Hi everyone,
Having attended a couple of funerals lately set me thinking about our wills which are very important considering we are building up a considerable amount of debt buying houses.Went to a Peter Spann workshop some time ago and he covers himself for the amount he owes, so when his time comes the insurance co. pays out,so no one is left with any debt.This is a very costly per month depending on your age.If you are getting into million dollar portfolios (which with property does not take long)this is a costly expense per month.
Wondering what others do,as it is not really talked about much in seminars and I think it is very important to set things up right for your children or whoever,
Love to hear how you have set things up?One way is to restrain borrowing, maybe by having a debt to equity limit (say 50%). If you already have $100 000 in assets, you can borrow 100% on a a $100 000 property, so you owe a max of $100k on $200k assets. As you pay the property off your situation will improve rapidly. This is a fairly conservative approach and is based on limiting your borrowings. Unless there was a big crash (with your assets falling 50%), you should be safe.
As for talking to kids about money, I know they say you should do it, and not doing this has caused numerous feuds in families, but if they know you’re rich, they might not work hard/invest themselves if they know they have a big inheritance from your diligence. But if you have a big debt not backed by assets, clearly this should be revealed.
Peter
Hi Glenda,
We have our own business (an asparagus farm) and have large business loans, and now P.I. loans. We have our total debt covered by insurance, but as you say it can be VERY expensive doing this.
Our superannuation fund pays the insurance. It is MUCH cheaper to do this. Perhaps you could enquire with your accountant.
You must continue paying into your super fund, or your super will deteriorate. But the way I look at it, if we are all paying off lots of properties, this will become our superannuation!!!
Good luck,
Del [
]Hi Glenda.
The strategy that most wealthy people use is to hold their assets in discretionary or unit trusts. When your time comes it doesn’t affect the investments, if set up correctly. Take a look at http://www.gatherumgoss.com.au.Terry
FinanceHi Del
I like you have my Superfund pay my life insurance. This makes the life insurance tax deductable but because it is the superfund the tax deduction is only 15%.
Terry the link you included is not working could you please correct it as I am interested in researching further.
Cheers
Hi Ziz.
Sorry all. The link is http://www.gatherumgoss.com.
Peter, your approach is very conservative and safe.
Note that banks, who are also conservative, allow a debt to equity limit (LVR) of 80%. There is 30% more borrowing ability which is not being utilised in your suggestion. Regarding kids & money, if the assets are in a trust then they have no likelihood of inheritance if they are not worthy
CheersTerry
Finance
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