How to leave an investment

For a more diversified investment, an option could be the Colonial First State (CFS) Enhanced Index High Growth Fund, which CFS suggests should be considered an investment with a maturity of at least 7 years. Again, this is at a low price compared to six months ago, but it could be lower.

My wife and I have established two testamentary trusts for my children ages 11 and 8. My brother is the sole executor of both trusts until my children reach the age of 25. The attorney who set up the trusts said my children can choose to continue the trusts up to age 80, protecting the trust assets from creditors. Could you please explain what you meant in a recent column on this topic, when you wrote that single-beneficiary trusts may not withstand a claim in court? And whatever you mean by assets within the trust don’t belong to a single beneficiary until the trustee decides? FW

A trust is a relationship between someone who has assets (the trustee) and who has a duty of care towards another, i.e. one or more beneficiaries. For example, pension funds are all trusts, albeit with their own rules.

In a “discretionary” trust, the money is invested in the name of the trustee and neither the assets nor the income can be said to “belong” to a beneficiary until the trustee decides to distribute them, assuming he, she or it (if it is a trustee of the company) who have discretion.

Distributions from a “permanent” trust, where each beneficiary receives a predetermined share, are not subject to the trustee’s discretion. Ultimately, the assets are distributed as that is the job of the trustee.

Problems arise when a third party, say an unhappy spouse, claims the assets in the trust and goes to court and says “those assets belong to my spouse and I want them as part of my divorce settlement”.

If there is more than one beneficiary—and all assets are invested in the trustee’s name, and the trustee has not decided to distribute assets—no one can tell who the money ultimately “belongs” to.

However, if there is only one beneficiary of the trust and the law requires the trustee to eventually pass on the assets, a judge would have much less uncertainty about who would ultimately own the money (and could rule that the funds are part of the trust). a divorce settlement).

Trusts are not cheap to run, with tax returns and other accounting fees paid every year.

Once the kids reach adulthood at 18, it’s also questionable whether a testamentary trust would benefit them unless you have other undisclosed concerns.

I am a 63 year old single man making $65,000 a year. I have three independent adult children and recently paid off my modest mortgage. My super balance is $300,000 and I bought my first new car last year with my savings. I have no other assets. I just inherited $95,000 and ask your opinion on my best options for using it? NR


If you think about your own needs, add the money to your super. Beginning July 1, your employer will contribute 10.5 percent, or $6,615 to your fund in 2022-23, if you don’t get a raise.

You can, say, top this up to $27,500 in June next year with a personal allowance (tax deductible) and then add the rest of the $95,000 as a non-concessional contribution (no deduction) but without 15 percent tax on entry . If you then retire at the age of 67 or later, you will have more money to build up your share age.

Another option, for example during a four-day holiday weekend, is to book four rooms on the Gold Coast and take all the children and grandchildren with you. Some memories are more important than money.

The advice in this article is of a general nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making financial decisions.

If you have a question for George Cochrane, please send it to Personal Investment, PO Box 3001, Tamarama, NSW, 2026. All letters answered. Helplines: Australian Financial Complaints Authority, 1800 931 678; Centrelink pensions 13 23 00.

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