Should I sell my home to help my three children buy a house?
I’m 74, single, and raising four children, but I still have a mortgage. I have approximately $1 million in equity in my home. One of my children already has a home and is financially secure, but the other three need help due to broken marriages. They each have some pension and savings and earn good incomes, but housing where they live is becoming unaffordable. Is there a sensible way to help them get into the housing market while I’m still alive?
Be careful; You’re relatively young and could live another 20 years, and you don’t want to put yourself in a situation where you can’t afford elder care in your 90s.
I don’t see a reverse mortgage as a viable option, so the only practical way to raise significant funds would be to sell the house; this would involve significant buying and selling costs, including stamp duty, then pay off your mortgage and give some of the proceeds to your children.
Even if you do that, I doubt the money you can give them will make much difference when distributed among four people, and it might also mean moving to accommodation that’s not as good as where you currently live.
If I have a binding beneficiary nomination in my retirement fund that does not lapse, is the fund legally required to pay my retirement balance to the designated beneficiary upon my death? Are there any circumstances in which the Fund might decline to pursue this nomination?
If your non-expiring binding nomination is made correctly and complies with the fund’s trust deed and governance rules, trustees should generally comply with it, says Heffron’s Leigh Mansell. However, there are situations where this may not happen.
For example, a clawback annuity may take precedence over a nomination, or trustees may not comply if it would violate annuity law (for example, where the designated beneficiary is no longer a spouse, dependent, or in a relationship of interdependence at the time of death).
There are also situations where the beneficiary chooses to waive these rights or the fund rules allow the trustee and the beneficiary to agree to change the way the benefit is paid.
Disclaimers are not something to be taken lightly. It requires legal and tax advice, must be formally documented in deed and done promptly before any benefits are accepted. It is also all or nothing; You cannot waive part of a power, and once done, it cannot be revoked.
Importantly, once a disclaimer arises, the trustee may exercise any discretion available under the fund rules, so the outcome may not be as originally intended. The power to waive may also extend to the legal personal representative of the estate, with the consent of the beneficiaries.
My wife and I are directors of our private limited company, which is the trustee of our SMSF. We recently retired—I am 80 years old and my wife is 77—and will be closing the company soon. Last year we received pensions of $80,000 and $40,000 respectively from our SMSF and we each received $10,000 in dividends from our company. Is it true that receiving income from both our company and our SMSF will not make us eligible for the Commonwealth Seniors Health Card? Our SMSF balances at retirement are approximately $1,223,000 and $760,000 respectively.
I can’t understand why you don’t qualify. Eligibility is based on your adjusted taxable income (ATI) plus income from account-based income streams. Under current rules, income limits are $101,105 per year for singles and $161,768 per year for couples.
To qualify, you must be at least 67 years old, meet residence rules and not receive income support payments from Centrelink or the Department of Veterans Affairs. The default income from your pension is $62,324 per year, so your ATI must exceed $99,444 to lose eligibility.
I have a vacation home that generates no income, but I know it will be subject to capital gains tax when sold. For old age pension purposes, should I value the property net of potential capital gains tax, or should I declare its full market value as it has not yet been sold?
For Centrelink purposes the property will be valued at its current market value. My understanding is that Centrelink determines this value from available property information. There is no provision for taking into account unrealized capital gains.
If there is a loan secured by a mortgage on the property, the value of the loan will be deducted for Centrelink purposes.
Noel Whittaker is the author of: Retirement Made Easy and other books on personal finance. Questions: noel@noelwhittaker.com.au
- The advice given in this article is general in nature and is not intended to influence readers’ decisions about investments or financial products. They should always seek their own professional advice, taking into account their personal circumstances, before making any financial decisions.
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Noel Whittaker, AM is the author of Make Money Made Simple and numerous other books on personal finance.Connect with: X or email.
