed Key Person insurance for the business.

Personal insurance is a complicated area and should be discussed with a financial adviser.  Reach out to the JBS Financial team to review your circumstances and to ensure adequate insurance cover is in place for you.


It's not just about your will

It’s Not Just About Your Will

By Jenny Brown – CEO and Founder

When we look at Estate Planning, the first thing that pops to mind is our Wills. After all, these legal documents dictate what will happen to our assets when we die. While this is a good start, you will more than likely have assets that are not covered by your Will and will need to be dealt with in a separate manner.

Jointly Owned Assets

It's not just about your willThere are 2 ways to structure jointly held assets and both are treated differently for estate purposes. The first and more common way is what is known as ‘Joint Tenants’. In this scenario, if you were to die, the asset automatically goes to the other owner. For example, a husband and wife purchase a house as joint tenants, if the husband were to die, the wife would now own the entire house. It does not form part of his Will.

The second ownership structure is what is known as ‘Tenants in Common’. In this scenario the 50% (or whatever % you own) is not automatically passed over to the other owners, it does form part of your Estate and will be distributed through your Will. For example, 2 business owners purchase a commercial building 50/50 as tenants in common. If one were to die, their 50% would go to their estate and as an example end up being owned by their partner. Now there may be an agreement in place where the surviving business owner then buys the other persons share from their partner, however the partner does now own the 50% rather unlike a ‘Joint Tenants’ situation where the surviving owner would automatically be allocated the other 50%.

Assets held by Private Companies or unit trusts

Sometimes a person has assets held by a company that he or she owns. The person may own all the shares in the company and might be the only director of the company, and in so doing is able to use and enjoy the assets. Whilst the person might own the company, it is the company that owns the assets. Thus for example the person cannot in their Will give away the company car because they don’t own the item. It is a common mistake by business proprietors that they forget that assets they use personally are not theirs but instead belong to the company.

The only asset that the Will maker has is the ownership of the shares in the company, not any specific assets of the company.

Units in a unit trust are similar to companies in that any units owned by you, not the assets owned by the trust, will pass to your estate to be distributed as per your Will.

Assets held in Family Trusts

Assets held in a Family Trust are governed by the determinations of the trustee of the trust and are not assets owned by the person who set up the trust and transferred assets to it. Such a person is unable in their Will to distribute the assets of what they might regard as “my trust”. Control of the trust post the death of the person might be capable of being governed by the Will, but the assets themselves are not the person’s to give away in the Will. In the event of the death of a trustee (where it is an individual trustee), the appointer will need to nominate a successor trustee.

Life insurance

When you set up a life insurance policy you may also nominate a beneficiary. Generally, the proceeds of a life policy are paid directly to the beneficiary, without any need to be included in a Will.

If you wish for your life insurance benefits to be controlled by the terms of your Will then you need to nominate your estate as the beneficiary of your policy. A lot of life insurance policies are owned by superannuation funds with the proceeds being paid into superannuation. This brings us to the next asset.


When dealing with superannuation assets you have the ability to nominate to the superannuation trustee to who the funds will be passed on. If no nomination is made then the superannuation trustee will distribute the funds according to their formula. It is therefore essential for you to make a nomination however most superannuation funds have two types of nominations available to you.

The first kind of nomination is a non-binding nomination. This is more of a suggestion to the superannuation fund of where you wish for your funds to be paid. The superannuation trustee is under no obligation to pay your super benefits as per your nomination and instead will try to contact all possible beneficiaries (spouses, kids, dependents etc) and for them to put forward their case on why they should receive any benefit.

The second kind of nomination is a binding nomination. This nomination instructs the superannuation trustee on where they need to pay the money. Note that this is an instruction and not a suggestion and the trustee is obligated to follow it. There are rules however on who can be nominated on a binding nomination as only ‘dependants’ (spouse, children, financial dependents) or your legal personal representative (your estate) can be nominated. Because of the absolute certainty of this nomination, a lot of binding nominations only last 3 years at which time they expire and will need to be renewed. There are some superannuation funds however that do offer non-lapsing binding nominations.

With both nomination types, once the trustee has made their decision it cannot be contested, unlike a Will. Therefore it is essential that it is set up correctly to ensure your funds are passed onto your preferred beneficiaries.

We often only think about our Wills when it comes to Estate Planning however when probably our 2 greatest assets, properties held jointly and our superannuation funds with any life insurance proceeds are not covered by our Wills we need to make sure the proper procedures are in place to ensure they are passed onto our preferred beneficiaries.

If you would like to talk to someone to ensure that your estate planning is adequate and in place to cover all of your assets, please reach out and discuss your situation with the JBS Financial team. 

Binding Death Benefit Nominations – Who gets your super benefits?

It is a question that most of us will not have given much thought to who will receive our super benefits in the event that we pass away?

If you have particular wishes, simply writing a name or ticking a box may not be sufficient to realise your intended plans. In many cases, the absence of correct estate planning documentation will see decisions made by the trustees of your super fund on where the funds will be allocated, potentially following generic rules which may see an undesired outcome.

The following case is a general example:

A mother passed away, having been predeceased by her husband, and had previously signed a trustee minute that her benefits be paid to her three children, however not in equal amounts. She believed that her eldest two children were financially secure, having benefited from a previous inheritance decision when compared to the third child who she wished to receive the bulk of the benefit.

The trustees of her super fund did not agree that her wishes were legally valid since they believed that the correct procedures had not been followed, and decided to pay the super benefits out to her three children in equal amounts.

In the case of self-managed super funds, several court cases have provided an indication of the need for correct legal processes and forethought. The 2005 case of Katz vs Grossman saw a father intend to divide his $1 million SMSF balance equally between his son and daughter. Following the passing away of his wife several years previously, the father had appointed his daughter as a trustee of the fund alongside himself in order to remain compliant. On his death, the father’s intentions were not realised. The daughter appointed her husband as a replacement trustee for her father and, as trustees, decided to pay the balance of the fund to her. The son challenged this decision, however, the court determined that she was legally able to do so as a trustee without a valid binding death benefit nomination from the father.

In both cases, the original intentions of the members of the super funds were not carried out.

One possible option is to complete a Binding Death Benefit Nomination. This will bind the trustees of your super fund to pay out the benefits of your super to either your dependents or your estate in the amounts specified by you.

Careful consideration must be made to ensure that the nomination is compliant with the fund’s trust deed and has been completed correctly. An example of incorrect completion was the recent case of Munro vs Munro where the deceased had named the “trustee of the deceased estate” as the beneficiary, which did not comply with superannuation law – incidentally, the correct term should have been “legal personal representative” which would have also resulted in the estate receiving the benefit. As a result, the nomination was not deemed to be binding and, against the wishes of the deceased, the funds were not paid to the estate.

Other possible ways to direct your super benefits include non-binding death benefits, lifetime binding death benefits, reversionary pensions and wills.

Ensuring you receive the correct estate planning and legal advice is a vital part of ensuring your wishes are watertight. If you have any concerns regarding who you would like to receive your benefits please reach out and discuss your situation with the JBS Financial team.

First Home Super Saver Scheme

Introduced as part of the 2017-2018 Federal Budget, the First Home Super Saver (FHSS) scheme aims to make housing more affordable for first home buyers. Essentially the FHSS scheme allows you to save money in your super fund that will go towards your first home.


If you are making either concessional or non-concessional contributions into your super fund, you will be able to apply to have your voluntary contributions, as well as associated earnings, released to help you purchase your first home. Since your concessional contributions are taxed at 15% as opposed to your marginal tax rate, the FHSS scheme can be an effective tool in helping you save for your first home.


When making a withdrawal from super to help purchase a home, you are able to withdraw total voluntary contributions of up to a maximum of $30,000 across all years, with a maximum of $15,000 from any one financial year. The contributions are ordered by a first-in first-out approach. For example, Joe has made $10,000 of eligible non-concessional contributions each of the past 3 financial years. He finds a house he would like to buy. He can withdraw a total of $30,000 to purchase the house as each year he has stayed within the maximum of $15,000 per year. If Joe had made eligible non-concessional contributions of $20,000 and $10,000 in the past 2 financial years, he would be limited to only withdrawing $25,000 (maximum of $15,000 from the first year and $10,000 from the second year).


Once your first FHSS amount has been released to you, within 12 months you must do one of the following:

– Sign a contract to purchase or construct your home – you must notify the ATO within 28 days of signing the contract
– Re-contribute the assessable FHSS amount (less tax withheld) into your super fund and notify the ATO within 12 months of the first FHSS amount being released to you.


There is a strict set of criteria you must satisfy in order to be eligible for the FHSS:

– You must be at least 18 years old when you request a release from your super account
– You must never have owned property in Australia (this includes investment property, vacant land, commercial property, a lease of land in Australia or a company title interest in land in Australia).
– You must not have previously requested the Commissioner of Taxation in Australia to issue a FHSS release authority in relation to the scheme.


You may be eligible for the FHSS even if you do not satisfy the above conditions. More details of this can be found here.


There is also criteria on what you cannot purchase through the FHSS and these include:

– Any premises not capable of being occupied as a residence
– A houseboat
– A motorhome
– Vacant Land


One thing to note is that just because it can be done, doesn’t mean that every super fund offers it so if you believe you are eligible and would like to explore it further, it would be worthwhile contacting JBS.

Suffering a Financial Hangover?

The holidays are great time for families and friends to get together to enjoy the warmer weather and sunshine together. However, this time of year is also when spending can go a little overboard and people end up with an overwhelming credit card debt.


Below are a few ways to get yourself back on track this New Year:


Sell, Sell, Sell
Selling items you no longer use is an easy start. You can make a dent in the amount you overspent during the holidays and you can also make a jump on decluttering your house. Try to sell in local areas to reduce the cost of shipping items. By grouping items together such as 10 x books or bag of kids clothing size XX for a set price reduces the time you spend advertising items and increases the chance of a quick sale.


Eliminate non-essential items
Small inexpensive items add up over the month. If you don’t purchase that morning coffee or afternoon soft drink you could potentially save yourself between $150-200 a month. Consider cheaper alternatives like taking your coffee with you in the morning and making your lunch the night before.


Stop Shopping
This time of year can be tempting to purchase in the post-holiday sales, but if you are already in debt you cannot afford the items no matter how good the deals are. Unsubscribing from e-newsletters offering sale items is a great place to start, if you don’t see the deals you can’t buy them. Ensure you don’t do your grocery shop when you are hungry and take a shopping list so you don’t impulse buy.


Make this year’s financial hangover the last, contact JBS today and we can help you give your finances that bright New Year feeling.

Proud to be an Adviser

I often get asked why I love being a financial adviser – well the answer is simple, I get to help our clients every day of the year. Along with my awesome team we are able to make such a difference in the lives of our clients whether it be when we get to help them retire, hold their hands when something goes wrong in their lives or be at the end of the phone when the markets get the wobbles.


Being an adviser comes with a huge amount of responsibility, that we often take for  granted and it’s not until we are able to sit back and reflect on all the good that we do that we often realise just how much of a difference we can and do make in our client’s lives. Take today, let me tell you about three clients, their stories and how it all unfolded, firstly let me introduce you John* and Sue*, they are both 70 and fairly typical retiree clients. They have combined investible assets of $850,000 and are receiving overseas pension income of $17,000. Their living expenses are around $60,000 including some low-cost holidays and they don’t qualify for any Centrelink at this point.


Their worry is how long will their money last, can they keep taking annual holidays, travel more than once a year, or do they need to cut back, especially with the current volatility that we are experiencing in the market. Now this is not an uncommon question and whenever we catch up with our clients to discuss their strategies, this question if it’s not asked, it’s certainly on their minds.


By anticipating their needs through experience, we had already projected out what continuing to receive a total retirement income of $60,000 would do for their retirement plans. In addition, we had prepared 2 other projections at $70,000 and $80,000 to highlight just how long on conservative projections their funds would last. Now the portfolio that John and Sue have within their fund is nothing sexy, more a very stable mix of quality blue chip Australian Shares, some international and local ETF’s, term deposits and some bank hybrids. Diversified enough that volatility is reduced and a portfolio that reflects their risk profile along with two to three years of cash plus dividends and income to fund pensions and ensure that in a downturn they wouldn’t have to sell any of their growth assets.


Our reward was to then experience the delight that they wouldn’t run out of money until they were hitting 100 years of age and that was on the projection for higher drawings. Turning a conversation around from how long will my money last, to what places we’d love to travel to and what would we love to tick off our bucket list just makes our day.


To keep reading this article click here


– Jenny Brown –


*The names of clients have been changed to protect their privacy.

Congratulations Jenny

We were all really happy when Jen was recently nominated for the FSPower50. The FSPower50 defines ‘influential’ as individuals who have been, or continue to be, instrumental in shaping the future of the financial advice industry.


We are proud to announce that Jenny has again been recognised in the Financial Standard FSPower50 – the 50 most influential financial advisers in Australia for 2018.


Congratulations Jenny! We think it’s fantastic that your hard work as a financial adviser and as a leader in the industry has been recognised. Well done everyone involved!

Downsizer Contributions

From the 1st of July 2018, if you are at least 65 years old and meet the eligibility requirements, you may be able to choose to make a downsizer contribution into your Superannuation fund of up to $300,000 from the proceeds of selling your home. Normally after age 65 you would need to meet a work test in order to contribute into Super, the great thing about this is that you don’t need to meet the work test to be eligible.


The contribution will not be counted as a Non-Concessional Contribution and will not count towards any contributions caps. The downsizer contribution can still be made even if you have a total super balance greater than $1.6 million, however if your balance is above $1.6 million you are still restricted to having $1.6 million in the pension phase.


The contribution is only able to be made once on the sale of one home, therefore if you sell a second home you can’t make the contribution again. There is also no requirement that you have to purchase another home or actually downsize your home as the name may suggest. In order to be eligible you must tick all of the following criteria:

– You are 65 years old or older at the time you make a downsizer contribution (there is no maximum age limit)

– The amount you are contributing is from the proceeds of selling your home where the contract of sale exchanged on or after 1st of July 2018

– Your home was owned by you or your spouse for 10 years or more prior to the sale. The ownership period is generally calculated from the date of settlement of purchase to the date of settlement of sale

– Your home is in Australia and is not a caravan, houseboat or other mobile home

– The proceeds (capital gain or loss) from the sale of the home are either exempt or partially exempt from capital gains tax (CGT) under the main residence exemption, or would be entitled to such an exemption if the home was a CGT rather than a pre-CGT asset (acquired before 20th of September 1985)

– You have provided your super fund with the Downsizer contribution into super form either before or at the time of making your downsizer contribution

– You make your downsizer contribution within 90 days of receiving the proceeds of sale, which is usually at the date of settlement

– You have not previously made a downsizer contribution to your super from the sale of another home.


It is important to note that if your home was owned by just the one spouse, the spouse that did not have an ownership interest may also make a downsizer contribution, provided they meet all of the other requirements.


The maximum contribution you can make under the downsizer rules is $300,000, or $300,000 each if a member of a couple. However, the contribution can’t be greater than the total proceeds of the sale of your home. For example if you and your partner sell your home for $400,000 you’re only eligible to make contributions of $200,000 each, or it can be split in another way such as $300,000 and $100,000.


You must also make your downsizer contribution within 90 days of receiving the proceeds of sale, which is usually at the date of settlement. In some circumstances the ATO may at their discretion extend this 90 day period, but you will need to apply for it. It is also possible to make the contributions in multiple batches, but the total amount can’t exceed $300,000, and all contributions must be made within the 90 day period.


If you’re thinking of downsizing your home and wish to explore your options in relation to making downsizer contributions, please don’t hesitate to contact JBS and we can assess your options and eligibility. It is a really great opportunity to help build your wealth in a tax effective manner.

Saving for Retirement

Over the next few years the age at which you can begin to start receiving the Age Pension will gradually increase from age 65 to age 67 (depending on your birthdate), with most people now having to be 65 and a half before they can access the Age Pension. Every time the Age Pension age increases or there’s talk of it increasing, you’ll hear all over the media people who now can’t retire because they have to wait a few more years before they can access the Age Pension.


Unfortunately for some, the Age Pension will be critical to fund their retirement, but the Age Pension age doesn’t need to be your Retirement Age. There’s a few things you can do to help reduce your reliance on the Age Pension and retire when you want to retire, our motto is that we’d rather you be working because you want to, not because you have to.


Super Contributions – Your employer pays 9.50% of your wage into Super as a Super Guarantee Contribution (SGC), but if your cash flow allows for it, you can top that up through a Salary Sacrifice arrangement or making Personal Concessional Contributions, up to an annual cap of $25,000 (which includes your SGC). This allows you to boost your Super Savings while at the same time helping you save tax personally.


You also have the opportunity to put up to $100,000 in as a Non-Concessional (After-Tax) Contribution and even up to $300,000 utilising the bring-forward rule in one year (if you haven’t made large contributions previously). Depending on your Super Fund, this can be a transfer of any cash you may have or even other assets such as shares. Remember that the new $1.6mil balance rules need to be taken into consideration.


Depending on your income, if you make a Non-Concessional Contribution the government may give you a Government Co-Contribution up to $500 on a $1,000 contribution (you can contribute more, but the co-contribution is based on a maximum $1,000). If your income is below $36,813 for FY18 you will receive the full $500 Co-Contribution, and you will receive a pro-rata amount if your income is above $36,813 but below $51,813.


Consolidate your Super – For some you may have multiple Super accounts, each time you start a new job your employer may start a new Super Fund for you if you haven’t given them the details of your existing Super Fund. If you’ve got multiple Super accounts it may be worth consolidating them into the one account which may help to reduce the total fees you’re paying on your Super accounts. However, you need to be careful that when you rollover any Super into another account you will lose any insurance you may hold.


Review your Insurance – Most Super accounts come with default insurance cover, and insurance is a very powerful tool to protect you and your family in case something happens to you. For those later in life, who are empty nesters, paid off the mortgage and are close to retirement, your need for cover may not be as important as someone who’s just starting a family and recently taken on a mortgage. Although insurance may be needed, it is always worth reviewing it on a regular basis to ensure your level of cover is appropriate and you’re paying for what you need, as the premiums come out of your Super balance. In some circumstances it may also be worthwhile holding some of your insurance cover outside Super.


JBS can help provide a full review of your Superannuation and Insurance and help you put strategies in place to ensure that you’re working because you want to, not because you have to. We’d rather you work towards your Retirement Age.


– Peter Folk –

The Age Pension Myth

An article on moneymag.com.au cited that “retirees with modest savings can be better off than those with more than twice as much”. The argument was that due to the new age pension rules introduced in January 2017, there was a ‘sweet spot’ where the income from the age pension and the return from your pension savings would be equal to the income received by someone with more savings who would not qualify for the age pension.


The below table sets out the results.

The assumption was that you would take the minimum amount from your pension account and combine it with your age pension entitlement. As you can see a couple with $1,050,000 will have the same amount of income as a couple with $400,000. What the analysis conveniently doesn’t include however is the capital value. It also only looked at 1 year and did not take into account what would happen in future years.


From a very simplistic view, lets assume that no capital is being drawn in either scenario and hence the capital values remain the same. This means that when the retirees die, they will have $605,000 more money available to pass onto their beneficiaries than in the scenario where the couple only has $400,000. Yes, the income is the same but the actual wealth is way different.


A second and more complicated scenario outlining how the person with more money is in fact way better off is if the capital is drawn down. Let’s assume an extra $10,000 per year, with an earnings rate within the pension account of a modest 5%.

The below table sets out the results.

In the above example, the person with $1,050,000 has a significantly higher regular income over time due to the higher amount of capital available to them and the requirement to draw down an increased minimum amount from their pension accounts as they get older.


The above graph also shows that even with the increased withdrawals, in this particular scenario you will still have considerably more assets throughout your life that you can also draw down on if you need to. Not only that but you need to remember that even if you do not qualify for any age pension at the start of your retirement, as your assets decrease over time you may end up qualifying for the age pension later on in retirement.


In fairness to the author of the original article, it was probably designed to indicate that in order to have a ‘comfortable’ retirement, due to the age pension, you can get by on a smaller pension savings balance. To suggest however that “retirees with modest savings can be better off than those with more than twice as much” is just plain wrong and doesn’t take into account all the pieces of the puzzle.


To speak to someone about growing your retirement wealth so you can have a better lifestyle in retirement speak to one of our advisers at JBS Financial Strategists.


– Liam Rutty –



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