As we get older, some things just get harder to manage.

That goes especially for the traditional family home. When you’re in your 30s, maintaining a house with two big yards is something to look forward to on the weekend.

But when you’re in your 60s, you just want to enjoy your retirement.

For many of my parents’ generation – the Baby Boomers – the decision to downsize is a tough one.

Some people don’t want to let go of the house they raised their children in. Others see downsizing as one step closer to the nursing home. Some see it as “trading down”; letting go of a sizable bricks and mortar asset to move into something smaller.

Recent changes to superannuation law are enticing many of these “fence sitters” to commit to downsizing.

Under the new rules, retirees can funnel up to $300,000 from the proceeds of the sale of a home they’ve owned for 10 or more years into their super fund. If you’re a married couple, that means between you, up to $600,000 from that sale could be invested into your super – and all the tax benefits your super fund enjoys.

On the surface, this might seem like the chance for a windfall: sell the family home, or an investment property, and move into something cheaper and live comfortably on the extra funds you’ll free up for your super.

But as an estate lawyer, I can tell you it’s never that simple.

Already, plenty of retirees are taking advantage of this new scheme, meaning demand for smaller homes is increasing. And not only are you up against other retirees in this market, but younger Australians are increasingly seeking apartments or townhouses to match their busy lifestyles.

That means you may not have the buying power you’d like when re-entering the housing market and could take a hit in stamp duty.

More importantly, how will the sale affect your entitlement for the aged pension? Cash is not exempt from aged pension means testing, so by liquidating your biggest asset you could be shooting yourself in the foot. Other questions to consider include:

• Is the house you’re looking to sell Capital Gains Tax exempt?
• Is the property owned as part of a trust, or subject to finance?
• How will the sale affect your children and grandchildren’s inheritance?

Downsizing can be a liberating experience, something that can actually help you enjoy your retirement more by freeing you up to live, but it needs to be done properly.

At Welden & Coluccio Lawyers, we are Estate Law specialists. This means we help people make decisions that will benefit them and their families into retirement and beyond.

If you’re considering selling your home to take advantage of this new super scheme, make an appointment to speak to us, as no decision happens in a vacuum.

It is wise to see what is proposed all from all angles.

Greg Welden was in Melbourne last week delivering a paper via ‘Live-video-Webinar’ in conjunction with the Television Education Network.  The topic of the paper was ‘Superannuation and Estate Planning’.  This event will be followed up next week with the same paper being delivered in person at the Eleventh Annual Estate Planning Conference held at the Langham Hotel in Melbourne. 

While participation in such an event is a massive honour that recognises Greg Welden’s years of experience and deep wealth of knowledge as an estate specialist; preparation for such events is an intensive process.  However, as Greg explains, “Opportunities such as this enable me to synthesise and deepen all that I have learned about estate law over the past 18 years.  Of course, presenting at National conferences also assists to raise the profile of my chosen area of law, while contributing significantly to the broader legal community.”

I’m sure that all our professional colleagues, clients, and supporters will join with the team at Welden & Coluccio Lawyers, to congratulate Greg on his achievement and wish him all the very best for a successful presentation next Thursday.

With many ‘average Australians’ having assets which are ‘non-estate’ assets, it is crucial that these individuals develop strategies (ie an estate plan), to ensure that the control of these assets is passed to your loved ones upon your death.

In part 2 of the Estate Planning series I identified some situations where assets may be non-estate.  In this article I will explore some general strategies for dealing with these kinds of assets with an aim to control who has access to them upon your death.

What happens to property owned as joint tenants?

The right of survivorship applies to property held among individuals as joint tenants.  This means that upon the death of one of the owners, full ownership of the property will automatically revert to the surviving owner.  The property will not form part of the deceased owner’s estate.

In your estate plan, if you do not wish for the right of survivorship to apply, steps can be taken to sever a joint tenancy, so that the property is held as tenants in common.  This will enable your interest in the property to flow to your estate.

What happens to your superannuation?

Superannuation is separate to your estate, therefore, it is not automatically distributed in accordance with your Will.  Without an estate plan, the trustee of your superannuation fund may decide which dependents to pay your superannuation to.

Welden & Coluccio Lawyers, when discussing your estate plan, can help to control which dependents your superannuation is ultimately paid to.

It should be noted that there are strict compliance issues which impact whether a binding death benefit nomination is valid.

What happens to assets held by a discretionary family trust?

Trust property will not form part of your estate as the assets are owned by the trust itself.

Without an estate plan, assets held by these separate legal entities may not pass to your loved ones as you wish.

Welden & Coluccio Lawyers can devise a plan, whereby you can transfer control of these assets to a specific person.  If you are concerned about assets held in a separate legal entity, it is imperative that you have your trust and company documentation reviewed by an estate specialist.

What happens to life insurance?

If you have taken out a life insurance policy to ensure that your loved ones continue to enjoy a certain lifestyle in the event of your passing, it is important to consider how this policy has been established.  If a beneficiary has been nominated on the policy, the life insurer must pay the beneficiary directly.  This means that the proceeds will not form part of the insured’s estate.  Therefore, it is important how you have made the respective nominations.

An effective estate plan means considering and appreciating all aspects of an individual’s life.  At Welden & Coluccio Lawyers our speciality is estate planning and we are able to effectively tailor the right estate plan to meet your needs and those you love.