Question 1

Jim and Amy are both aged 38 and have twin girls aged 3. Jim is currently a stay-at-home dad but expects to re-join the paid workforce when the children start school in two years time.

They are concerned about the impact that death, disability or serious illness could have on their long-term saving plans for their retirement as well as the associated estate planning issues.

Amy is a psychologist and earns $180,000 gross pa. Although all her income is used to cover their living costs, including the mortgage, they are able to make adjustments to their spending to accommodate the cost of insurance/s.

They owe $600,000 on their mortgage and expect that this will be repaid when they both fully retire at 60.

Jim and Amy each have work superannuation with balances of $80,000 and $200,000 respectively. Their superannuation fund provides death and TPD cover, equivalent to their account balances.

Required

a. Explain suitable risk management strategies that might assist (include calculations, where applicable).

b. Explain 4 areas of estate planning that Jim and Amy will need to implement.

c. Explain the superannuation beneficiary options available.

d. What special estate planning considerations could apply regarding their twin girls?