Opinion
I would like to gift/loan some money to my adult nephews to help them buy homes and am uncertain how best to do this. One is married with children, one is in a de facto relationship with no children, and the third is single. I would like to give/loan the money in such a way as to protect them financially in the event of a relationship ending, but I also want to act fairly, particularly in relation to my nephew’s children and their mother. I am in a good position financially and so have no need for any gift/loan to be repaid.
You will certainly lock in favourite aunty status with this plan! Great to hear that you are sufficiently across your financial position to be aware that you have more than you need.
Dying with millions of dollars in the bank is not winning. The impact your gifts will have on your nephews now will be far more significant than if they have to wait until you pass away.
You should discuss this with your solicitor. My understanding is that you can structure your assistance as a loan, which can provide protection in the event of a relationship breakdown.
However, for it to stand up to a legal challenge, it needs to be conducted as a legitimate loan, with interest charged, repayments made, and perhaps security taken.
I am 61, single, and had to resign from work due to health issues. I have $351,000 in super and $150,000 in savings. I own my home and have no debts, and I am intending to apply for the disability support pension. Can I also draw on my super if I’m on a DSP?
Yes, you can. As you are over age 60 and have ceased employment, your super will be accessible.
Whilst it would be possible to commence a pension from your super, I would delay this until you get a determination on the DSP. For means-testing purposes, money in super will be ignored until you turn 67. But if you convert it into a pension it will get included in the test, and is likely to reduce how much you receive in DSP.
A suitable solution here might be to live off the DSP and supplement this via draw-downs from your savings. Leave your super alone until you reach age 67 and transition to an age pension.
If you pursue this plan, and your super is left to compound for six years, ensure it is invested with a bias towards growth assets so that you maximise the compounding impact across that period.
I invest in an actively managed international share fund that has been underperforming for years. If I withdraw the funds, I will incur capital gains tax. However, if I transfer my money from this share fund to a different share fund with the same fund manager, will capital gains tax still apply?
Yes it will, as you will be selling units in the current fund that you are in. I don’t know the amounts involved here, but if you are in a high-cost fund that is not performing, it might be worth copping the CGT hit to move onto greener pastures.
Perhaps you could make a tax-deductible super contribution to offset the capital gain if you can do so. Alternatively, if you have any investments that are sitting on losses, perhaps you take the opportunity to clear those out at the same time, which would provide an offset.
Paul Benson is a Certified Financial Planner at Guidance Financial Services. He hosts the Financial Autonomy podcast. Questions to: paul@financialautonomy.com.au
- Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.
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Paul Benson is a Certified Financial Planner, and host of the Financial Autonomy podcast.