Article of Interest on Wills & Estates

GIVING IT AWAY BEFORE YOU DIE

Older people can be worried as to whether or not they can give money away to assist their children. Obviously, people are allowed to do with their property what they will. However, the real question is “How does that gift affect your pension?”

Older people worry about the consequences of having assets in their name in the event they have to go into a nursing home. Generally, the solution is not to gift the home or asset away . Before any action is taken you need to obtain advice.

Under the current rules the value of an asset gifted away can still be treated as the giver’s asset under the pension means tests .

Trying to get relief from charges and fees in nursing homes by gifting assets away will most probably also be frustrated. Badly thought-out plans to assist children and avoid nursing home fees and charges can result in older parents losing control of assets they have had all of their lives and having their pensions reduced at the same time. When someone reaches an age where their incoming-earning capacity has been significantly reduced or stopped altogether, they do not want to be in a risk situation.

If you are thinking of gifting away your home; your investment property; money, or shares to a family member, then this should be a trigger for you to go and get good estate planning advice. Any gift made greater in value than that allowed by Centrelink will be assessed as an asset in your control for 5 years from the date of the gift. This could reduce benefits or increase nursing home fees even though the asset has been disposed of by you.

If you are living in your family home and receiving a pension, then the family home is not regarded as an assessable asset which will affect your pension. However, if you give that home away to your child then it may be regarded as an assessable asset for a period of 5 years from the date of the gift and your pension may very well be affected.

Before you gift, make enquiry. The first port of call is your Lawyer experienced in Estate Planning who will get you to look at your overall estate and how it should be managed to the best effect.

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