Case Study – Couple in late 50’s still working, terminal illness, company takeover and going back to work

Couple in late 50’s still working, terminal illness, company takeover and going back to work

CASE STUDY
Couple in late 50’s still working,
terminal illness, company takeover
and going back to work

The wife was happy in an administrative job locally. The husband had a long-running business with another executive director with equal share of ownership. The husband was diagnosed with terminal cancer and possibly 5 years to live. He decided to retire, and take on treatment, including a new procedure that was in trail stage and also expensive.

They had begun a Self-Managed Super Fund (SMSF) with us because there was only an administration fee with no further set up costs (which would not be tax-deductible for the fund) and they wanted the control and flexibility of investment choice with SMSF. We arranged the Trust Deed and cash management account with a good interest rate and made applications to their commercial super funds to rollover to the SMSF. They now had $400,000 combined monies in the SMSF. There was also a Term Allocated Pension (TAP or Market-Linked Pension) which began before the SMSF where the husband had to declare in writing that the conditions of the TAP would be maintained in the SMSF.

The husband began treatment, but several months later found that the other director was applying to transfer patent ownership of their main product to his own name, as well as get staff on-side to support his take-over of the company. Up to $100,000 was required to buy the other director out and get rid of him. We converted one of the husband’s accumulation accounts to pension, then he withdrew it in 1 main lump sum. He was now only left with the TAP, which has the minimum pension by law, up to a maximum of 10% of the value. With treatment expenses coming in, the TAP could not allow us to draw enough, so his wife retired from one of their companies, and we started one of her accounts in an Account-Based Pension (previously called Regular Account-Based Pensions or RAP). Nearly $80,000 was drawn out over 8 months to pay for treatment. She also had employer contributions going to an accumulation account. This also meant an actuary certificate was required to determine the accurate percent of the fund that was in pension and hence tax free for the income proportion.

Good news is he came through treatment quite well, with further tests still in progress to determine if the cancer is fully conquered. The husband had to swing back to work as soon as he was fit enough, to save the company and return it to stability.

His wife can write to the fund and state she wishes to stop the pension and continue in the job she has.

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About SuperBenefitnews

Self-Managed Superannuation Service Providers in Australia. SuperBenefit provides a wholistic SMSF assistance, education and administration service continuum - 1. “assistance” is help of whatsoever nature where our overall SMSF experience and knowledge enables us to provide assistance/help without any legal (or “license”) limitations. 2. “education” involves providing knowledge through teaching, coaching and mentoring about all matters SMSF, including (but not limited to) investment issues such as equities and property, 3. “administration” encompasses all admin aspects of legally required SMSF trustee and member record keeping including (but not limited to) audit and ATO matters. In keeping with our key point that SuperBenefit does not provide Financial Advice, where issues arise from 1, 2, and/or 3 above Indicate a need for a legally authorized provider (such as a Financial Adviser) and the client does not have their own service provider, the client can utilize SuperBenefit’s ‘Connect Assist’ … SuperBenefit, in itself, does not provide Financial Advice, but it does provide the wherewithal for great SMSF service. WE do not provide Financial Advice or any other service that requires a legally authorized provider. However, where such advice or service is required we have our ‘Connect Assist’, a SuperBenefit resource we use to connect clients to a Licensed Advisor or other legally authorised service provider. Call us 0407 361 596, no obligation FREE Connection call to see how we can help you!
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