Chatting to Yahoo!Finance, Suzanne Jones, Head of Estate Planning at Coote Family Lawyers, shares some important considerations associated with cash gifting.
Gifting early inheritances has increased in popularity as younger generations of Australians struggle to enter the property market. Lawyer Suzanne Jones urged people to "do their homework" as cash gifting can backfire if you don't consider the financial implications over the next five years.
"Say you gave a child $250,000 and then unexpectedly had to go into care within five years of making that gift, then that $250,000 is still treated as part of your assets for the assets test for residential care or the Age Pension," the head of estate planning at Coote Family Lawyers told Yahoo Finance.
How does deeming work when it comes to Centrelink?
Suzanne told Yahoo!Finance that the government body, Services Australia, will look into your accounts as far back as five years to tally your asset income.
They will be able to see it and it can cause your payments to drop substantially if you've given any large gifts.
You can access the Age Pension at 67 and Suzanne recommended considering any early inheritance gifting if it was within five years of you reaching that age.
In addition to financial gifts, you'll also be checked for:
- savings accounts and term deposits
- interest on bank accounts, shares, managed funds, and super
- managed investments, loans and debentures
- income streams like account-based pensions or allocated pensions
You can read the full article that was published in Yahoo Finance here
If you have a question or concern about your estate planning, call our office on 03 9804 0035 to speak with one of our Estate Planning Lawyers today.
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