Discuss Estate Planning And Insurance


Estate Planning case study


Bruce and Samantha Lee are a married couple aged in their early 40’s and have come to you for some financial advice around the protection of their wealth and other risks that they face. They are concerned about accumulating sufficient wealth for their retirement, while at the same time living a relatively comfortable life and providing the highest possible education for their three children Andrea (19), Mitchell (9) and Taylor (5).

Personal details

  Bruce Samantha
Date of Birth 09/06/1974 26/02/1976
Age 45 43  
Marital status Married Married
Children 3 children aged 20, 9 and 5    
Work status Full Time Flexible hours
Occupation HR consultant Accountant (self?employed)
Smoker No No  
Estate planning      
Will No No  
Power of attorney No Yes  
Enduring power of attorney No Yes  
Savings and Expenses     Amount ($)
Bruce’s Salary before tax     147,500
Samantha’s net income from business partnership (before tax) 112,000
Other income     1,500
Income before tax     261,000


Household / living expenses   (72,000)
Loan repayments (Principle and interest)   (32,748)
Holidays and entertainment   (20,000)
Total Surplus before tax   126,525
Note: Figures are for the prior financial year    
Amount Outstanding Interest rate  
$420,000 (25 years) 3.7%  
$10,000 (10 years to maturity 6.0%  
– recently refinanced)    
$12,000 12.5%  


Asset Cost price and date of Purchase Market value
Home $505,000 in 2014 $840,000
Contents $140,000 $150,000
Cars (2) $108,000 $82,000
Campervan $32,000 in 2012 $28,000
Bank account   $20,000
Bitcoin   $40,000
Term deposit   $15,000
Share portfolio $20,000 in 2009 $45,000
Office furniture for business (share) $60,000 in 2012 $50,000
Superannuation (MLC Masterkey    
Super retail fund )    
?Bruce   $230,000
?Samantha   $50,000
Total assets   $1,550,000

Other information

  • The couple would like to send their 2 younger children to a private school when they move into secondary school at age 12. Andrea is at university in the second year of a Bachelor of Arts. Bruce and Samantha would like to pay her fees up front so she does not have a HECS debt and to that end have paid her first years fees already.
  • Their 9-year-old child, Mitchell, has a physical disability but has normal cognitive function and learning capacity. The couple would like to provide some additional financial support for him when he becomes an adult.
  • You can assume that funeral and final medical expenses would be $20,000. Assume that if either Samantha or Bruce were seriously injured, out-of-pocket medical expenses would amount to $25,000. Bruce and Samantha do not have private medical insurance nor have they considered or made any legal provision regarding medical treatment decisions •Bruce’s father had a stroke at 53 and was unable to work after that.
  • Samantha’s brother is her attorney. The power of attorney and enduring power of attorney were established 20 years ago before her brother moved to Hong Kong. She has not heard from him since that time.
  • Samantha and Bruce intend to retire at 60 and 65 respectively, at which time they expect to be able to live off the income derived from their superannuation accounts.
  • Samantha is a 50% partner of ‘All Accounts Accountants’ with her lifetime friend Mai from university. The business has made a consistent 45% profit on turnover over the past 7 years. •All Accounts’ office furniture consists of a computer which holds all records of the business. All information is backed up via a USB memory stick and they annually update their Norton security software
  • Assume a CPI rate of 2.5 per cent p.a.
  • Samantha and Bruce’s life expectancy is estimated at 85 years and 83 years respectively.
  • Bruce works as a HR consultant for a major financial services business.
  • Included in the contents list are several items of antique furniture items that were passed to Samantha from her grandmother and have a current value of $87,000.
  • The couple are looking to travel to Europe next year with the children for four weeks on a family holiday that is expected to cost $40,000. (The couple intend to use Bruce’s substantial Qantas Frequent Flyer points, around 1,000,000 points, accumulated from his previous employment to book the best seats they can on the plane for the trip).
  • Mai and Samantha have never made a formal written agreement regarding the business but have estimated that if one of them was to die then the value of the business would $1.20 per dollar of gross fee income received.
  • Living expenses of approximately $700 per month per each child would end when they cease to be dependent, which can be assumed at age 24 for each child.
  • You can assume that in case of one of the couple dying prematurely, the couple’s living expenses would fall by 20 per cent.
  • Bruce and Samantha have life insurance and TPD cover with their superannuation. They elected to take the standard cover with MLC Lifestage insurance. Both are worried that they may be under insured and Samantha wants her TPD cover to come under the “own?occupation” definition of TPD. Bruce also has an agreed income protection insurance policy of $4,000 per month payable to age

60 with a 90-day wait period for which he currently pays $300 per month. The couple has a Home  and Contents policy and Third Party policies on their cars and campervan. They have no other insurance policies in place.

  • All Accounts currently rents premises for conducting its business.
  • Samantha does not currently contribute any money to superannuation.
  • Bruce made an investment in bitcoin during the year as he thought it was a good long-term investment.
  • Bruce has a rather large iTunes collection but otherwise has minimal use of the internet while Samantha is a heavy Facebook user and All Accounts does most of its business digitally.


After analysing their personal circumstances, prepare a limited Statement of Advice (SOA) to Bruce and Samantha. Ensure that you summarise their current estate planning and insurance positions, outline the potential risks and losses they are exposed to, justify and explain the types of cover you would recommended to cover their risks and the amount of cover you would put in place. It is expected that you will explain the various policy features as well as typical exclusions likely to be experienced and also discuss the merits for and against holding their various personal insurance policies within their superannuation funds including the tax implications of the cost of the premiums. You are not required to recommend specific policies. Include in your Statement of Advice analysis and recommendations that relate to the couples digital assets. The limited SOA should contain a Covering Letter addressed to the couple detailing the purpose and general content of the report and a Table of Contents.


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