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  • Shane Ellis

The Saga of Mary & Rose

“Procrastination is unfortunately not just the thief of time but also the robber of family wealth when the unexpected arrives for the unprepared!”

CASE STUDY: The Saga of Mary & Rose: Part 1


Times were very busy. The speed of the modern world was hard to keep up with and then...BAM, the GFC came along and everyone sat back and took a little bit more notice and acted a little more cautiously. There is a fine line between caution and procrastination though, and procrastination can be very costly.


In one week, two couples were seen in family estate protection planning sessions, involving their assets across the board as well as their SMSF estates.

Now, even though the size of the estates was a bit different the work to be done to tidy up the client's affairs was quite similar. John & Mary needed updated enduring powers of attorney, simple wills needed replacing by Family Estate Protection wills, the family trust had to have its survivorship clauses tidied up, and they needed SMSF Wills put in place and auto-reversionary pension clauses for maximum tax efficiency.


They were given a quote to have the work done, quickly considered it over the next few days; they recognised the value of getting things done properly, and the work was completed and signed off within two weeks. Not only could they rest confidently knowing that if anything happened to them their estates were protected.


Ted & Rose even though they were now worth in excess of $6.85M didn't have enduring powers of attorney in place...In fact they didn't know what they were and how critical they are for their family estate protection. They had simple wills they had gotten when they had taken up a TV offer for funeral costs insurance which was totally wrongly drawn and quite meaningless, their family trust had no survivorship clauses in it at all, and they had thought the simple will had covered their SMSF estates.


They did know about auto-reversionary pensions and were astounded when the amount of tax savings was explained to them. They too were given a quote to have their estate protection planning work done, which happened to be much the same in size as the quote given to John & Mary. They had it pinned to the refrigerator next to one of their grandkids finger paintings and were "getting around" to discussing it. They understood the principals of how they were being protected by having the structures put in place but they could not believe the lawyers quote to do the work, even though the tax savings they would make should they die would pay the bill many times over in the first twelve months.


Even though they kept reading in the newspapers about estate cases where the family fought for years through the courts and the end cost to the estate was tens of thousands of dollars in legal fees they were "going to get around to" discussing it with Shane a little further, and Ted would see if he could get Shane to sharpen his pencil a bit more in relation to his proposed account. Unfortunately 7 months later & not so long back in time from today the flash floods hit out of the blue and both John and Ted were killed because their businesses were right in the path of the unexpected torrent of water. Fortunately both Mary & Rose where nowhere near the flood path and survived the incident. Their lives went like this after the event...

CASE STUDY: The Saga of Mary & Rose: Part 2 'Building blocks or falling towers'


Times were very still busy for Mary & Rose even though the boys were no longer physically around. As we saw there is a fine line between caution and procrastination though, and procrastination can be very costly. Lets see what has happened to their assets across the board as well as to their SMSF estates.

CASE STUDY: The Saga of Mary & Rose: Part 3 'The Swan Song'


Times were settling for Mary and Rose with John and Ted having passed away a good while ago. As we saw there is a fine line between caution and procrastination though, and procrastination can be very costly. Let us hope they have learned their lessons.

Over two years has elapsed since John and Ted passed. Time goes on and Mary & Rose have advanced in their lives, and with the restructuring of their affairs without their husbands. We will see what has happened to their assets and to their SMSF estates.


Mary is still a loving and resilient woman. She has met a new man in her life and he is a tennis coach! Her backhand has improved out of sight! She is smashing Josh off the court, much to his despair as he cannot handle his aging mother beating him at tennis. The proper family estate protection planning including their SMSF Estate has paid its way many times over.


Mary downsized her home to a new beachside unit and she has been going for morning and afternoon walks on the beach every day with "the coach". She and "the coach" are getting quite serious in their relationship and he has been suggesting that they invest in a tennis ranch together as he knows that she is quite well off financially. Shane has discussed this at length with Mary and with the other trustees and executors of John's Will. Their adult son Josh, and Mary's brother Bill. They all agreed that John wished to provide for Mary to be comfortable in her lifetime, BUT then for John's estate to flow on for the benefit of their kids and grandkids. They advised Mary that John would have wanted Mary to get on with her life and to meet a new partner BUT to be sensible with both her estate and the use she has of John's estate whilst she is alive.


With this in mind they suggested to Mary that John's family estate protection estate protection planning trust and the family trust loan them the money for the tennis ranch business, and will take security for the loan by way of mortgage over the property the business is on. "The coach" did not like this idea as he wanted the money outright and did not wish to pay any interest on the loan as it was "Mary's money in his eyes". Shane explained that as it was a family loan there would not be any interest on the loan as long as they did not default on paying for the capital value of the land and the tennis ranch business. The loan was made and the mortgage security was taken over the business property. Mary was being well provided for from the investments that she & the family trust held, and Josh & Bill kept a close eye on her. There was something that was just not right with "the coach".


He seemed too cool and insincere to them. Shane, did not get involved with any personal assessments of the guy, but did make sure that Mary kept chatting with Shane about her matters. Even though it had only been a short period of time that Mary had been in the relationship with "the coach", Shane suggested that she put in place a Binding Financial Agreement under the Family Law Act to protect the assets Mary introduced into the relationship. "The coach" protested vehemently about this but Shane did not buckle and Mary listened to the advice & accepted it. Much to the annoyance of "the coach" he signed the agreement & the mortgage so that the tennis ranch could go ahead. With the wisdom of hindsight Mary was soon so pleased this was done!


She soon found out that "The coach" could spend money much faster than he could make it, and she discovered a few months down the track that he was "coaching" his women students in much, much more than tennis! He had been cheating on Mary with younger women throughout the whole course of their relationship. "The coach" had not paid one cent off of the tennis ranch capital, and Mary's personal savings were becoming depleted. She, with the aid of Josh and Bill, kicked "the coach" off the property and told him not to come back. He was last seen driving off with a buxom fake blonde in a convertible sports car. Mary was a bit ruffled by the "love experience" but both the estate funds and most of her money were safe through proper family estate protection planning structures having been set in place once more. Mary learned further from the tennis coach episode, made sure her estate was fine as her life progressed and would also pass for the benefit of her kids and grandkids when she died.


They got the last laugh on "the coach" because the property the tennis ranch was on was sold to a big land developer for a lot of money. The loan to the Family Estate Protection Trust was repaid, and the Binding Financial Agreement held up nicely. "The coach" had brought nothing financially into the relationship with Mary and had only cost them money whilst he was around. He got nothing in the family court property settlement! Mary lived only a few short years after that, but she had a full and happy life. She knew she was always protected.


Her estate was easy to administer as it followed the path set by John's estate. Her SMSF estate was also easy to administer. The really great thing she had also implemented whilst John was alive was that upon Mary passing away John's reversionary pension & Mary's pension automatically reverted with 1/2 to go as a lump sum to the Family Estate Protection Trust to be divided equally in favour of the kids. As long as they were not subject to marital misadventure, illicit substance misadventure, or bankruptcy/financial attack they would have unfettered access. The other 1/2 of both John's Auto-Reversionary pension & Mary' pension was to revert as a TAX FREE pension in favour of John and Mary's dependent grandchildren in equal shares until they were 28 years of age when they could receive a lump sum so long as they were not subject to marital misadventure, illicit substance misadventure, or bankruptcy/financial attack, and if they were it would remain in the SMSF Auto-Reversionary Pension to be applied for their benefit. Mary very cleverly ensured that "the coach" was never involved with her SMSF.


Mary and John had been well organised people, they had ensured Mary was protected during her life, now that she had died also that the kids and grandkids would be protected too. Understanding the financial affairs of the family had been fabulous for Mary & John, and the even more brilliant part was that they were now passing this wisdom on to their kids and grandkids to apply in their lives. John and Mary rested well in their afterlife keeping an angelic eye on their family.


Rose was well and truly over travelling daily between hell and back since Ted had died. She was a fairly quiet, but very attractive woman for her age, as it turned out the partner she had been placed with for the Golf Country Club mixed partners ambrose day was a very handsome, kind, and unassuming man who, though he appeared to not have two pennies to rub together, was both a great golfer and a nice companion. His golf clubs looked like they had come off of the ark, but gee he could hit them well, and Rose really wanted to take him clothes shopping because his golf shirt had a tear in it and a couple of small silverfish eaten holes. His name was Fred and he was an utter gentleman.


They turned out winning the golf day and he shouted them dinner at the casino in the flash Italian Restaurant. Their relationship blossomed and Rose was very, very happy but also VERY cautious. She well and truly believed in "once bitten twice shy" after all she had gone through with Ted's estate. As the relationship became quite serious, she also listened to Shane, put in place a Binding Financial Agreement with Fred to ensure what little money she had left would last her life time and then be able to be passed on to her grandkids.


She was in Shane's office on the first occasion they were there to discuss her estate protection planning, and she nearly fell out of her chair when Shane asked Fred if he was happy to sign such an agreement? Fred said it was fine because his estate was worth about $85 million and he thought proper family estate planning was a critical element to have in place in any relationship, and especially in a blended family relationship! It turns out good old Fred was one of the founders and owners of a major health food franchise that he had brought to Australia. He had sold out of the franchise at the top of the market value.


He made sure Rose sold her house and invested her funds via making a non-concessional contribution to her SMSF so she could make further low or no tax investments, and with Rose having reached her age threshold she now received a pension "tax free" from the SMSF. Rose and Fred travelled the world playing golf and having a great time. Rose bought Fred some new Srixon golf clubs, and a new golf shirt at every pro-shop they attended on their travels. Fred would make sure she was well off for the rest of her life too, because he had $5 million in his SMSF pension account that was to revert to Rose to receive a tax free non-commutable minimum pension annually after Fred died (about $200k per year!) and then to revert in a lump sum via Fred's Family Estate Protection Trust estate to his kids who did not have any children as yet.


When his kids did have children, Fred was going to vary his pension so that after Rose passed away, his grandkids would get a tax free share of his SMSF estate too! Fred taught Rose how to invest via her SMSF and for her SMSF using the borrowing rules and related party loans to maximise the return into Rose's SMSF. She was going to leave quite a large SMSF estate to her financially dependent grandkids through Fred's help, and most, if not all of it, would be tax free too! Rose didn't trust her own kids any longer with what had taken place and she changed her Enduring Power of Attorney for her sister and Fred to jointly look after her if she lost her faculties for any reason.


She wasn't having her well-loved grandkids missing out through her estate not being in order. They were all she had left family wise. Rose protected all of her assets for her grandkids and from them against themselves if there was any marital, financial or illicit substance misadventures with any of them, via her having a Family Estate Protection Will and proper SMSF Will and Auto-reversionary Pension clauses in place. The dope puffing daughter, Suzy, who had wanted her share of the money NOW and who had forced the sale of Rose's family home to get it, had blown all of her money and was in a nursing home with few of her mental faculties. Her drug addiction had been very costly.


Suzy said, "Dad would have said '*hit happens get over it'." She was so right. The public trustee controlled her affairs because she had no enduring power of attorney, and the nursing home she was in was very old and run down in its facilities. Rose could not handle the cockroaches and bed bugs. Although Suzy had been so horrible to Rose she was still Roses' daughter so Rose paid for the Supreme Court case to have the public trustee ordered to move Suzy to a better class of nursing home for which Rose would pay the gap between Suzy's pension and the cost of the new accommodation until Suzy died. Rose thought, " S*it happens, but family comes first, and I am frankly over it."


Rose also watched as her only son had the lion share of his money sucked out of him via a family court battle with his wife that was very bitter and arduous. Rose helped him pick up the pieces after the final payout was made, and whilst she and Fred would not contribute financially to her son rebuilding his estate, they showed him how to best structure this to avoid future losses and for maximum returns. He was pleased his mother Rose was such a caring person who was prepared to forgive him. The son would not have been in his position financially if he had taken the time out of his busy work schedule to NOT PROCRASTINATE and to have a Binding Financial Agreement put in place as well as proper family estate protection structures. After the divorce he built a new SMSF estate to favour his financially dependent kids when he was gone. He knew it could not be challenged in the state courts dealing with estates.


Rose was well past being an emotional mess and she rarely cried except with happiness these days. All of the past mess in her life started because of money. Ted had been too tight to just pay and get the family estate protection planning done properly which would protect her by ensuring the proper running of the family affairs when he died. Rose had learned a lot from this and had told all of her friends at the Golf Country Club about what she had had been through and had learned about family estate protection planning and the use of SMSF's for maximum investment returns.


Shane occasionally had lunch with her just to say thank you for the clients she continuously referred to him. She now loved her life, she loved Fred, and she mostly loved that it all had come about because she had learned that prevention was better than cure in the legal world and much more cost efficient. She was provided for very well when Fred passed away, and there was no trouble with the estate even though it was from a blended family. Rose and her step kids fully understood how Fred had planned for the estate to go, and all were happy to abide by the rules put in place for Fred's Family Estate Protection Will, family trust, and his SMSF estate. There was after all plenty to go around and they loved each other more than the money they were dealing with.


Suzy passed away peacefully in her sleep one night whispering about how penny pinching procrastination had cost her family so very dearly. Rose passed away not long after that and her grandkids were very well provided for, as were Fred's kids & dependent grandkids from his estate reverting back to them. (Fred had not dilly dallied. He had changed his SMSF Will as soon as his grand kids came along! This saved his estate hundreds of thousands in tax!)


Rose's son was the best cared for at the reading of Rose's Will. Rose left him the best gift of all. She had paid from her own personal estate for Shane to rebuild her son's family estate so that he would never have to endure anything like that which Rose had experienced. Rose also created a fund in her Family Estate Protection Will to be invested and applied for the education of women about their family estate protection planning.