GENERAL EDUCATION SEMINAR

“Trials and Tribulations of Estate Planning”

2 November 2016 | The Epping Club

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Housekeeping

♦ This is generaladvice

♦ The information discussed in this presentation should not be used without seeking professional advice specific to your own personal circumstances

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Profile Investment Management

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Planning division

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“…Most things may never happen –this one will…”

Aubade, Philip Larkin

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My journey so far…

♦ Great-grandfather’s second family

♦ Grandma’s home contents

♦ Selling the family farm

♦ Mother-in-law’s jewellery

♦ Father-in-law’s company

♦ Executor disputes

♦ The kids are alright – or are they?

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Agenda

♦ Market and economic update

- Phillip Win, Managing Director and Chair of the Profile Investment Committee

♦ Q&A and coffee break

♦ Setting the scene – estate planning overview

- Kurt Ohlsen, Senior Financial Planner

♦ Estate planning and relationships

- Crystal Lockard, Principal, Crystal Lockard and Associates

♦ Estate planning and the law

- Rob Pearson, Principal, Creagh & Creagh

♦ Panel discussion and Q&A

♦ Profile update and close- Sarah Abood, CEO

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United States of America

“I am the king of debt…I would borrow,

knowing that if the economy crashed, you

could make a deal” – Donald Trump

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United States of America

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United States of America

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United States of America

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Europe

♦European elections a major risk for markets

♦ Increasing support for Populist parties

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China

♦Credit growth has accelerated to over 250% of GDP

♦ Is a problem looming?

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Japan

♦A period of negative interest rates

♦ ‘Act without hesitation” and defend negative rates

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Australia

♦Over the next two years, inner city apartments will grow by 16,000 in Melbourne, 12,000 in Brisbane and 10,000 in Sydney.

♦Any downturn could leave the banks very exposed particularly in Melbourne and Brisbane.

♦Bank losses would remain low unless prices were to fall 25% or more (RBA estimate).

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Overall Portfolio Strategy

♦ Steady approach – only gradual changes to PPP and PAP

♦ Portfolio’s reasonably defensive positioning remains in place (high cash, increasing alternatives)

♦ Adding strategies less reliant on equity markets going up to make money.

♦ Looking for better opportunities to add to selected growth assets (especially PAP)

Asset Class Outlook

Cash

Government

bonds

Corporate

credit

Infrastructure

Real Estate

Equities

Asset Class Outlook

Japanese Eq

Asia xJapan Eq

EM Equities

European Eq

Resources

Asset Class outlook …..but, value in the rough

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Preservation portfolio

• We continue to target strategies with lower market risk, although higher manager risk. We have actively increased our exposure to non-stock market reliant investments (Alternatives).

Source: Select fund services

Like♦ Cash

♦ Selective Credit

♦ Alternatives

Dislike♦ US equities

♦ Government bonds

Asset allocation

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Accumulation portfolio

• The challenge is deploying our cash reserves into an uncertain market. The hunt for value continues and ensuring an adequate margin of safety. We have taken advantage of equity market weakness over the year to add to our exposure.

Source: Select fund services

Like♦ Cash

♦ Asian and European

equities

♦ Alternatives

♦ Selective Credits

♦ Gold

Dislike♦ US equities

♦ Government Bonds

Asset allocation

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GOAL MEASURE PROGRESS* – to Sep 2016

Grow your wealth

relative to the cost of

living

Returns of 6% above

inflation over rolling 6

year periods (after

fees)

Medium to high

volatility

Medium to low risk of

capital loss

Standard deviation of annual

returns no more than 8% pa

Frequency: Less than 17% of

annual returns negative (ie

chance of loss < 1 year in 6)

ON TRACK?

5.4% pa, since

inceptionWell ahead of

plan

10.9% of one-year return

periods negative, since

inception

Well ahead of

plan

* 6 years NYA – showing rolling 3 year returns

55% of 3-year

returns above

objective – but

trend is down

Magnitude: Maximum loss

less than 50% that of shares.

Maximum loss 6.6% vs

15.5% for shares – 42.6%Well ahead of

plan

PAP dashboard

Inception is 5 April 2011. Past performance is calculated pre-tax and after fees and expenses, assumes distribution reinvestment but does not take into account inflation.

Neither past performance nor volatility is a reliable indicator of what may happen in the future. Neither capital nor returns are guaranteed.

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GOAL MEASURE PROGRESS – to Sep 2016

Grow your wealth

relative to the cost of

living

Returns of 4% above

inflation over rolling 3

year periods (after

fees)

Low to medium

volatility

Medium to low risk of

capital loss

Standard deviation of annual

returns no more than 4% pa

Frequency: Less than 10% of

annual returns negative (ie

chance of loss < 1 year in 10)

ON TRACK?

3.2% pa, since

inceptionAhead of plan

9.1% of one-year return

periods negative, since

inception

Ahead of plan

68% of 3-year

returns above

objective – but

trend is down

Magnitude: Maximum loss

less than 30% that of shares.

Maximum loss 3.3% vs

15.5% for shares – 21.3%Well ahead of

plan

Inception is 5 April 2011. Past performance is calculated pre-tax and after fees and expenses, assumes distribution reinvestment but does not take into account inflation.

Neither past performance nor volatility is a reliable indicator of what may happen in the future. Neither capital nor returns are guaranteed.

PPP dashboard

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Profile Portfolio Solutions – v Cash, Objective and Shares

Source: Select Fund Services and Profile Financial Services. Performance is shown from inception (5/4/2011) to 30/09/2016. Performance is calculated pre-tax and after fees and

expenses, assumes distribution reinvestment but does not take into account inflation. Neither past performance nor volatility is a reliable indicator of what may happen in the future. Neither

capital nor returns are guaranteed.

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Any

Questions?

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Trials and tribulations of Estate PlanningKURT OHLSEN

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What are we talking about?

♦Wills

♦Deed of Mutual Wills

♦Enduring Powers of Attorney

♦Enduring Guardianships

♦Superannuation Death Benefit Nominations

♦Advanced Health Directives

♦Funeral Plans

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Who are we talking about?

♦You

♦Trusts

♦Companies

♦Superannuation Funds

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Should anything be done before death?

♦Charitable giving

♦The kids (or other beneficiaries)

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The process

♦What do you want and who do you want?

♦The discussion

♦Discuss, review and document with a Solicitor

♦The conversation

♦Review

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Trials and tribulations of estate planning

Creagh & Creagh

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Crystal Lockard Robert Pearson

ESTATE PLANNING

Every family is different

Distribution of your estate and assets will depend on your relationships and personal preferences

LOOSE ENDS

• Write a will

• Power of attorney

• A health directive

• Have those difficult conversations with your family about the distribution of your assets

Tying up loose ends doesn’t mean you are giving up. What could/should you consider?

How do you start this conversation?

• What are your own feelings about doing this?

• Choose the moment

• Use stories as openers

• Divide and conquer

• Communicate with each other – as a couple, as parents, as grand-parents, or with your children if you are a single parent

Your own feelings

• Do you feel talking about this will make “bad” things happen?

• This conversation will often be related to the issue of death and dying. How do you feel about this?

• Money is often one of the last things discussed.

Choose the moment

• Avoid procrastination

• Perhaps have this conversation while doing something else

• Schedule a time

• Don’t catch someone “on the hop”

Use stories

• These are often useful as “openers”

• Examples might be current events or the death of a famous person

• Perhaps a friend has died

suddenly and un-expectedly

• Case study example

Divide and conquer

• Between parents or with children?

• In a group or individually?

• A series of talks or one long discussion?

• What are the personalities involved?

• What are the relationships like between the individuals?

Communicate your thoughts

• Who would you communicate this first to? Partners, parents?

• Consider how well you know them? How would they react?

• What words would you use?

• Couples often have different views as to how to divide their assets among the family

DIFFERENT TYPES OF FAMILIES

• One in three marriages ends in divorce

• One in five families is a step-family or blended family

• This has increased by 50% in the last decade

• What does this mean for those families in this situation?

• Often involves an emotionally balancing act

What could go wrong?

• Emotions around talking about death and dying make it a difficult topic

• Money is often considered a private matter, often taboo in society

• You can avoid surprises after death

• Skeletons often come out of the closet later. What could you do now to avoid this?

SOURCES OF CONFLICT

The main sources of family conflict after death are:

• Who gets what?

• What to keep and what to give away?

• When to sort through belongings?

• Keep or sell?

• Money, money, money!

• Treatment decisions at end of life

• Funeral decisions

What are the benefits of doing this earlier?

• Promote family harmony

• Allows you time to anticipate and respond to objections

• Ensures your wishes are known in the distribution of your estate and in health issues

• Allows you to select who will make decisions for you when you are not able to

CASE STUDY

• Jack (70) and Jill (65), married 25 years

• Jack has two adult children from a previous marriage

• Both have made wills, have set up powers of attorney and health directives

• Jack develops rapid onset of dementia. Jill is caught unawares

Wills and Estate Planning R O B E R T B R UCE PE A R SO N (A DMITT ED 1 9 82) CR E AG H & CR E AG H (E STA B LISHED 1 879 )

Be alert, not alarmed

Orderly Estate Planning in the context of making Wills and appointing Attorneys and Guardians

When is a Will not a Will? Invalid/Ineffective Wills

I. Marriage/Divorce

II. Testamentary Capacity/Duress

III. Public Policy

IV. Family Provision Act

Blended Families

I. Balancing act

II. Mutual Wills/Mirror Wills

III. Be mindful of subtle changes over time

IV. Devices such as Trusts, Testamentary Trusts, Superannuation arrangements & Life Insurance

V. Potential Problems:

I. Biological Children missing out on their rightful inheritance

II. Your step-children challenging your Estate

III. Spouse challenging your Estate

Provision during Lifetime

Direct Shares Service

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♦ Research agreement moved to Bell Potter♦ New fee structure

44 Market St, Sydney

City office premises

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2015

Acquisitions

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2016

Technology

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To-Do

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♦ Do you have an estate plan in place?

♦ Is it complete?♦ Will

♦ Power of Attorney

♦ Enduring Guardianship

♦ Advanced health directive

♦ … etc

♦ Is it up-to-date?

♦ Are the family on board?