Disputed Will – Case Study – Future Needs
We were engaged recently to determine a daughter’s future needs in respect of her father’s estate.
The daughter was unmarried and self employed as a writer. Her earnings fluctuated as you would expect with a professional writer, but she did earn a reasonable income on average. There was evidence regarding her ability to earn the same level of income into the future and the necessity for early retirement.
Her sister received property from her father before his death but the daughter was not included in the will.
Our approach in respect of her future needs was to calculate the lump sum that would provide her with an income in retirement equal to her current living standard.
Our process included:
- Analysis of her current earnings and expenditure. We calculated that her mortgage would be repaid prior to retirement and thus her income needs would reduce.
- Calculation of the lump sum that would be invested in superannuation and taking into account:
- tax deductions for superannuation contributions;
- income tax rates;
- investment earnings of superannuation funds and,
- her life expectancy.
The end result enabled a quick settlement because the amount was significantly less than initially claimed but through effective tax planning and the use of superannuation satisfied the daughter’s requirement for an income in her retirement.