SMSF Family Profiles SMSF Association. SMSF Family Profiles. 0 P a g e

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1 SMSF Family Profiles 0 P a g e

2 THE FAMILY TREE 1 P a g e

3 JAY JAY AND GLORY Jay Jay, 62, and Glory, 41, have been married for 9 years. They own their own home, are debt-free, and set up an SMSF around 5 years ago. Jay Jay is the major shareholder and managing director of his family business. Other family members are minority shareholders, being Glory, Jay Jay s daughter Clara and her husband Philip (who works in the family business) and Jay Jay s son Mitch. Each have 5% of the family company shares except Philip who has acquired his shares as part of an employee share scheme he holds 10% of the family company shares. Glory runs a hairdressing and beauty salon business from home, where her clients visit her. She has a separate part of their home set aside for this activity. Jay Jay s SMSF account balance of $2.2 million has been substantially funded by insurance he received on the death of his first wife, Dee. The insurance policy was owned in an employer super arrangement. He commenced a death benefit pension at the time, which he commuted and moved back to accumulation phase once he was comfortable to return to work. Glory s account balance of $230,000 has been accruing over the last 20 years, funded predominantly from employer super guarantee contributions. Both rolled over their respective super accounts into their new SMSF and both are still in accumulation phase. Their investments are pooled, generating an annual generic investment return, allocated on an after-tax basis. With Philip taking up an increased role in the family business, Jay Jay is considering working less hours and transitioning into retirement. Jay Jay has two adult children from his first marriage, Clara aged 40 and Mitch aged 35. Glory has a son, Matty aged 13, from a previous relationship, while Jay Jay and Glory together have a four-year old son, Joe. Jay Jay has formally adopted Matty as his son, following the death of Matty s biological father, Xavier, a few years earlier. 2 P a g e

4 JAY JAY AND GLORY S PARENTS Both Jay Jay s parents passed away several years ago. Glory s mother, Pabla, lives on her own near-by, in a home almost twice the size of Jay Jay and Glory s home. She is a self-funded retiree with over $5 million in her SMSF which she started with her husband. After their divorce, she retained the fund and has invested the money well. Until the recent changes, all the money was in pension phase. She is still waiting for her accountant to explain how her SMSF is to be reorganised to reflect the new super regime. Glory s father, Fabio, 70, disappeared after the divorce. Pabla still believes he had secreted away substantial amounts of money in offshore accounts and that he has disappeared overseas to live off these amounts. Glory has not told her mother that she is secretly in touch with her father who is indeed well off and living in the Bahamas. Fabio has mentioned to Glory that he wishes to come back to Australia, set up an SMSF and commence a pension. 3 P a g e

5 CLARA and PHILIP Jay Jay s daughter Clara, aged 40 has been married to Philip, aged 42, for 20 years. They have three children, daughter Halle, aged 20, daughter Allie, aged 18 and son Luka aged 12. All three children live at home. Philip has worked in the family business with Jay Jay for those 20 years where he is currently Chief Operating Officer. Clara had been a stay at home mum until 5 years ago when she took on a role as a sales representative of a well-known cosmetic company. She has proved to be a highly successful representative and is earning significant commission income. Finances were very tight in the early years of their marriage. They still have a large mortgage on their family home and have minimal other savings. Philip has $155,000 in an industry super fund while Clara has $62,000 in a different industry super fund. Even with their increased levels of income between them, they are still struggling to save any significant amounts for their retirement. They have concentrated on reducing their mortgage and the ongoing education costs of their three children. They have limited life and total and permanent disability insurance through their industry funds only. Neither has salary continuance insurance cover. Clara s father, Jay Jay is in particularly good health. Her mother died several years ago. Philip s father passed away a number of years ago and his mother is aged 82 and not in good health. No inheritances are expected in the near future however. Since finishing school and attending university, Halle has adopted a party hard philosophy, which Philip and Clara have viewed as a common reaction for a young person in her position to adopt. Secretly, Philip has expressed some concerns, as Halle s reckless behavior doesn t appear to show signs of waning. 4 P a g e

6 MITCH and CAMMO Jay Jay s son Mitch, aged 35 is in a long term de facto relationship with Cammo, aged 39, of over 10 years. About 4 years ago they decided they would like to have a child. While various options were looked at, they decided to adopt Lulu, who was 2 at the time. Now coming up to her 6th birthday, Lulu is attending a private girls school and is being encouraged by her adopted parents to be an outgoing and outspoken young girl. Mitch and Cammo upgraded their own home about the time they adopted Lulu and now own it outright, as joint tenants. Mitch was a school teacher for 12 years and retained his entitlements under a State Government unfunded retirement scheme. He now works for a private education provider and salary sacrifices the excess over his employer s super guarantee contributions into a company superannuation scheme, up to the maximum concessional contribution cap allowed each year. Mitch has generous life and total and permanent disability cover under the State government scheme, even as a former State employee, and so has elected to not hold any other insurance, other than salary continuance through his new employer scheme. Cammo has been self-employed for most of his working career. He rents a small retail shop in a local shopping complex and employs two sales assistants part time, as well as himself, full time. He has a reasonable sized overdraft facility with the local bank which is secured against a rental property he inherited from his mother. Cammo sees his business and the rental property as the source of his retirement savings in the future. Consequently, he has not elected as a self-employed person to contribute any substantial amounts to superannuation up until now. He has no insurance of any kind in place. 5 P a g e