GET ADVICE BEFORE GIFTING!

Many retirees may want to help younger family members by gifting part of their savings. There are many things to consider so getting proper advice is essential.

Here at Orange Financial Planning, we get gifting. You want to share with your family and help them achieve their goals. But if things go wrong in the future, we know the joy may turn to grief.

Many don’t realise that gifting may help the children and grandchildren, but it could have significant impacts for an older person’s own future – especially if an aged care need arises.

Means-testing impacts your eligibility for government concessions, such as the age pension, and impacts how much you will be asked to pay in aged care fees.

Gifting assets may not have the impact you think, as gifts are still assessable for five years if you gift more than the allowable thresholds. If you gift more than $10,000 in a financial year (or $30,000 over five years) the excess counts as a deprived asset for the next five years.

If you want to reduce assessable assets, you need to plan more than five years in advance. But it is hard to predict what may happen in the future. Leaving yourself short, may increase your risks and reduce your range of care choices.

For example…

Betty has $700,000 in financial investments, in addition to her home. She decides to gift $300,000 to family. This leaves her with $400,000 in savings, but Centrelink will continue to assess her assets at $690,000 (only reduced by the allowable threshold of $10,000).

As a result, Betty has less assets to support herself. Her age pension only increases by $780 per year. If Betty needs to move into aged care within the next five years, the gift will also affect her means-test assessment. She will need to fund around $27,000 per year for ongoing care fees (basic fee plus means-tested care fee) plus other personal expenses and accommodation costs.

The key message is to take care before gifting, as protecting your financial future is just as important as helping family members to secure their futures. Gifting assets may leave you with insufficient resources to fund future needs or to adapt to any changes. Financial advice to consider implications may help you to make an informed decision.

MAKE AN APPOINTMENT TODAY!

Give us a call at Orange Financial Planning TODAY to review your situation and discuss your gifting options. Kim Bryant is a Financial Planner with Orange Financial Planning who is Aged Care Accredited and holds a Masters FP, Grad Dip FP, and Assoc FPA

Tyron Mitchell

Contact us today on (02) 5310 4477 or drop us a line HERE!

 

See here for more information on Orange Financial Planning services…

WHAT WE DO – RETIREMENT PLANNING                                              

WHAT WE DO – AGED CARE

 

Also check out our blog… PLANNING FOR AGED CARE – WITH EARLY PREPARATION AND GOOD ADVICE 

Mitchell Advice Pty Ltd ABN 44 625 356 872 t/as Orange Financial Planning is a Corporate Authorised Representative of Synchron AFS License No 243313. Unless specifically indicated, the information contained is general in nature and does not take into account your personal situation. You should consider whether the information is appropriate to your needs, and where appropriate, seek personal advice from a financial adviser.