Many people have very little idea if they are ever going to need insurance like income protection or in the case of a will, know when they are going to die. It is common for those who do get diagnosed with a life threatening illness to be burdened with needing to rush out and to handle affairs such as setting up a will and addressing estate planning issues at a time when they really should be focussing on getting better and resting up under medical care.

Some frequently asked questions:

1. What is a will?

A will is a document that sets out your intentions for your assets after your death. There are significant tax savings if it is established correctly. It also provides instruction as to who is to be charged with the responsibility of carrying out your wishes, also known as your ‘executor’.

The person making a will is known as the ‘testator’, while a person entitled to benefit from a will is known as a ‘beneficiary’.

You may review and update your will at any time, however your last signed valid will is that which applies on your death.

2. How often should I update my will?

While there is no limit on the time that a will remains valid, a review every 3-4 years is recommended.

It is important that reviews are also conducted whenever your circumstances change if, for example, you decide to alter your beneficiaries or if you buy or sell an asset.

Regular reviews of your will ensure that your intentions are still accurately reflected. Some people think that making a will is something you do once and can then forget about. For most of us, nothing could be further from the truth. The only thing that can be worse than not having a will, is having a will which is no longer relevant to your circumstances.

3. Why update my will?

You should check your will regularly to see that it still reflects your wishes, responsibilities and financial position.

It can also be helpful to make a fresh will every few years as this provides a continuous record showing how your wishes and needs have changed
as your circumstances warrant. A simple will that is 30 years old, whilst technically valid, may not seem relevant to your family as, say, five wills made approximately six years apart. Recently and regularly updated wills may lend greater support to your wishes than a very old will in the event of a contest.

By regularly reviewing your will, you are actively managing your affairs and ensuring that your loved ones receive the benefit you intend for them. They will also have the comfort of knowing that you have thoughtfully considered and provided for their needs after your death, rather than leaving matters to chance.

4. What could make my will invalid?

Sometimes a will is revoked or rendered invalid by other things you do. For example, your will may be revoked if:

You marry

Marriage generally causes your existing will to be revoked.

You divorce

Depending on the State you live (or die) in, divorce can also alter the effect of your will. In Victoria, for example, your former spouse is treated as having died immediately before you for the purposes of the distribution of your estate.

These laws differ from State to State and it is vital you prepare a new will if
you marry, separate or divorce so your wishes can be carried out.

You destroy it

If you deliberately destroy your will (with the intention of revoking it) it will usually be revoked.

You make a new Will

• If you make a new Will, previous Wills are usually revoked.
• Your Will may be invalid if:
• it is not signed and properly witnessed
• you do not have ‘legal capacity’ when you make it
• someone has exerted ‘undue influence’ over you
• it is overturned by a court of competent jurisdiction

5. Consider who should be the executor of your will

The choice of executor is critical to ensure that obligations, legalities and family issues are handled professionally after your death.

6. Consider what powers your executor should have

• To provide money to a guardian for any infant children for their education, shelter and maintenance.
• To invest any part of your estate if it needs to be held until beneficiaries come of age.
• To distribute specific assets of your estate in-kind, rather than converting them to cash before any distribution.

7. Consider the burden that you may be placing on a private executor

Things you should consider when making a will

1. Asset distribution

• Insurance, superannuation, jointly owned assets, trust assets and company assets may or may not form part of your estate.
• Debts owed to you – consider how they should be repaid, or whether loans you have made should be forgiven.
• Who you wish to benefit from your will and how.
• How you would like specific items distributed (including personal belongings), noting that chattel division can be a significant source of conflict in estate management.

2.  Who will be the guardian of any infant children

3. Whether you have any specific wishes about your funeral (Burial, cremation, religious service, etc.)

4. Whether you wish to donate any organs or other body parts after your death. Do you wish your body to be available for medical teaching purposes or alternatively for transplant purposes?

Having a personal and or business plan for each year is a very dollar productive activity.

Sitting down, even if it is just for 3 or 4 hours, and putting together a short plan for the next 30 days, 3 months, 12 months and up to 5 years can have a very significant dollar return on the time it actually takes to put each timeframe together.

As your accountant we are very happy to assist you, one on one, in this area. However, for the purpose of this article we have put down just a few ideas that might help you put together a plan, and have included 5 generic tips that have been successful for others in getting the process started.

• Document the Plan:A business or personal plan needs to be documented; having it in our head is a road map to nowhere. It is amazing how many people are now getting a GPS in their cars, because knowing where we are heading, and the best route to get there, does makes sense.
• Short and Long Term: Having both short term and medium term time periods allows us to set tasks, and keep deadlines to achieve certain things. We believe having 30 days, 3 months, 12 month, and 5 year plans within the overall plan suits most people. You then are able to review the 12 months and 5 year plan each January, dedicating the longest time to it, but also have shorter term check ups at relevant expiry dates of each task.
• Simple is Best: Simple and achievable targets are best. It is fantastic to dream, the 5 year plan should include dreams, however the shorter period plans should be realistic and include many of those jobs you really need to get done but keeping putting off. 12 month business goals should always have revenue and expense targets to aim at.
• Carrot and The Stick: The 30 day and 3 month component should include tasks to be completed. I.e. get our creditors down to xx by 1/4/2012, tidy up the storage room etc. Having little rewards for achievements and penalties for non achievements can work well. One penalty that we have heard used before is to put a With Compliments slip and a $ 50 note in an envelope and if you don’t achieve the activity you set out to do, you send the money to someone you don’t like.
• Sharing is Caring: Don’t be afraid to share short term goals with staff, us as accountant, partners and others that will check in on your progress. If we really do want to benefit from the time we put in setting up a plan we should not be afraid to share part of the information with those who can help us achieve it.

Retailers in particular such as Harvey Norman have been extremely outspoken about the drop in sales as a result of overseas websites offering lower priced products to the Australian market.

This is great in essence as it means lower prices on goods to all, with the acceptance of the internet booming it also allows more home grown businesses to establish an online component to their business.

One issue however with many of the online businesses is in relation to the security of payments and the theft of personal details from credit cards and the like. It is vital that if you are establishing an on-line business or using it to purchase goods that you ensure that you have strong security measures in place and that you can verify the security of the payment method you use to pay for goods.

6 security tips for shopping online

Secure your computer

Help protect your online transactions by using firewall, antivirus, and anti-spyware software.

Encrypt your wireless connection at home. Keep all software (including your web browser) current with automatic updates.

Create strong passwords

Strong passwords are easy for you to remember but difficult for others to guess. They are at least 14 characters long (the longer the password, the better) and include numbers, symbols, and upper and lower case letters. For more information, see Learn how to create strong passwords. If you already have a password in mind, check your password strength.)

• Keep passwords and Pins (Personal Identification Numbers) secret. Do not share them in email, instant messages, or over the phone.
• Use unique passwords for bank accounts and other important financial information. Avoid using the same password everywhere. If someone steals that password, all the information that the password protects is at risk.

Beware of links from unknown sites

Links in email messages, text messages, instant messages, or popup ads can take you to websites that look legitimate but are not. To visit websites, type the address yourself or use your own bookmark or favourite.

Look for signs that your information is safe

Before you enter sensitive data on a web page, ensure that:

The site uses encryption, a security measure that helps protect your data as it traverses the Internet. Signs of encryption include a web address with https (‘s’ stands for secure) and a closed padlock beside it. (The lock might also be in the lower right corner of the window.)

l You are at the correct website – for example, at your bank’s site, not a fake one. If you are using Internet

Explorer, one sign of trustworthiness is a green address bar. If you allow your mouse pointer to hover over the address your browser should state if the site is protected and by whom.

Save financial transactions for your home computer

l Never pay bills, bank, shop, or do other financial business on a public or shared computer or on devices such as laptops or mobile phones that are on public wireless networks. The security is unreliable.

Use common sense

To protect yourself against fraud, watch out for scams. For example, be wary of deals that sound too good to be true, alerts from your “bank” that your account will be closed unless you take some immediate action, notices that you have won a lottery, or a refusal to meet in person for a local transaction.

Typically this kind of message, whether sent by computer or phone, is designed to entice you to visit a phony website where criminals collect your financial data.

 Some useful websites

It’s not all negative, there is an amazing number of websites that provide tremendous information that we can use in business or to aid our shopping experience. A few worth checking out:

• Car Sales - Thinking of buying or selling a car, this website is a great tool to value the car you have or the car you are looking at.
• Seek –  Looking for a job, or getting an idea of what salaries are for various roles in your organisation should be, this website is a great tool.
• Credit Card Compare – With interest rates so high on credit cards, this website is an excellent tool to compare just what different banks offer, in comparison to any credit cards you now have.
• iSelect – The health insurance comparator that ‘I Select’ offer is an excellent tool to compare policies and premiums. Health insurance premiums for those that qualify has tax advantages. Gaining the tax advantage and getting the right insurance cover at the right price can be improved by using this site.
• ASX – Looking for the latest prices of ASX shares, this website is free, and offers all information on all Australian listed companies.
• Chinese Astrology - To learn more about our previous subject matter, this website has the lot.
• Deals Direct - This website has more deals than you can imagine, they focus on a daily “deal”, buy in bulk and occasionally have some really good products at large discount to every day prices.
• Brands Exclusive – Another online shop offering ideas in the cosmetic and perfume ranges for those looking Valentine’s Day ideas.

If you think you could benefit from providing your services to your clients online, let us know and we can discuss the cost versus the benefit.

The amendments also increase the Super guarantee age from 70 to 75 commencing 1 July 2013.

These changes were introduced with a number of bills which have not yet passed through the house; they are contingent on the Mineral resources rent tax being passed and are an attempt by the government to see all Australians less reliant on the government in retirement and a move towards retiring with at least 70% of income post their working life.

On this point, Superannuation funds differ significantly from one fund to another. If you would like to review your superannuation planning, don’t hesitate to call the office. We can help you better understand your eligibility to contributions and discuss strategies that maximise the preferential treatment available under the superannuation rules.

Discussion points may include:

• Transition to retirement benefits (for Age+)
• Co contribution government incentives
• Low income contribution incentives
• Tax free retirement income strategies
• Consolidating your super into one fund
• Salary sacrificing additional super
• How a self managed super fund works
• Understanding the benefits of various fund types

According to Chinese Five Element Astrology Calendar, 2012 is the Year of the Water Dragon.

The colour of Water in the Five Elements system is related to Black. Therefore we can say 2012 is a Black Dragon, Water Dragon or Black Water Dragon year.

Chinese Astrology is a Balance Theory of Five Elements. Each animal can be converted into Five Elements. Dragon contains Earth, Water and Wood. It’s a source of Water and it is also called the Water Dam in Chinese astrology. Since Water of 2012 comes with Dragon. It implied Water from the sky makes a dam overflow. Therefore 2012 is a strong Water year.

Dragon is a legendary creature and is the symbol of the emperor in China. Since the Dragon is coated with mysterious colour, Chinese consider that the dragon is unpredictable, untouchable and people cannot see its head and tail at the same time. Therefore, we might see something unexpected happening in 2012. Also a person with too many dragons in the Chinese astrology birth chart is said to become smarter and unpredictable in the coming year.

Before predicting your luck in 2012, you have to know what Type of Element you are and what your Lucky Element is from your astrology birth chart. Your luck element is the major factor to determine people’s fortune. 2012 is the Year of the Black Water Dragon, which contains Earth, Water and Wood. If your Lucky Element is Earth, Water or Wood, then 2012 is said to bring you some degree of luck. Since 2012 is Water Dragon, people whose lucky element is Water will benefit more in 2012. Fire is the opposite element of Water. People whose lucky element is Fire will have more impact in 2012.

Whilst the reference to the astrology is a bit of fun, we want to use it as a means of introducing a number of underlying messages that might help your relationship with us and overall business and our role in that.

As such this February we are focusing on a number of issues relating to mitigating risk, business and personal planning as well as some tidbits we have picked up over the break.

We hope you enjoy the upcoming posts and that 2012 is a great and happy year for you.

We enjoy working with all of our clients and hope you take the time to read the newsletter. If you need our assistance in any of the areas discussed within the newsletter, please contact us so we can be of support to you.

The head of the household, a self employed 38 year old carpenter, suffered a stroke. His wife and two children, under 5 years old, spent the last few weeks in a hotel room in Brisbane while their bread winner was in hospital recovering.

There wasn’t any income, only expenses and the mortgage payments back home, still had to be paid.

They received a lot of support in the small mining town where they lived. Getting home they found the lawn had been mowed, the dog washed, and the fridge full of food.

Their friends gave them some breathing space to settle back before they all called in.

The good news is that a general insurance broker had referred this young fellow to Belmont Financial Solutions back in 2003, for Income Protection insurance.

We provided him with Income Protection and Trauma insurance. This is the GOOD NEWS. This wouldn’t have happened without the referral from the General Insurer broker.

The following is his words:

“Hello John

I would first of all like to thank you in writing for helping me through this difficult time of my life. As you seemed to know, these situations arise to those who expect things to happen, and in my case, those who don’t expect something to happen. With your expert advice, I have been blessed by the right insurance for my needs, to help me recover from this event. In the past i couldn’t see how I could afford to pay the premiums each month, so I thought of cancelling one of my policies. It was your professionalism and expertise that convinced me to keep up with the policy at an affordable level, and this was one of the greatest pieces of advice I have ever received.

Without the insurance, the past events would have gone for scary to terrifying. When you have a health emergency, the only thing that could make you feel any worse would be to be in a financial emergency as well.

I will be ever grateful to you for your help in this assistance in what has been such a difficult time to get through.

Please use my story for any future clients who don’t have insurance, or are deciding on giving up theirs for financial reasons.”

Data from the Australian Bureau of Statistics shows consumer caution continues to sit at an all-time high, despite the fact that rates have not increased since November last year.

Annual retail sales have endured sluggish growth of just 2 to 3 per cent. Pre-GFC, this growth historically hovered around the 6 per cent mark. Similarly, the household savings ratio has increased to 11.5 per cent from zero just six years ago.

So why have consumers become so cautious?

AMP’s chief economist Shane Oliver says there are several factors at play behind the new found caution of consumers, mainly an attitudinal change towards debt and savings.

“From the mid-1980s until about five years ago, consumer spending was supercharged by a combination of rising household debt levels and a fall in the household savings rate from around 15 per cent to zero,” he says.

“Debt was in, saving was out. This was driven by a combination of easy credit post financial deregulation, falling interest rates making debt more affordable, younger generations becoming more comfortable with debt as memories of serious economic problems faded, and rapidly rising wealth levels making active savings seemingly less necessary.”

But this trend has since reversed. The GFC provided consumers with a long overdue reminder that debt is indeed risky. In addition,

it warned borrowers that their jobs aren’t as secure as they first thought.

As a result, savings are now back en vogue and the pace of increase in household debt slowing to a crawl.

In addition, the debt build-up of the past has left households very vulnerable to higher interest rates. This is particularly so for those who entered the housing market on the back of the first home owners’ boost and generational lows in mortgage rates in late 2008 and 2009.

So talk and the reality of higher interest rates have only added to a more cautious attitude on the part of consumers.

Moreover, the portion of the household budget allocated to necessities such as power and water bills, fuel, rent, insurance and health is rising rapidly.

Genworth Financial’s mortgage trends report released earlier this year found the rising cost of living was deterring Australians from jumping onto the property ladder. And this is now evidenced in falling auction clearance rates.

Data from the Real Estate Institute of Australia shows auction clearance rates have slumped to 60 per cent from 75 per cent this time last year.

It seems Australians feel happier and safer saving their money rather than investing it in property. And the RBA’s decision to leave the cash rate on hold at 4.75 per cent in June is unlikely to change this trend.

Nobody likes to think about falling ill, suffering a serious accident, or worse still, dying, but the truth is sometimes serious illnesses or misfortunes may happen.

If you have substantial obligations, such as a loan for a family home, and have a family to think of, what would you and your family do should you no longer be able to earn an income?

When it comes to taking out a home loan you may wish to consider whether it is appropriate to take out mortgage protection insurance, illness, accident, or total or permanent disability insurance, to cover you if anything goes wrong.

Covers, types and levels will vary from one provider to another but usually you will be able to take out cover for the total value of your home loan. There could be a cap or limit or different circumstances when cover could apply.

Types of illness cover vary but can include Life Cover and Terminal Illness which provides lump sum benefits in the event of loss of life or terminal illness. Some types of insurance may also cover you in the case of accident and trauma. It may also cover heart attack, cancer, stroke and coronary artery bypass surgery.

Cover can vary according to your individual needs and budget and you may be able to pay for your insurance in full or via instalments.

If you’re a household with limited assets and you depend largely on one income, you may wish to consider your insurance needs. Call us today and we can put you in touch with qualified insurance advisers who will look after your needs.

There are a number of key reasons why borrowers should consider refinancing. Importantly, while your home loan might have been right for you when you purchased your property, there’s a good chance there might be a more appropriate product on the market that meets your changing needs.

Perhaps you’ve recently had a child and moved to one income, for example; maybe you’ve changed jobs and have greater earning capacity – all of these factors can influence the relevance of your mortgage.

As well as ensuring that your mortgage is right for your current situation, refinancing has a range of other usages.

You can refinance your mortgage to finance a renovation, free up funds to cover the deposit on an investment property, consolidate high interest rate debts, or even help your children raise a deposit for their first home.

The good news is that if you’d like to take advantage of refinancing your mortgage, it’s easy to arrange. However there a number of key points you need to consider.

Importantly, there may be fees and charges associated with refinancing – so before you make any decision to move your

mortgage do your sums to ensure you will be better off in the short and long term.

If you are unsure whether refinancing is right for you, give us a call. We can determine whether refinancing is the best option as well as assist you with identifying the products most suitable plus coordinate the application process.

The cost of refinancing

While it certainly has its advantages, refinancing also has its pitfalls – including potential fees and charges.

To avoid being caught off guard and out of pocket, here are a few fees you may possibly incur:

• Applications, establishment and handling fees when applying for your new loan
• Early settlement fees on your existing loan
• Valuation fees
• Mortgage insurance
• Discharge fees on your existing mortgage and registration fees on your new one
• Stamp duty

In those areas, there’s a widening gap between demand for property compared to the number of properties available – there is greater latitude for buyers to negotiate on price. Combined, for many home owners these dynamics may influence your decision to not sell now.

If you’re looking for a new home or more space, rather than selling why not look at improving your current property – and, potentially, adding to its value to boot.

Before you seek to renovate it is crucial to have a game plan to ensure the most successful outcome. Here’s five sure fire ways to capitalise on a renovation.

Research

Seek out a professional, such as a licensed builder, structural engineer or a certified plumber, for advice to determine whether there is enough scope in your property to benefit from renovation.

Understand what adds value

Different features hold different value on different properties, so focus on identifying what additions are likely to generate the most interest from prospective buyers for your specific property.

Plan

Even though the sums may add up and a profit (should you choose to sell) can be turned, all your hard work can be undone if you don’t plan which areas to direct your funds to.

Make sure you set a budget and stick to it so you don’t over capitalise the property. It’s all too easy to let prices spiral out of control… successful renovators know their limits and know when to stop.

Finance

How you choose to finance your renovation can have a lasting impact on how much profit you make, plus the scope of works you’re able to undertake.

There are a number of different scenarios to finance your renovation, such as refinancing or using equity currently in your home. Give us a call and we can determine the best plan of attack.

Seek advice from the experts

Get a building inspector to take one last look to see if your property is structurally sound and doesn’t have any major problems. Renovations can sometimes reveal significant problems you were unaware of; for this reason be conservative in your estimates and factor additional funds into your budget in preparation for unexpected expenses.