Tax planning for retirees is no different than the non-retiree tax payers. Rather, the tax planning activity of the retirees is more cumbersome because of they often receive their income from social security benefits, pension funds, annuities and other investment plans, which tend to make payout to the insured person once they reach their retirement age. Therefore, it is important that the rather than waiting for the retirement age, the retirees should plan their tax payouts beforehand so that they can save money on taxes and help them protect their retirement income stream. Henceforth, an individual must understand the tax regime effectively and choose right strategies to keep their tax bills as low as possible
Estate Plan
Estate Planning is one of the most ignored aspect by the individuals considering financial planning. Important to note, estate planning relates to the management of the individual asset base and deciding its allocation post the death of the individual. A lack of prudent estate planning can cause tussle between the hiers post the death of the individual holding assets for the family.Below we have recommended some of the steps which George and Brittney should consider to plan their estate:
Create a will using the solicitor hired by you or by using a DIY Will Kit
Setting a trust account in the name of beneficiaries. This will limit the etate taxes
Naming the guardian for the hiers
Naming the executor of the estate to oversee terms of the will
Deciding on annual gifting to reduce taxable estate
Consider Power of Attorney to name one executive who can direct and manage other assets
For George and Brittney, it is important that they both must register for Will and should assign a power of attorney to each other. This will help in management of assets, and in the event of any change in circumstances, the will can be changed anytime and power of attorney can be nullified.
We will also recommend that both of the partners should assign the estate to the living partner, so in case, one partner dies, other inherit the estate, and in case both the partners dies, the estate should be divided equally amongst the two children
For any of the proceedings towards the estate planning, a solicitor must be hired in order to enure that all the legal formalities are being complied to
As for superannuation fund also, the other partner should be entitled to the fund balance in case of death of the fund member.
Tax Treatment under estate planning
References
Income for Medicare levy surcharge, thresholds and rates. (n.d.). Retrieved May 25, 2016, from https://www.ato.gov.au/Individuals/Medicare-levy/Medicare-levy-surcharge/Income-for-Medicare-levy-surcharge,-thresholds-and-rates/
Individual income tax rates. (n.d.). Retrieved May 25, 2016, from https://www.ato.gov.au/rates/individual-income-tax-rates/
Medicare levy surcharge. (n.d.). Retrieved May 25, 2016, from https://www.ato.gov.au/Individuals/Medicare-levy/Medicare-levy-surcharge/
