CASE STUDY: TAXA3006 Estate Planning
CASE STUDY: TAXA3006 Estate Planning
Due date: Monday 15th May, 9 am
Marks: 50%: Refer to the Rubric for the allocation of these marks.
Word limit: The word limit for this case study is no more than 2,500 words, excluding references, bibliography and statement of facts.
You must note the number of words on the cover page. A tolerance of 10% will be applied then the failure to comply will be reflected in your mark AND the marker has the discretion to cease marking.
For this assessment you are not required to comply with the requirements of RG 175 regarding a Statement of Advice
Academic Integrity: You must submit through the Turnitin link in Blackboard. You will have the opportunity to review your work for inadvertent plagiarism and resubmit up to the due date.
You must attach the coversheet available on Blackboard.
Note that you may be asked to provide an oral defence of your assignment.
Learning outcomes and assessment criteria This assignment requires you to have mastered the concepts illustrated throughout Topics 1 to 9.
The allocation of marks to the assessment criteria can be reviewed through the rubric which can be viewed in My Grades on Blackboard.
Apply discipline knowledge, principles and concepts
Effective communicators with digital competency
Industry connected and career capable
Innovative
Referencing You must comply with academic referencing conventions, even though a letter of advice would not usually include referencing.
The required referencing format is AGLC4 with Bibliography http://libguides.library.curtin.edu.au/referencing/aglc
Extensions Refer to the Unit Outline regarding assignment deadlines and the policy relating to assignment submissions. The following is noted:
Applications for extension must be lodged on the required form with supporting documentation where required.
Late assignments will be accepted with penalties applied in accordance with the policy set out in the Unit Outline.
Case Study
Jess (aged 57) and Morgan Bentley (aged 63) have been in a de-facto relationship since 2004:
Between them they have the following children:
Nat (aged 32). Jesss oldest child, is a flight attendant and is in a de-facto relationship with Avery. Nat is based in the United States, but stays with Jess when flying the US/Australia route.
Daryl (aged 14) is Nats child from a teenage romance. Under Family Court orders, Daryl cannot leave the country to live with Nat, but Jess has custody as Daryls other parent is dealing with substance abuse and mental health issues.
Sydney (aged 27), Morgans oldest child, is currently on extended parental leave caring for three year old twins. Sydneys partner Taylor disapproves of the situation with Daryl, which has caused some tension within the family.
Charlie (aged 16) is the child of Jess and Morgan. Charlie is still at school but has shown a talent for art and is planning a career as an artist. The family joke that Charlie would starve in an attic in pursuit of that dream.
Jess has a thriving business as a picture framer, currently operating from premises in North Perth as a sole trader. Jess has decided to retire early to enjoy a post-COVID lifestyle. There is a history of early on-set dementia in the family.
Jess has received an offer to purchase the business as a going concern, including the lease on the business premises and all equipment and stock. Because of difficulties valuing the business following the uncertainty of the last two years, the sale price is based on a lump sum of $500,000 plus 10% of the turnover for the next five years.
Morgan is self-employed as a bookbinder, averaging a net income of $120,000 pa, and has no current plans to scale back work.
The assets held by Morgan and Jess are:
Morgan Jess
Bank Account $10,000 $50,000
Superannuation $450,000 $700,000
Credit Card Debts ($15,000) ($5,000)
Social Media Accounts Facebook, Twitter Facebook, LinkedIn
Joint Assets Liabilities
Term Deposit $100,000 Investment Property (in WA) $1.2 m Mortgage $800,000
Family Home (in WA) $650,000 Mortgage $300,000
The following life insurance policies are also in place:
Each holds a life policy for $500,000 on the life of their spouse; and
Each has taken out a policy of $1m to be shared equally between their children (as worded in the insurance contract).
Their superannuation accounts are held in one of the better-performing industry sector funds, and they are happy with the returns. Jess does not intend to draw down on superannuation for at least the next five years.
Required:
Morgan and Jess are seeking advice on how to address their estate planning needs. Prepare a letter of advice addressing the following issues:
Advise Jess and Morgan on the distribution of assets on the death of either of them, specifically:
The treatment of each asset if
either dies intestate and
they both die intestate in the same incident; and
Assuming that they now draft wills, what issues need to be considered and what steps should they take in relation to those issues.
What other matters should Morgan and Jess address in an Estate Plan? What recommendations would you make in respect of other documentation that is required?
How will the proceeds of the sale of Jesss business be taxed?
You should identify any assumptions that you make in respect of the facts provided.
