Trust Explained

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“A fiduciary relationship in which one person (the trustee) holds the title to property (the trust estate or trust property) for the benefit of another (the beneficiary)” – this is how trust is defined in the dictionary.

Reasons to set up a trust

To protect assets is one of the major reasons for creating a trust. A trust can protect assets and property from creditors, it can look after an estate until such time when a beneficiary reaches legal age to take ownership, or keep valuable assets separate from a trading company that may be exposed to risk, like litigation.

If set up properly, a trust can be used to lawfully reduce some tax obligations. However, this can be a delicate matter, as the taxman is constantly watching for individuals or corporations who are taking advantage of the loopholes or over-stretching the limits for lowering taxes. It is advised that you seek specialised advice on this matter.

The word “trust” is used inappropriately in these types of arrangements. A trust is an official entity overseeing a responsibility, where “beneficiaries” put their trust (or confidence) in the one who controls the assets (called trustee) for their benefit.

Another party in a trust structure is a “settlor,” the person who provides the initial trust asset (which can be money or property like a house) in order for the trust to be formed. There is also the “appointor,” the person with the power to appoint, replace or remove trustees.

Fiduciary duty of a trust

This relates to isolating control from beneficial ownership. The trust allows for a business or assets to be controlled by a third party (trustee) who has the legal control and has the responsibility to run that business or oversee the assets for the benefit of another party (beneficiaries).

Distributions and tax

The usual tax laws govern how a trust computes its taxable income for the year. The income is either distributed or kept by the trustee. Income received by beneficiaries will be taxable at their own marginal rate. On the other hand, the trustee, (on behalf of the trust), must pay tax on any taxable income that is retained by the trust. Top rate (including Medicare levy) is used to tax undistributed income.

When income is distributed to each beneficiary, the trust must consider the financial, taxation and personal situation of each beneficiary so that income is distributed in a manner that benefits everyone. Naturally, the terms of the trust deed bound the trustee.

Types of trust

A fixed trust is where the share that beneficiaries own in assets and income (which can be absolute or proportional) are fixed or pre-determined, giving no flexibility for the trustee to adjust income distribution. A typical fixed trust is a unit trust, as each unit owned in the trust entitles a beneficiary to a specific share of the income and/or capital.

A discretionary fund gives the trustee the discretion to choose which beneficiary receives income from the trust. This must be distributed based on the terms of the trust deed.

A hybrid trust has elements of both discretionary and fixed trusts. It can be a discretionary trust having some rights that are pre-determined by the trust deed, or a unit trust having discretionary distribution options. A hybrid trust is characterised as anything that is neither completely discretionary nor completely fixed.

Family trusts

A hybrid or discretionary trust can typically be a family trust to obtain tax breaks, if the trustee chooses to do so. However, distributions have to be limited to members of a certain family group. Only the income distributed outside of this group will be taxable at the highest marginal rate (plus Medicare levy).

There are various reasons to set up a family trust. First, a discretionary trust’s beneficiaries may otherwise be unable to benefit from franking credits ascribed to share dividends obtained by the trust and distributed to beneficiaries. Second, it would otherwise be more difficult for the trust to utilise previous tax losses versus the present year income.

Ownership issues

Another reason to set up a trust is if means or assets tests for government benefits are a possibility in your financial future. A trust can help re-allocate legal ownership without fully sacrificing the benefits you get from the assets.

Consideration for inheritance is the other side of asset protection. If a major asset, a beachfront property for example, is owned by a trust, and there are conditions for the sale and/or maintenance of the property specific in the trust deed, family members born later will also be able to benefit from the property and not have some irresponsible cousin just sell it off.

Getting the trust structure right can be a challenge. There could be instances in which asset protection and taxation would be competing interests, and great consideration should be given to other trade-offs for taking advantage of the trust structure.

There are some areas of trust that are complex, so if you are considering setting up a trust it would be wise for you to seek expert advice from a lawyer and an accountant.

Are you considering setting up a trust? Ask your lawyer or accountant for guidance, or contact PJS Accountants. We offer accounting and other bookkeeping services to individuals and companies, big and small. Allow our team to evaluate your business and advise you on the right measures to create an excellent financial management strategy for you.

Guide to Creating a Succession Plan

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Succession involves making sure the success of your business continues through a timed change of ownership and control. Who will take over the business, when will they take over and how they will they take over the business should be outlined clearly in a succession plan.

Many owners feel daunted by the idea of handing over the reins of their business to someone else. If you need help dealing with the emotional effect of succession and the practical aspects of your succession plan, go to Family Business Australia.

Planning your succession

Make your succession plan way before the time you actually leave your business. Based on research, succession can require over two years to plan. Preferably, your succession plan should be included in your general business plan and be looked over regularly. Make it flexible enough so you can change it anytime there is a change in your situation.

Picking a successor

Identifying a likely successor should be your first priority. Typically, your succession plan can take the form of either:

A family succession plan, which entails creating a trust, selling or gifting the business to relatives
A non-family succession plan, which entails a management buyout, or selling the business to employees or your co-owners

Things to include in your succession plan

Generally, all financial, legal and operational plans for exiting your business should be addressed in your succession plan. The particulars will not be the same for each business, but you can start the first step by answering the following questions as you create your succession plan:

Operational matters

  • When do you intend to exit the business?
  • Will you be fully out of the business or will you still participate in some areas?
  • What are the duties of your successor?
  • What are the training programs you will set up for your successor(s)?
  • What are the dangers that can result from succession?
  • What will be the state of the business when you exit? Who will take on major positions?
  • Are the contracts, work agreements, etc. of the employees all updated?
  • Are all of your plant and equipment working properly?
  • Have you discussed the succession with major suppliers and customers?
  • Have you thought about privacy and intellectual properties policies?

Financial matters

  • Are you gifting or selling the business to your successor(s)?
  • How much is the value of your business or your interest in the business?
  • What are the tax and monetary effects of the succession?
  • What insurance policies have you purchased in case you become disabled, die or injured?
  • What’s the amount of income you require to retire/exit the business?

Legal matters

  • Will the legal structure of the business change after you exit?
  • Do you require legal papers that contain the provisions of the succession?
  • Do you have to modify/transfer any permits, licenses or registrations?

Talk to a professional business adviser when organising your succession plan. It is also helpful to talk to your family and important people in the business, particularly your potential successor(s).

Applying your succession plan

The implementation of your succession plans involves outlining a practical timetable to achieve major milestones. The things that should be included in your milestones are:

  • Naming a successor
  • Business housekeeping, such as important dates for legal and financial requirements
  • Successor training
  • Phased in hand over of responsibilities
  • Final transfer

Ensure that this timeline is conveyed to all those involved in the business so they are aware what’s happening and when. It can be emotional and difficult when you step back from your business, but it would be easier to let go by setting up clear targets and time frames.

Contact PJS Accountants to help you organise your succession plan. We provide a full range of services including accounting, taxation, business improvement, superannuation, business valuations, asset protection, succession planning and bookkeeping. We have been dealing with local businesses in Capalaba, Cleveland and the Redlands for over 30 years. Our team is always available to take your call and help with your business needs.

What is Family Succession?

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Business owners who have invested a lot of time and money growing may strongly feel the need to retain ownership of the business within the family when they exit.

If you are looking at handing over the reins of your business to a relative, either by gifting it or selling it, you must consider the impact it would have on both your business and your family.

Selecting a successor in the family

What’s best for the future of the business should always be given top priority when choosing a family successor. While you may wish to secure your children’s future by leaving them the business, it could create problems if they don’t really want to take responsibility for it. You must choose a successor that possesses both the required skills and dedication to lead the business forward. Don’t let emotion rule your decision. You can benefit from creating a board of non-relatives to gain an impartial opinion.

Problems could arise when picking a successor. Naming just a single successor may create disputes if other family members are also interested in heading the business. Alternatively, naming more than one successor could bring about disputes because there is no obvious leader. Major problems could also arise if the successor(s) fail to come to an agreement on how the company should be run.

Ideally, the role of successor should be earned, not just inherited. To find out how suitable and committed a potential successor(s) is, set up a trial period during which they would be assigned to work in all areas of the business.

Ownership and management

The method of transferring both ownership and management is a major consideration in family succession planning. Use the following questions as a guide when planning family succession:

  • Will both ownership and management be handed over to relatives?
  • Will the business be equally owned by the family members?
  • Will non-family members be given management roles?
  • Do you have to modify the goals and long-term targets of the business?
  • What method do you use to quantify the success or performance of the business?
  • Who are the family members who will take active participation in the business? What are their duties and responsibilities?
  • Will there be relatives who will take non-active ownership?
  • Is training or mentoring needed by your successor?
  • Do you wish to take on an adviser role after you hand over ownership of your business?

Financial and legal matters

Consider the legal and financial impact of family succession and add these in your succession plan:

  • How are you transferring the business to your family: by gifting it or selling it?
  • Is creating a trust required as part of the succession? There are tax implications when you set up a family trust to own and run the business on behalf of your children.
  • Will you get the business’ market value if you are selling it to a relative? Make sure you are rewarded justly for all the work you have done for the business and avoid financial disagreements by obtaining a professional valuation.
  • Which would you prefer: receive a regular dividend from the business or get a lump sum?

Before selling all or part of your business, make sure to obtain professional legal and financial guidance.

Communication and dispute resolution

An important aspect of family succession planning is open communication. Both family and key staff should be included in any decision-making associated with the future management and ownership of the business. Their views and opinions are important. Look over the plans regularly with relatives to ensure they are up to date and content with the progress.

Having a process for resolving disagreements is also essential. Emotion cannot be totally eliminated in family businesses. So it is a good move to get an objective opinion from a trusted third party such as a lawyer, accountant or family business adviser.

Get help when taking on a family succession process for your business. PJS Accountants offer a host of services including accounting, taxation, business improvement, superannuation, business valuations, asset protection, succession planning and bookkeeping. We have been dealing with local businesses in Capalaba, Cleveland and the Redlands for over 30 years. Our team is always available to take your call and help with your business needs. For enquiries, contact PJS Accountants.

The Most Common Ways of Exiting a Business

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At some point, every business owner will decide to exit their business. There are various reasons why this happens. These include declining profits, growing competition, shift in life goals or health, retirement, or handing over the business to family members. Some may even exit their business because they can’t keep up with its growth. Exiting a business is sometimes done voluntarily, while others are forced to do it.

Preparing for exit is important as the process can involve fulfilling a host of monetary, legal and operational requirements. Your goal is to make sure your business is in good shape before you exit.

Preferably, you should include an exit strategy in your primary business plan. You can find out about the different exit strategies available for your business by talking to your solicitor or financial adviser.

Here are the most common methods to exit a business:

Succession planning

If it took you years and a lot of effort to develop and expand your business, the thought of just selling your business to another party may not be to your liking as you may prefer to pass it on to a family member. This method of exit strategy is called succession planning.

Succession involves making sure the existing success of the business continues with a hassle-free transfer of ownership. This needs a huge amount of planning. In a formal succession plan, who will take over the business, when they would take over and how they will take over must be clearly defined.

Shutting down the business

It may be hard to sell a business that is declining. If this is the case, it may be better to close it down. There are a lot of things involved in closing a business, including divesting business assets, paying debts and retaining whatever money is left.

When closing a business, there are many legal obligations involved, as well as monetary and emotional costs. You, your employees and other stakeholders in your business will be affected by these factors.

Selling your business

This is typically a major decision for a business owner. When planning to sell your business, you have to make specific decision regarding the why, when and what you are divesting and the person you are selling your business to.

In money terms, the best time to sell is when a business’ sales and profits are up. Your business will get a higher value and will attract more prospective buyers.

Contact PJS Accountants to help you plan your strategy for a successful exit from your business. We provide a full range of services including accounting, taxation, business improvement, superannuation, business valuations, asset protection, succession planning and bookkeeping. We have been dealing with local businesses in Capalaba, Cleveland and the Redlands for over 30 years. Our team is always available to take your call and help with your business needs.

What is Non-Family Succession?

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In cases where no family member is interested in taking over your business or if you do not have a potential successor in your family, there are two options for non-family succession:

  • Buy-sell option – selling your share of the business to other owners
  • Management buyout – selling your business to employees

Buy-Sell Option

For a business that is a partnership, the buy-sell agreement is available to them. How the remaining partner(s) will purchase your share of the business when you die, become disabled or retire can be determined by buy-sell agreements.

These are the items that are explained in buy-sell agreement, a legally binding contract:

  • When owners can divest their shares
  • Parties that can buy the owner’s shares
  • How much is the value of the owner’s shares
  • Where the financing will be obtained to pay for the owner’s shares

Insurance will be a crucial part of any buy-sell agreement as your co-owners may have insufficient funds to purchase your interest in the business, and the business will need to be liquid to maintain its operations after you turn over ownership.

Management buyout

Management buyout, or selling the business to managers or employees is a common succession strategy for small and medium-sized businesses. However, there are both advantages and disadvantages with a management buyout:

Pros

  • Both the old and new owners will have some assurance of the business’ future.
  • Employees already have the knowledge about the business’ strengths, weaknesses and culture.
  • There is already an established relationship with suppliers and customers.
  • Employees may feel more assured that their jobs are secured. When selling in an open market, outside buyers may have a mind to replace employees with their own.
  • Owning an interest in the business can strengthen productivity, innovation and morale. This is brought about by the shift in mindset from employee to owner.
  • New owners will be more committed to making a success of the business as profits will go to them.
  • There is no need to sell or reveal classified information to a rival in business.

Cons

  • Training may be needed for the management buyout.
  • A dispute may arise over the purchase price.
  • The financing should meet the requirements of the seller but also have enough remaining to keep the business in operation. Major problems can arise if a buyout leaves no cash after the sale.
  • Managers may only be interested in the buyout to continue having a job. They may not have the funds or knowledge to run the business in the long term.
  • If the buyout fails, you have to cautiously handle relationships between you and the staff.

This process must be handled over time and communicated in a straightforward manner. Have professional advisers on hand to help management with each step of the process.

Seek guidance when undertaking a management buyout of your business. PJS Accountants provide a full range of services including accounting, taxation, business improvement, superannuation, business valuations, asset protection, succession planning and bookkeeping. We have been dealing with local businesses in Capalaba, Cleveland and the Redlands for over 30 years. Our team is always available to take your call and help with your business needs. Contact PJS Accountants for enquiries.

What you Need to Know About Inheriting Property

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Because of the relentless increase in property prices, many prospective home buyers could be excused for thinking that the only way they could own a home is through inheritance.

What occurs when you find out you’ve inherited property.

In Australia, unlike in other countries, there are no death duties or inheritance tax. However, it does not mean that the taxman will just simply allow you to have the property. Wills and inheritance are covered by state and territory laws, but they may also be subject to federal taxes and regulations. Capital gains tax (CGT) is the primary one.

The rules on CGT as it applies to inherited property vary significantly and are dependent on several factors:

  • How you are related to the individual from whom you inherited the property
  • When they died
  • What the property was used for – for instance, whether the property was the person’s residence or if you’re a co-owner of the property.

Viability of owning the property

Before making any decision, make sure to find out the value of the property you’ve inherited:

  • Get the property valued by a professional; it wouldn’t hurt to also have a building survey done on the property, or a strata survey, if the property is some type of common title like an apartment.
  • Instruct your accountant to familiarise you with the tax implications and go over how taking ownership of the property would impact your financial situation.
  • Adopt a tactical, long-term outlook of the property and if you are able to fund its maintenance. Certain short-term expenses may actually put you in good financial position in the long run.
  • Be level headed, especially if the person who left the property to you is close to you, such as a partner or a parent. The sense of obligation to keep the property may be strong, regardless of the financial cost to you. However, try to remove your emotional connection to the property and be objective when viewing it.

Unwelcome inheritance

You are not obligated to keep your inherited property. You have options: either sell it promptly as a deceased estate, or make it a renovation project (and possibly make a profit from selling it after renovations are done).

In case the property was the dead’s person’s main place of residence, you don’t need to pay any tax from selling it, if you’re able to sell it within two years from the date you inherited it.

You can also rent out the property. This option would earn you an income, or at least allow you to use the rent to fund the upkeep of the property.

Of course, you don’t have to do either of those things and just decline the inheritance. This is not common, but it absolves you of the obligation and expenses of becoming the owner of the property.

You don’t need to fear inheriting a property. Just don’t forget to factor in all implications of taking ownership and maintain records of the inherited property to reduce your tax obligations.

Inheriting a property comes with different tax and legal obligations. Aside from consulting with your lawyer, be sure by talk to your accountant to discuss the tax and financial side of things.

PJS Accountants, chartered accountants, offer a full range of services including accounting, taxation, business improvement, superannuation, business valuations, asset protection, succession planning, estate planning and bookkeeping. Contact PJS Accountants for enquiries.

“Ignorance is not bliss” when it Comes to Succession Planning

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You probably have encountered all types of clients – those who have to take drastic action right this minute; those who live happily outside of their means; and those who believe that long term is next week.

It’s fun living your life now and not thinking about your obligations for the future. But when the fun stops, you’ll find that you have a lot of catching up and tidying up to do.

Fortunately for those individuals who’ve chosen to act early, they can enjoy their life today and still expect to experience the same enjoyment in the years ahead.

You can realise genuine financial security by adopting a practical long term approach, planning early, and implementing a financial planning plan gradually but surely – starting immediately.

Planners set up their practices for many notable reasons:

  • To fulfil a need to improve and safeguard the lives of people
  • To build a viable business that will earn money and let work opportunities and careers to grow
  • To establish an asset that in the future will be important to another person with similar client-based objectives

Most successful planners can easily fulfil the first two points above, but struggle with the third item, which is referred to in financial/accounting circles as “succession planning.”

It is important to establish a business and make it successful that clients will flock to you, they wish to be your employee, they want to invest in your business, years after your retirement.

Sadly, a number of practice owners don’t bother with succession until they begin planning the details of their retirement party. By that time, you have turned into a price taker, not a price maker.

According to practice owners, they began succession planning roughly 10 years before their retirement. This is sufficient time to fulfil the following:

  • Determine the right candidates who will own and operate the business in the years to come
  • Present the new advisers to the clients
  • Attain growth objectives to allow optimal valuation
  • Obtain financing to allow the implementation of strategy

What’s even more challenging for these firms is resolving succession. There are questions that need to be answered, such as who has the funds to purchase the business, over what time period, and what the purchase price is?

A critical, but often disregarded, issue to take into account is “what’re the buyers’ intentions?”

Granted the pool of buyers is likely fewer for large-sized business, nonetheless the practice owner has to evaluate the real intention of the buyer.

  • Do they intend to continue the client relationship that you have painstakingly nurtured over the years?
  • Are they really committed to building a viable business that will allow careers to grow?
  • Or they simply have lots of money and are eyeing high return on equity?

This succession-planning challenge is coming to the fore as the industry’s biggest and profitable firms begin to see manifestations of the problem. Over the past few years, we’ve witnessed listings, acquisitions by institutions, and management buyouts. These moves are largely driven by a party requiring an exit plan and a different party needing a growth plan.

What impedes this is that “exiting” and “growing” are two contrary concepts. Studies done over the years have shown that acquisitions rarely result in a win-win situation. It is the buyer and/or the client who lose out more often than not.

This is not something that should make vendors happy. A winning succession requires the convergence of similar interests. The only way this can happen is if the vendor begins planning in advance so that they can devise an exit plan while still working towards growth, This way the interests of both buyer and seller can be satisfied, while still continuing to sustainably serve the clients, employees and the community.

Begin planning today to allow you to take control of your future. It is only right that you do this for the sake of your clients and your employees. If you begin considering succession immediately, you’ll find that there are genuinely aligned options available to you.

Always keep your motives in mind and remain faithful to them. In doing so, you can always look back on your professional life and feel proud that you made a difference.

Seek financial advice today regarding succession planning to secure your future and that of your employees and your community. PJS Accountants offers a full range of services, including tax planning and compliance, accounting and SMSF services, and bookkeeping. For enquiries regarding our services, contact PJS Accountants.

Two SMSF Accounts May Benefit you More in your Retirement

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To save on fees, superannuation members are advised to consolidate their accounts. However, doubling up may sometimes be advantageous.

Utilising two or more funds could benefit some in relation to tax, estate planning and insurance. And there is no rule saying that it is not legal to have more than one fund.

A number of super strategies centre on two kinds of contributions that members make: concessional contributions like salary sacrifice that provide deductions and are taxed; and non-concessional contributions paid from after-tax money.

Pre-retirees can avoid a death benefits tax of a minimum of 15% being applied on SMSF willed to their adult children by splitting these kinds of contributions, because just the taxable part is taxed.

Estate planning is currently the primary driver, however, a future-proofing element is definitely present now. The reason is that both sides of government can’t help but get involved in super, and individuals who split their SMSFs may be able to act quicker when adjustments are made to the guidelines again.

If health problems are hindering you from obtaining adequate insurance to cover your family, an option available to you is to sign up with a number of funds, which automatically provides basic insurance to new members. For example, if the man of the house dies unexpectedly, he could leave his family with a $1 million life insurance payout, if he has not consolidated several funds that provide life insurance.

It is rather common for people who set up an SMSF to leave a balance in whatever fund they have joined before to keep the insurance intact.

Any of these strategies are great on paper, but when it’s time to put it into practice, there’s nothing better than seeking advice.

Some people benefit from being creative with their super, but it is largely smart to keep super as uncomplicated as possible. Carefully consider the pluses and minuses before messing around with your super.

Expect more additional fees and administration responsibilities when you set up or join a second fund.

In some cases, there are potential benefits to joining two super funds. Generally, this strategy is ideal for holders of SMSF, those individuals in their mid-50s and beyond, aiming to split concessional and non-concessional contributions to secure longer term tax savings.

PJS Accountants works with clients to open and manage a SMSF. Contact PJS Accountants if you’d like to talk to us about your retirement goals and help you strategize to get the most out of your super fund.

Small Business Owners: Planning for Retirement

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On the subject of retirement planning, the most typical answers among small business owners are: “I don’t intend to retire” or “my business is my retirement fund.” However, the reality is that slowing down or retiring is in the cards sometime in the future, or you will have no choice but to do so due to health reasons or shifts in your industry.

It is difficult to save for retirement when you’re paying ongoing expenses and intend to expand or finance your business operations. A few employees use a percentage of their current income to approximate their retirement income requirements. However, this is not the right method for small business owners who are building their business and waiving additional income to create long term wealth.

Your retirement fund requirement at 60.

There is a ballpark figure you can use as a base for retirement planning, courtesy of ASFA & Westpac. Every six months, they give out a survey to find out the amount retirees are spending and the things they are spending their money on. The data provides a single person or a married couple an idea of what amount they would need to live a comfortable life upon retirement.

Finances for different living standards and households as of June quarter 2015:

Modest lifestyle

– single

 Modest lifestyle

– couple

 Comfortable lifestyle

– single

 Comfortable lifestyle

– couple
Total per week $455 $654 $824 $1130
Total per year $23,662 $34,051 $42,861 $58,784

Source: ASFA Retirement Standard

The numbers in every situation assume that the retired person(s) lives in their own home, and the amounts equal to expenses by the household (for couples). The budgets can be higher than household income minus income tax where there is a drawdown throughout the extent of retirement. Figures from female respondents were used for singe calculations. Unless otherwise stated, all computations are weekly.

Follow these tips to meet your retirement fund needs:

Be responsible for your own savings.

Employees have their employers to take care of their superannuation payments. However, this is not the case for business owners who must pay their own superannuation. As a business owner, you must utilise a method of ‘paying yourself’ and start as early as possible even if the amount is only $20 per week (this is sufficient to obtain the government co-contribution) while getting minimum income from your own business. Raise the amount by 5% every six months and increase it further during the good years after you have come up with a tax plan with the help of your financial planner or accountant.

The foundation of your retirement plan will normally be a business retirement or exit plan. Don’t think that you will have to close down your business. But one aspect of your superannuation planning may involve selling your business.

According to the MGI Australian Family and Private Business 2010 conducted by RMIT University, owners are depending on the sale of their business to finance their retirement, but with prices declining and available funds running out, they are forced to continue working.

Save a portion of your profits each year because the value of your business may or may not be there. Avoid reinvesting all the profits back into your business. What you need to do is build wealth inside and outside of your business as you approach retirement.

Think about starting a self-managed superannuation fund.

A number of business owners sign up for a self managed superannuation fund (SMSF) for the retirement fund plan. You can derive many benefits from SMSF including reduced tax rates, flexibility when looking at sources of income, and ability to decide what to do about your assets. In addition, you can also own the place where you run your business in your SMSF. Capital becomes available for reinvestment, and you gain a secure tenancy with your SMSF serving as the landlord. Your retirement plan, or SMSF, gets a steady rental income, frequently at the industrial or commercial property rates of 7-10%, not the 3-5% on residential rental properties or the instability of the share market.

Control your risks.

Let’s say you find yourself considering withdrawing from your business in a time like now, following GFC where there is a financial crisis, or several business owners are divesting simultaneously. If this is so, start to plan and organise your business to sell it 5 to 7 years prior to your intended retirement age, to get the highest possible value.

Get life, disability and business expenses insurance, so that you or your loved ones can employ people to assist you in operating the business. This would ensure that the sale of the business will be well planned rather than forced.

Know that superannuation is shielded from bankruptcy.

Your superannuation balance is shielded from your creditors in case of a bankruptcy, as long as you are making payments regularly. Take note that payments have to be regular and ongoing, and not look as if their sole function is to take cover from bankruptcy.

The key is advanced planning.

Retirement planning should be done as early as possible. A large number of business owners reach a plateau at some point in their working lives, or worst, they get sick or get injured and that ends their career. People are frequently very tired or preoccupied that they lack the drive to organise and market their business for sale the right way.

This gives them so little time to sell the business for maximum value, and buyers will know this and take advantage!

Commence early and focus on the end target so that your business and retirement fund will all be arranged for you. Thus, you will not be forced to decide whether to retire or continue working.

Enlist the help of professionals when planning for your retirement. If you are a business owner, then your business should be a part of that plan.

At PJS Accountants, we offer succession planning services to help you prepare and organise your business for when you eventually retire. We also offer expertise in managing SMSF, accounting, taxation, business improvement, superannuation, business valuations, asset protection, succession planning, and bookkeeping. Contact PJS Accountants for enquiries.

Planning your Retirement

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It is essential to be ready as much as possible if you are about to embark on a major lifestyle change like retirement. Here are four tips to help you find the plan that you need for your retirement:

1. Plan on how you will remain healthy.

You have to be healthy so that you can enjoy your retirement. Create a plan for how you will remain in the peak of health, at present and in the years ahead. This could include seeking locations that are ideal for walks or jogging, or participating in some type of organised sports club. For your exercise to be effective, you have to find good routines and stick to them. Instead of squeezing your exercise sessions during your free time, it’s good to plan your entire week, allotting a special time to go walking in the park.

2. Settle all your legal issues.

You should be enjoying life and suffering as little stress as possible when you are retired. Find a reputable lawyer to handle all your important legal matters, thus allowing you to fully enjoy your retirement years. Choose a lawyer who is skilled in assisting retirees and who will give you a clear plan for what you have to do to ensure your family is taken care of. You may have a hard time understanding the law, so having the assistance the assistance of a lawyer can greatly ease your mind.

3. Assess your lifestyle.

Take stock of your home with a critical eye so you can see the things that you don’t use anymore. Your emotions can get in the way while you do this, but clearing out your junk will make you feel better. You can earn extra cash from selling unwanted belongings, and you can have a better appreciation of the things you really love without so many junk cluttering your home.

4. Discover hobbies to occupy your time.

Instead of spending most of your time parked in front of the television, keep your concentration and memory healthy by discovering a new craft or hobby that you enjoy. This activity could be as difficult as keeping a personal journal, or as easy as water colouring. The essential thing is that you are spending your time honing your creativity and using your mind to acquire a new skill. You may even turn this hobby into a little business, depending on how proficient you become. One way or the other, your time is spent enjoying and keeping active.

It is not too early to start planning your retirement. Consult with financial advisors on how you can best enjoy your retirement years. One of PJS Accountants’ areas of specialty is estate planning. We are experts in customising estate-planning solutions to meet your special family situation. It is our aim to protect your wealth and assets. We also offer other services including accounting, taxation, business improvement, superannuation, business valuations, asset protection, succession planning, and bookkeeping. Contact PJS Accountants for enquiries.