Kevin has met with you and Brenda. Brenda has explained his current duties as an enduring power of attorney holder. She has also provided Kevin with a copy of Norman's will and briefly explained his obligations as an executor for when the time comes. Kevin has questions for you regarding some of the assets and liabilities.

(b) What are Kevin's options in relation to receiving Norman's superannuation fund, and the tax consequences. (Show workings) Assume Norman passes away in the coming weeks. His service period is 15,402 days and 303 days to retirement. The taxable component of his superannuation balance is 50%, with a tax-free component of 50%. The insurance benefit is $600,000. The trustees of the fund have claimed the future liability to pay benefits as a tax deduction. Kevin has private health cover. (10 marks)

Case Study:

Case study You are a financial adviser and your clients of five years are Norman Jones (age 64) and his son, Kevin Jones (age 37). You receive a call from a distressed Kevin, who advises you that Norman has suffered a massive stroke leaving him in a coma. You have met Kevin and Norman several times and are aware that Kevin holds Norman's enduring power of attorney (both medical and financial). Kevin asks for your help in getting up to speed with his father's financial position. He asks to meet with you and Brenda Parisi, Norman and Kevin's solicitor, who you also know very well. In preparation for your meeting with Kevin, you review your records. Norman's personal and financial situation Norman divorced his second wife, Christine (age 39) four years ago, which included finalising a property settlement. Apart from Kevin, Norman has three other children: Susan (age 35) is Kevin's sister they are both the children of Norman's first marriage to Barbara. Susan is a successful neurosurgeon working in private practice in Melbourne. Following the breakdown of her relationship with her de facto partner, Sam over his refusal to address his alcoholism, she and their son, Brock (age 8) returned to Australia after living in New York for years. Susan's break up with Sam was bitter and she had to agree to a large financial settlement with Sam for him to agree to Susan relocating with Brock. She is renting and slowly rebuilding her finances but would love to purchase a home for security for herself and Brock. Cody (age 11) is Norman's child with his second wife, Christine. Cody has Down Syndrome. While he has mild learning difficulties, he has received additional support and is doing well in school. However, it is possible he may develop health issues in future and may have restricted employment options. Celeste (age 6) is Norman's child with Freda (age 34), the result of a brief affair while Norman was married to Christine. Norman and Freda never lived together and Freda and Celeste moved to New Zealand with her current partner when Celeste was two years old. Norman voluntarily provides financial support for Celeste. Celeste believes that her mother's current partner is her father. Only Christine and Norman know Celeste is his child, and Norman has been adamant that no one else in the family should know about her. Norman's winery Norman is the Managing Director of Normandy Wines Pty Ltd, a Hunter Valley vineyard and winery. Kevin's role as General Manager was originally to run finances, operations and human resources. However, over the past five years as Norman became less 'hands on' with management of the winery, Kevin has taken on more of the management responsibilities. The vineyard and winery is well insured and Kevin is of the understanding that it was always Norman's intention that Kevin take over the business eventually. Under Norman's will, he appoints Kevin as the director of Normandy Wines Pty Ltd by bequeathing him all his shares in the company Following Norman and Christine's divorce, he built a small home on the vineyard close to Kevin and his family. To fund the divorce property settlement with Christine, Norman has sold several properties. Document classification: Confidential FPC005_AI2_v10A4 5 Kaplan Higher Education Norman's family trust Norman is the sole trustee and appointer of his family trust. Under the trust deed, Kevin is appointed sole trustee with the power to continue the trust or wind-up it up and distribute the proceeds, as he sees fit, in the event of Norman's death or incapacity. However, while Norman has told Kevin he will become the trustee, Kevin does not know the financial position of the trust. The family trust is a discretionary trust. Norman has distributed income to his grandchildren and two younger children from time to time. In particular, Norman's monthly payments to Freda to support Celeste come from the family trust. The family trust has a significant loan and owns the vineyard and winery's buildings which it leases to the business. Norman's current estate arrangements and objectives Norman has always told his ex-wives and Kevin and Susan that he loves all his children equally and would treat them fairly under his will. After his divorce and property settlement was finalised, Norman created a new will. He made a video to be shown when his will was being read. In it, he explains that he believed he had made generous provisions for his ex-wives Barbara and Christine, as well as Cody (who will benefit from Christine's estate) but was leaving each of his previous spouses a cash bequest of $10,000 as a goodwill gesture from his ANY bank account. You are aware of the will and its contents, and also what Norman discusses in the video. In the video, Norman also acknowledges that Celeste is his daughter and apologises to her and his other children for keeping her existence a secret. He tells Celeste he regrets not being part of her life but agreed with Freda that she deserved to grow up without the burden of family drama as there was between Christine and his older two children. While he has provided regular financial support since her birth, he is leaving her the ANY bank term deposit when she turns age 18 to give her a good start in her adult life. As Kevin will inherit the business on Norman's death, i.e. the Normandy Wines Pty Ltd shares, Norman is leaving Susan the Noosa unit, his share portfolio, and his Bitcoin holdings. The balance of Norman's estate he leaves to the Charles Sturt University to establish a scholarship grant for high achieving students of wine making. Norman has a valid binding death benefit nomination on his superannuation fund in favour of Kevin. Document classification: Confidential FPC005_AI2_v10A4 6 Kaplan Higher Education Kevin's personal and financial situation Kevin is married to Terry (age 35) and they have two children Gia (age 9) and Dion (age 6). He and his family live on the vineyard. Kevin earns a very good income from the winery (salary plus bonuses) giving them a very comfortable lifestyle; however, they do not save much. Kevin has always viewed the winery as the source of his family's financial security. Terry is a full-time homemaker and both children are in private schools. As Kevin has taken on more responsibility at the winery, he has spent less time with the family. Prior to Norman's stroke, Terry has been pressuring Kevin to either get Norman to resume some of his responsibilities and ease Kevin's workload or to resign and move the family back to Sydney closer to her family. Terry and the children are spending more time at the Coogee unit on their own. They have a joint savings account with Auz Bank with an average balance of $50,000, and their Acme Superannuation Funds (retail funds) (Kevin $450,000, Terry $250,000). Kevin also owns the Coogee unit (now worth $1,500,000) in his sole name. Norman Jones: Estate planning fact find Personal details Client name Mr Norman Jones Name of spouse n.a. Age 64 Spouse's age n.a. Health status Good Health status n.a. Marital status Divorced Marital status n.a. Occupation Managing Director Occupation n.a. Employer Hunter Valley Winery Employer n.a. Children Full name Kevin Jones Susan Jones Cody Jones Celeste Sanders Age 37 35 11 6 Financial dependant No No Yes Yes If yes, till age n.a. n.a. Indefinite Age 18 Occupation General manager Neurosurgeon Student Student Marital status Married Single Single Single Additional information Are any relationships of your children in actual or potential difficulty? Yes Kevin Do you have a will? Yes Is it current? Yes Do you have an enduring and/or medical power of attorney? Yes Kevin Notes: Norman would like to be cremated and have his ashes scattered over the vineyard. Document classification: Confidential FPC005_AI2_v10A4 7 Kaplan Higher Education

Superannuation Client Norman Fund name Acme Super Fund (retail fund) Current value $1,000,000 Insurance Life and TPD $600,000 Business Trading name Normandy Wines Pty Ltd Nature of business General hospitality Vineyard, winery & restaurant Directors Norman Shareholders Norman Value Company cash XYZ Bank savings account $200,000 Company assets Equipment and Goodwill $3,000,000 Company liabilities Jones Family Trust loan $350,000 Trust Name Jones Pty Ltd as Trustee for the Jones Family Trust Type of trust Discretionary Director/Shareholder Norman Appointor Norman Beneficiaries Children Grandchildren Ex-spouses Value Trust assets Bank account $200,000 Share portfolio $500,000 Loan given to Normandy Wines Pty Ltd $350,000 Vineyard and buildings (leased to Normandy Wines Pty Ltd) $1,500,000 Trust liabilities Interest-only loan owed to Big Bank $1,500,000 Personal assets Asset description Owner Ownership Asset value ANY bank account Norman Sole $200,000 ANY bank term deposit Norman Sole $500,000 Noosa unit Norman Sole $2,000,000 Direct shares Norman Sole $1,000,000 Bitcoin Norman Sole $200,000