Have you been successful with a TPD claim and you’re not sure what to do next? This blog is for you.
If you are faced with the possibility of needing to pursue a TPD claim, a Certified Financial Planner® like Glenn Hilber from Precision Wealth Management can help you to decide how best to use your payout.
Below we share how one of our Brisbane clients used the money they received from their payout to ease their financial stress both now and looking ahead to the future.
DISCLAIMER – The information provided in this blog is general and does not consider your individual financial needs or objectives. It does not constitute personal advice. We recommend seeking out professional and independent financial, legal and tax advice which has been designed for your individual situation before acting on any information contained below.
Ways to use a TPD Payout in Super
When a claim is inside your super fund, there are a few courses of action you can take, including:
- Leaving the money within your superfund
- Withdrawing the money as a lump sum to either invest the funds or use them to repay debts, carer costs etc.
- Commencing a disability pension
There’s pros and cons to each, and considerations to weigh up based on your current financial position, your family’s immediate needs, along with tax implications.
We go into more detail about Superannuation TPD claims, including when to speak to a financial advisor before a lawyer in this blog.
Successful TPD Claim Case Study
Our qualified financial planner, Glenn, recently helped a couple who were successful with their TPD claim to make the most of their payout.
The pair, in their early 40s, have children and existing super.
They were eager to pay off their mortgage straight away, so they requested a large portion of their payout as soon as practically possible.
Careful planning was paramount in this instance as they receive Centrelink payments, including the Family Tax Benefit, which is assessed on taxable income.
So, this is what we did:
- Instead of taking a lump sum, we elected to take a very large pension payment initially.
This was done so that the tax was less than if we took the equivalent as a lump sum. Read more about the Tax on TPD Payouts here.
We were also very careful to take just enough this financial year to minimise taxation but not compromise their family tax benefit.
We also made sure that the remaining funds in the pension were not above the threshold to impact their other Centrelink benefits under the assets test.
- Going forward, they will receive small pension payments
We tried to retain as much of the TPD payment as possible for the future, and with the remaining funds they have chosen to receive small pension payments for the rest of their lives.
These smaller payments will not impact Centrelink or incur tax, but will assist their cash flow and help to raise their children.
Personalised Financial Advice for TPD Payout
As every person’s situation is different, it is necessary to seek personalised financial advice if you have been successful with a TPD claim.
A good financial planner can help you maximise the money you receive from a claim and successfully reinvest it for your future!
If you would like assistance from a Certified Financial Planner®, please reach out to Precision Wealth Management today on 1300 200 012.
Precision Wealth Management is a local, privately-owned financial planning firm based on Brisbane’s northside.
Our certified advisors work with each individual client to determine the best wealth creation strategy based on their unique situation.
We strive to stay at the forefront of the industry, and our investment approach is based on decades of research.
Financial Planner Brisbane
Our services include Superannuation Advice And Planning, personal Insurance Advice, Budgeting And Cashflow Management, Investment Strategy And Advice, Aged Care Financial Advice, Retirement Planning Advice, and Debt Reduction Financial Planning.
At Precision Wealth Management, we offer flat fee pricing which is determined on the complexity of the work – not the value of your investments.