1 00:00:10,080 --> 00:00:13,440 Speaker 1: Welcome to the Money Puzzle. I'm your host, Julianne Sprague, 2 00:00:13,520 --> 00:00:16,759 Speaker 1: Wealth editor at The Australian. I'm filling in for James Kirby, 3 00:00:17,040 --> 00:00:20,560 Speaker 1: who is on a well deserved break, and today's guest 4 00:00:20,960 --> 00:00:23,560 Speaker 1: Jason Featherby. He is the co founder and head of 5 00:00:23,600 --> 00:00:26,680 Speaker 1: financial advice at Lure and Wealth. He's got more than 6 00:00:26,760 --> 00:00:30,120 Speaker 1: twenty five years experience in the industry. He is a 7 00:00:30,200 --> 00:00:32,240 Speaker 1: friend of the Australian. He does write for the Dollars 8 00:00:32,240 --> 00:00:35,960 Speaker 1: and Cents column, providing practical tips and guidance for people 9 00:00:36,040 --> 00:00:41,640 Speaker 1: navigating the complexities of managing their money. And Jason, Welcome 10 00:00:41,720 --> 00:00:42,680 Speaker 1: to the Money Puzzle. 11 00:00:42,840 --> 00:00:43,400 Speaker 2: Hi, Jules. 12 00:00:43,400 --> 00:00:47,280 Speaker 3: Great to be on, first time podcaster, time podcaster. Thanks 13 00:00:47,280 --> 00:00:50,279 Speaker 3: so yeah, very excited. Couldn't sleep last night. It's like Christmas. 14 00:00:51,200 --> 00:00:53,680 Speaker 1: You could join us. We'll cover a bit of ground today. 15 00:00:54,240 --> 00:00:56,240 Speaker 1: But I wanted to chat to you for the Money 16 00:00:56,240 --> 00:00:58,880 Speaker 1: Puzzle because a recent column you did, this Dollars and 17 00:00:58,920 --> 00:01:02,360 Speaker 1: Cents column I mentioned that runs in The Australian. It's 18 00:01:02,360 --> 00:01:04,920 Speaker 1: an advice colin. People put their questions. 19 00:01:05,080 --> 00:01:06,680 Speaker 3: And we try and give them a bit of guidance 20 00:01:06,720 --> 00:01:07,840 Speaker 3: and some general advice. 21 00:01:08,040 --> 00:01:12,200 Speaker 1: Yeah, and so one question in particular I thought was 22 00:01:12,280 --> 00:01:15,759 Speaker 1: one that many people are grappling with at the moment. 23 00:01:16,240 --> 00:01:19,320 Speaker 1: It is around gifting to family and what the tax 24 00:01:19,360 --> 00:01:22,520 Speaker 1: implications might be. We are in the midst of an 25 00:01:22,560 --> 00:01:27,200 Speaker 1: intergenerational wealth transfer, and lots of parents, lots of grandparents, 26 00:01:27,480 --> 00:01:29,120 Speaker 1: they're thinking about this idea that they want to be 27 00:01:29,120 --> 00:01:31,959 Speaker 1: able to help their kids or their grandkids. Definitely, and 28 00:01:32,000 --> 00:01:34,479 Speaker 1: they want to do it while they're alive, because there's 29 00:01:34,720 --> 00:01:37,840 Speaker 1: joy in seeing the benefits that money transfer. 30 00:01:38,400 --> 00:01:40,680 Speaker 3: Yeah, absolutely, And I think they read the news and 31 00:01:40,720 --> 00:01:43,520 Speaker 3: watch the news and think, well, their grandkids or their 32 00:01:43,560 --> 00:01:45,440 Speaker 3: kids are going to find it. It's so difficult to 33 00:01:45,440 --> 00:01:47,640 Speaker 3: buy a property now that they do want to help. 34 00:01:47,680 --> 00:01:50,320 Speaker 3: And I reckon that it's taken over as the most 35 00:01:50,320 --> 00:01:52,920 Speaker 3: commonly asked question of a financial advice. It used to 36 00:01:52,920 --> 00:01:55,600 Speaker 3: be how much money do I need to retire? And 37 00:01:55,640 --> 00:01:57,920 Speaker 3: now it is how do I help my kids into 38 00:01:57,920 --> 00:01:58,320 Speaker 3: a house? 39 00:01:58,440 --> 00:02:01,080 Speaker 1: And it's property prices, that is that the property prices 40 00:02:01,080 --> 00:02:05,240 Speaker 1: have hit fresh records this week. People are very concerned 41 00:02:05,240 --> 00:02:07,880 Speaker 1: about that. But for this column, it was Karen who 42 00:02:07,880 --> 00:02:11,400 Speaker 1: wrote in about she owned a city residence and her 43 00:02:11,480 --> 00:02:16,519 Speaker 1: daughter currently occupies that rent free. Wow. 44 00:02:17,000 --> 00:02:18,359 Speaker 2: Oh yeah, no, not bad. 45 00:02:18,400 --> 00:02:20,000 Speaker 1: There's a property you don't even have to live with 46 00:02:20,080 --> 00:02:22,960 Speaker 1: mum or dad and you're getting it for free. That's 47 00:02:23,000 --> 00:02:28,160 Speaker 1: a whole other debate. But Karen said that her daughter 48 00:02:28,200 --> 00:02:30,480 Speaker 1: would inherit the property on her desk, So the plan 49 00:02:30,560 --> 00:02:32,480 Speaker 1: is always that her daughter was going to have this property. 50 00:02:32,880 --> 00:02:35,959 Speaker 1: So now Karen is thinking about gifting this property. You know, 51 00:02:36,000 --> 00:02:38,320 Speaker 1: her daughter's living there rent free. Anyway, I think she's thinking, 52 00:02:38,320 --> 00:02:41,480 Speaker 1: why not, no's gifted. It sounds like such a lovely 53 00:02:41,560 --> 00:02:42,239 Speaker 1: thing to do. 54 00:02:42,360 --> 00:02:43,520 Speaker 2: It's such a simple thing to do. 55 00:02:43,520 --> 00:02:45,920 Speaker 1: It would seem so simple. And Jason and I would 56 00:02:45,919 --> 00:02:49,680 Speaker 1: think about this, and if I own my property with 57 00:02:49,760 --> 00:02:51,800 Speaker 1: my husband, tell her and a bit of the bank, 58 00:02:51,960 --> 00:02:53,600 Speaker 1: and the bank owns it a little bit of it too. 59 00:02:53,960 --> 00:02:55,440 Speaker 1: But for I give at sake, say, I decide, I 60 00:02:55,480 --> 00:02:57,040 Speaker 1: actually just want to give that to my daughter. I 61 00:02:57,120 --> 00:02:58,880 Speaker 1: just want to give that to her. Then I feel 62 00:02:58,880 --> 00:03:01,120 Speaker 1: like that's a gift to her. The tax man should 63 00:03:01,120 --> 00:03:02,400 Speaker 1: just leave me the hell alone. 64 00:03:02,520 --> 00:03:04,480 Speaker 2: But he won't, she won't. They won't. 65 00:03:05,320 --> 00:03:07,160 Speaker 3: You need to be really careful. So and on the 66 00:03:07,200 --> 00:03:09,480 Speaker 3: face of it, I think you nailed it. So it's 67 00:03:09,520 --> 00:03:11,919 Speaker 3: a really nice thing to do, and to be able 68 00:03:11,919 --> 00:03:14,760 Speaker 3: to give a gift while you're here on the earth 69 00:03:14,840 --> 00:03:17,640 Speaker 3: to see the benefits and the joy that gift gives. 70 00:03:17,680 --> 00:03:19,079 Speaker 2: I think is a wonderful thing. 71 00:03:19,720 --> 00:03:24,680 Speaker 3: And if you can, I guess philosophically, I think you should. 72 00:03:25,000 --> 00:03:28,840 Speaker 3: So you should be able to if you can financially 73 00:03:28,880 --> 00:03:31,000 Speaker 3: and you are in a financial. 74 00:03:30,639 --> 00:03:31,800 Speaker 2: Position to do so. 75 00:03:31,800 --> 00:03:35,120 Speaker 3: So we see, as I said, every second person is 76 00:03:35,120 --> 00:03:36,160 Speaker 3: saying I want to help my kids. 77 00:03:36,160 --> 00:03:37,480 Speaker 2: I want to help my kids into a house. 78 00:03:38,160 --> 00:03:40,280 Speaker 3: Do so, yes, but only if it doesn't put your 79 00:03:40,320 --> 00:03:44,240 Speaker 3: own I guess financial future at risk. So you need 80 00:03:44,280 --> 00:03:46,440 Speaker 3: to be in a decent financial position yourself before you 81 00:03:46,480 --> 00:03:47,400 Speaker 3: go down this path. 82 00:03:47,480 --> 00:03:49,680 Speaker 1: So we probably need to explore that and how you 83 00:03:49,760 --> 00:03:55,320 Speaker 1: work that out. But can we discuss why these rules 84 00:03:55,320 --> 00:03:58,680 Speaker 1: are in place and what they might do. So, for example, 85 00:03:58,720 --> 00:04:01,480 Speaker 1: with the current situation, So if she decides she wants 86 00:04:01,480 --> 00:04:04,800 Speaker 1: to gift this unit to her daughter while she's still living, 87 00:04:06,240 --> 00:04:09,080 Speaker 1: what are the implications what happens from a tax? 88 00:04:09,720 --> 00:04:12,200 Speaker 3: Yeah, so from a tax? So this in Karen's instance, 89 00:04:12,200 --> 00:04:14,960 Speaker 3: it's not her house, is it? So it's an investment property. 90 00:04:15,000 --> 00:04:16,719 Speaker 3: It's a property that she owns that she doesn't live in. 91 00:04:16,800 --> 00:04:21,279 Speaker 3: So on gifting of that house to her daughter, there 92 00:04:21,360 --> 00:04:24,240 Speaker 3: will be some capital There will be capital gains implications, 93 00:04:24,320 --> 00:04:28,719 Speaker 3: So what she paid for it and what the value 94 00:04:28,800 --> 00:04:30,160 Speaker 3: is it the day she gifted it? 95 00:04:30,200 --> 00:04:31,440 Speaker 2: So this is important. 96 00:04:31,480 --> 00:04:33,760 Speaker 3: So even if you give it for no consideration, you 97 00:04:33,760 --> 00:04:36,360 Speaker 3: don't receive her send I think that this was Karen's intent. 98 00:04:37,040 --> 00:04:40,479 Speaker 3: The taxman is still going to apply the I guess 99 00:04:40,520 --> 00:04:41,920 Speaker 3: the value on the day it was. 100 00:04:41,880 --> 00:04:43,560 Speaker 2: Gifted, and who works? 101 00:04:43,800 --> 00:04:45,119 Speaker 1: Do they just get a market value? 102 00:04:45,200 --> 00:04:46,840 Speaker 3: They'll get a market value, right, yeah, they'll get a 103 00:04:46,880 --> 00:04:49,200 Speaker 3: market value. The account and will get a market value, 104 00:04:49,200 --> 00:04:51,440 Speaker 3: and they'll say, right, you've sold. You've gifted your house, 105 00:04:51,440 --> 00:04:54,240 Speaker 3: which is effectively a sale for capital gains tax purposes. 106 00:04:54,560 --> 00:04:57,520 Speaker 3: They'll apply that against the cost base. You'll get a 107 00:04:57,640 --> 00:05:00,360 Speaker 3: very generous discount from our government because you've probably held 108 00:05:00,400 --> 00:05:02,920 Speaker 3: it for twelve months. But then there's capital gains tax 109 00:05:02,960 --> 00:05:07,280 Speaker 3: to pay and that might be an unintended consequence of 110 00:05:07,320 --> 00:05:11,680 Speaker 3: this gift. So there's capital gains tax implications which need 111 00:05:11,720 --> 00:05:12,880 Speaker 3: to be considered first of all. 112 00:05:13,200 --> 00:05:15,600 Speaker 1: And so just so, if Karen has held this property 113 00:05:15,640 --> 00:05:17,960 Speaker 1: for a significant amount of time, and given what we 114 00:05:18,040 --> 00:05:20,080 Speaker 1: know that has happened with property prices, she could be 115 00:05:20,160 --> 00:05:21,719 Speaker 1: up for quite a significant tax bill. 116 00:05:21,880 --> 00:05:24,479 Speaker 3: Yes, yep, and she needs to at least address that 117 00:05:24,600 --> 00:05:26,360 Speaker 3: or think about that before she just goes and gives 118 00:05:26,360 --> 00:05:26,760 Speaker 3: it away. 119 00:05:26,880 --> 00:05:30,360 Speaker 1: What happens if the daughter inherits this property from the will, 120 00:05:30,440 --> 00:05:33,240 Speaker 1: So and Karen, I'm sure you're fit and healthy, and 121 00:05:33,279 --> 00:05:36,200 Speaker 1: I wish you a long and prosperous life. Argument sake, yes, 122 00:05:36,480 --> 00:05:39,200 Speaker 1: you know tomorrow something happens to Karen. The daughter inherits 123 00:05:39,200 --> 00:05:41,599 Speaker 1: the property. Does the daughter then have to pay capital 124 00:05:41,640 --> 00:05:42,080 Speaker 1: gains tax? 125 00:05:42,200 --> 00:05:44,960 Speaker 3: Not immediately, So the daughter inherits the cost base of 126 00:05:45,080 --> 00:05:48,120 Speaker 3: Karen the mum. So if Karen paid five hundred thousand 127 00:05:48,120 --> 00:05:50,440 Speaker 3: dollars for it when she bought it, and say it 128 00:05:50,480 --> 00:05:53,599 Speaker 3: was worth a million dollars on her passing, then her 129 00:05:53,720 --> 00:05:57,360 Speaker 3: daughter would inherit a cost base of five hundred thousand, 130 00:05:57,560 --> 00:05:59,080 Speaker 3: and she would be deemed if she lived in it 131 00:05:59,120 --> 00:06:01,080 Speaker 3: to then have moved in at the price of a 132 00:06:01,120 --> 00:06:04,480 Speaker 3: million dollars, and that becomes her residence, so she doesn't 133 00:06:04,520 --> 00:06:09,120 Speaker 3: automatically pay tax, whereas on the gift the mum Karen 134 00:06:09,160 --> 00:06:13,320 Speaker 3: does automatically paid capital gains tax. The daughter only pays 135 00:06:13,320 --> 00:06:17,479 Speaker 3: capital gains tax if she ultimately sells that property and 136 00:06:17,560 --> 00:06:19,040 Speaker 3: if she lives in it for twenty or thirty years, 137 00:06:19,040 --> 00:06:20,719 Speaker 3: it's probably not going to be too much of a problem. 138 00:06:21,040 --> 00:06:25,680 Speaker 1: But if the daughter moved into the property and then 139 00:06:25,760 --> 00:06:28,880 Speaker 1: goes to sell it two years later, is the capital 140 00:06:28,920 --> 00:06:30,760 Speaker 1: gains that she has to pay two or three whatever 141 00:06:30,800 --> 00:06:34,440 Speaker 1: it might be based on the growth from the million 142 00:06:34,480 --> 00:06:38,080 Speaker 1: dollar property that she moved into. No, it's from the existing. 143 00:06:37,800 --> 00:06:40,080 Speaker 3: Yes, So between this price, yeah, it's the purchase price 144 00:06:40,120 --> 00:06:41,119 Speaker 3: and the inheritance price. 145 00:06:41,480 --> 00:06:42,320 Speaker 2: That's her tax. 146 00:06:42,480 --> 00:06:44,720 Speaker 3: That's her tax if she lives in it for two 147 00:06:44,839 --> 00:06:48,400 Speaker 3: or three years and it grows again, it's a principal residence, 148 00:06:48,440 --> 00:06:50,560 Speaker 3: and so there's no tax on that portion of the game. 149 00:06:51,240 --> 00:06:54,160 Speaker 1: Okay, if she sold it straight up, is it better 150 00:06:54,160 --> 00:06:55,360 Speaker 1: to sell property. 151 00:06:55,000 --> 00:06:58,040 Speaker 2: That you inherit straight away? Yeah? Depends on what you need. 152 00:06:58,120 --> 00:06:59,320 Speaker 2: So you're going to pay tax. 153 00:06:59,680 --> 00:07:02,080 Speaker 3: So if you want to live in it, it's probably 154 00:07:02,160 --> 00:07:04,240 Speaker 3: better to defer the tax. If you're going to live 155 00:07:04,240 --> 00:07:07,120 Speaker 3: in it or use it as an investment yourself, then 156 00:07:07,160 --> 00:07:09,760 Speaker 3: why pay the taxman when you don't have to. So 157 00:07:09,800 --> 00:07:12,040 Speaker 3: at least you've got the option as a gift. There 158 00:07:12,080 --> 00:07:14,560 Speaker 3: is no option that gift is a trigger for capital 159 00:07:14,560 --> 00:07:16,160 Speaker 3: gains and you're paying that tax. 160 00:07:17,640 --> 00:07:22,360 Speaker 1: You mentioned. It's becoming an increasing question to you. There's 161 00:07:22,720 --> 00:07:25,280 Speaker 1: becoming the number one question from clients of yours. Now, 162 00:07:25,360 --> 00:07:28,160 Speaker 1: how do I help my kids? And so do we 163 00:07:28,240 --> 00:07:31,960 Speaker 1: feel that the laws might not have kept pace here 164 00:07:32,000 --> 00:07:35,120 Speaker 1: with this property price gross? Because presumably I'm going to 165 00:07:35,120 --> 00:07:37,360 Speaker 1: make assumptions here, but presumably the laws of the way 166 00:07:37,400 --> 00:07:40,520 Speaker 1: they are to stop people shifting their assets around and 167 00:07:40,600 --> 00:07:41,600 Speaker 1: avoiding paying tax. 168 00:07:42,080 --> 00:07:45,680 Speaker 3: Yeah, certainly the government doesn't want people to gift houses 169 00:07:45,720 --> 00:07:48,600 Speaker 3: and not pay tax. So the laws are there so 170 00:07:49,480 --> 00:07:53,160 Speaker 3: to stop you from gifting and avoiding tax. Now, if 171 00:07:53,160 --> 00:07:55,760 Speaker 3: you gift your own house, it's a different story. Karen's 172 00:07:56,080 --> 00:07:58,760 Speaker 3: is an investment property, so she pays that capital gains tax. 173 00:07:59,120 --> 00:08:01,920 Speaker 3: If you were to gift your own principal residents whole 174 00:08:02,400 --> 00:08:04,880 Speaker 3: other conversation, I suppose. But there is no tax on 175 00:08:05,360 --> 00:08:08,880 Speaker 3: your principal residence, so you can pass assets on into 176 00:08:08,920 --> 00:08:12,960 Speaker 3: generationally if it's your private residence, because there's no tax 177 00:08:13,000 --> 00:08:14,880 Speaker 3: on mine. And if I give my house to my 178 00:08:15,040 --> 00:08:18,520 Speaker 3: kids or one of my kids, or Karen does, and 179 00:08:19,120 --> 00:08:22,120 Speaker 3: it was my residence and it's their residence, then there's 180 00:08:22,120 --> 00:08:22,560 Speaker 3: no tax. 181 00:08:22,600 --> 00:08:24,120 Speaker 2: There's no capital gains tax. 182 00:08:24,320 --> 00:08:31,560 Speaker 1: So could Karen gift her daughter the home that she's 183 00:08:31,640 --> 00:08:35,040 Speaker 1: currently living in. It is I've got no idea where 184 00:08:35,040 --> 00:08:38,240 Speaker 1: these properties are. What's this? But Karen gives the daughter 185 00:08:38,360 --> 00:08:41,240 Speaker 1: her primary residence the house she's living in, yep, and 186 00:08:41,280 --> 00:08:44,319 Speaker 1: then Karen moves into the unit. 187 00:08:44,559 --> 00:08:47,959 Speaker 2: Yes, no tax, no capital gains tax. 188 00:08:47,960 --> 00:08:51,000 Speaker 1: But no capital gains tax. So that's how Karen's daughter 189 00:08:51,000 --> 00:08:54,079 Speaker 1: can can own a property and avoid both of them 190 00:08:54,120 --> 00:08:55,000 Speaker 1: avoid paying. 191 00:08:55,000 --> 00:08:56,480 Speaker 2: Capital going capital gains tax. 192 00:08:56,559 --> 00:08:59,559 Speaker 3: Yes, there's still some capital gains tax embedded in that 193 00:09:00,000 --> 00:09:02,840 Speaker 3: investment property, but it's not dealt with until Karen passes 194 00:09:02,880 --> 00:09:06,840 Speaker 3: away or not triggered or passes away and the property 195 00:09:06,880 --> 00:09:07,200 Speaker 3: is sold. 196 00:09:07,280 --> 00:09:08,079 Speaker 2: You can defer it. 197 00:09:09,000 --> 00:09:11,400 Speaker 1: And I'm so sorry, I'm going down so many rabbit 198 00:09:11,440 --> 00:09:12,960 Speaker 1: holes I'm trying. You can see how I'm. 199 00:09:13,160 --> 00:09:14,040 Speaker 2: Trying to get out of paying time. 200 00:09:14,120 --> 00:09:18,840 Speaker 1: I am, I am. I'm helping Karen here. So if 201 00:09:18,880 --> 00:09:23,520 Speaker 1: then could then Karen, who's moved into the unit and 202 00:09:23,559 --> 00:09:26,880 Speaker 1: the unit is her primary residence, then at some point 203 00:09:26,880 --> 00:09:30,880 Speaker 1: in the future gives that unit to her daughter and 204 00:09:30,920 --> 00:09:32,080 Speaker 1: avoid capital gains tax. 205 00:09:32,200 --> 00:09:35,080 Speaker 3: Not avoid it because it's been an investment property for 206 00:09:35,559 --> 00:09:37,840 Speaker 3: the period of time until she moves into it. Okay, 207 00:09:37,960 --> 00:09:40,480 Speaker 3: so she can minimize So she's owned it for three years, 208 00:09:40,480 --> 00:09:42,960 Speaker 3: and you've got this gain. If she then moves in 209 00:09:43,000 --> 00:09:45,800 Speaker 3: and lives in it for twenty more years, then the 210 00:09:45,840 --> 00:09:49,360 Speaker 3: game becomes reasonably marginal in terms of the overall gain. 211 00:09:49,480 --> 00:09:51,640 Speaker 3: So yeah, look, if I was Karen and I was 212 00:09:51,679 --> 00:09:54,800 Speaker 3: hell bent on giving my daughter a property, that's what 213 00:09:54,840 --> 00:09:59,359 Speaker 3: you've just come up with is a reasonably good solution strategy. 214 00:10:00,400 --> 00:10:03,000 Speaker 1: So what's your advice to your clients when they come 215 00:10:03,000 --> 00:10:05,400 Speaker 1: and say, I want to be able to gift, whether 216 00:10:05,440 --> 00:10:07,840 Speaker 1: it's property or money to my kids. Maybe it's about 217 00:10:07,960 --> 00:10:11,439 Speaker 1: there'll be people having conversations about it, wanting gift money, 218 00:10:11,800 --> 00:10:14,760 Speaker 1: to provide a deposit or to at least help my 219 00:10:14,840 --> 00:10:16,880 Speaker 1: kids on their way. What's the what are the tax 220 00:10:16,880 --> 00:10:19,040 Speaker 1: implications for that? And what is your advice to Okay. 221 00:10:18,800 --> 00:10:19,640 Speaker 2: So we've touched on one. 222 00:10:19,720 --> 00:10:22,360 Speaker 3: So the property gifting is actually more a lot more 223 00:10:22,440 --> 00:10:26,680 Speaker 3: rare than giving of cash, so and it has far 224 00:10:26,800 --> 00:10:29,720 Speaker 3: more I guess complications attached to it. So capital gains 225 00:10:29,760 --> 00:10:32,480 Speaker 3: is one in Carriage's because it's a it's an investment 226 00:10:32,520 --> 00:10:36,200 Speaker 3: property she's gifting, But there's also stamp duty payable by 227 00:10:36,240 --> 00:10:39,280 Speaker 3: her daughter on the receipt of that property because she's 228 00:10:39,360 --> 00:10:42,640 Speaker 3: even though she hasn't paid any money. The tax office 229 00:10:42,960 --> 00:10:45,760 Speaker 3: again applies the stamp duty on the market value at 230 00:10:45,760 --> 00:10:47,920 Speaker 3: the time of the transfer. So there's capital gains for 231 00:10:48,000 --> 00:10:49,880 Speaker 3: Karen and there stamp duty for her daughter. 232 00:10:50,679 --> 00:10:55,240 Speaker 1: That seems so unfair though it's really the state government 233 00:10:55,320 --> 00:10:57,520 Speaker 1: should be able to waigh that at least because you're 234 00:10:58,120 --> 00:11:00,120 Speaker 1: there's no treasure that hasn't paid any money for it, 235 00:11:00,160 --> 00:11:02,400 Speaker 1: and yet the government will treat it as a. 236 00:11:02,800 --> 00:11:03,600 Speaker 2: Change of ownership. 237 00:11:03,640 --> 00:11:06,640 Speaker 3: It's the same paperwork as far as the government are concerned, 238 00:11:06,720 --> 00:11:08,400 Speaker 3: is if I was to sell a property to you. 239 00:11:09,240 --> 00:11:12,760 Speaker 1: But the stamp duty on these properties now is quite significant. 240 00:11:12,880 --> 00:11:16,079 Speaker 2: Yeah, the government must be making a fortune on stamp duty. Yeah. 241 00:11:16,360 --> 00:11:19,319 Speaker 3: And the thing about stamp duty, it hasn't been changed 242 00:11:19,400 --> 00:11:21,120 Speaker 3: or the rate of stamp duty hasn't been changed for 243 00:11:21,160 --> 00:11:24,000 Speaker 3: so long, and yet the prices of property have gone 244 00:11:24,040 --> 00:11:26,319 Speaker 3: through the roof. So they're making a lot of money 245 00:11:26,320 --> 00:11:29,520 Speaker 3: that the state government. And yeah, that sugar hits. It's 246 00:11:29,520 --> 00:11:32,240 Speaker 3: hard to unwind, it's hard to give up. They're not 247 00:11:32,280 --> 00:11:33,400 Speaker 3: even likely to. 248 00:11:33,360 --> 00:11:36,000 Speaker 1: Do so, Okay, So it sounds to me that property 249 00:11:36,640 --> 00:11:39,800 Speaker 1: is too difficult, and that's probably adding two inflated property 250 00:11:39,840 --> 00:11:41,160 Speaker 1: prices because people. 251 00:11:41,240 --> 00:11:43,000 Speaker 2: Yeah, it wouldn't help, it wouldn't help. 252 00:11:43,040 --> 00:11:45,000 Speaker 3: And again there's the one less property going in the market, 253 00:11:45,040 --> 00:11:46,880 Speaker 3: isn't there's sort of kept in house, so that doesn't 254 00:11:46,880 --> 00:11:49,400 Speaker 3: help with the supply of property. So property is problematic. 255 00:11:49,880 --> 00:11:52,960 Speaker 3: Cash is a lot simpler. So if you were to 256 00:11:53,000 --> 00:11:57,400 Speaker 3: gift cash, there is no tax ramifications on the gift. 257 00:11:57,920 --> 00:12:02,440 Speaker 2: Tour or the giftee, so no problem. So no problems. 258 00:12:02,640 --> 00:12:05,640 Speaker 1: Okay, So my dad decides I'm going to give jewels 259 00:12:05,720 --> 00:12:09,680 Speaker 1: fifty thousand dollars tomorrow. You can just put fifty thousand 260 00:12:09,679 --> 00:12:10,720 Speaker 1: dollars into my account. 261 00:12:10,800 --> 00:12:12,560 Speaker 3: No problems with me, I can so from a tax 262 00:12:12,920 --> 00:12:16,520 Speaker 3: point of view, no tax on a gift yet in Australia, 263 00:12:16,559 --> 00:12:19,440 Speaker 3: and no tax on obviously receiving a gift. So the 264 00:12:19,520 --> 00:12:23,079 Speaker 3: problems then with the money gift come from if it's money, 265 00:12:23,080 --> 00:12:25,079 Speaker 3: that is your money, it's important to you, and it's 266 00:12:25,120 --> 00:12:28,240 Speaker 3: in the family. What if I was to gift, know, 267 00:12:28,360 --> 00:12:31,920 Speaker 3: you two hundred thousand dollars and then you go and 268 00:12:31,920 --> 00:12:34,680 Speaker 3: split up with your husband and your husband walks away 269 00:12:34,720 --> 00:12:37,080 Speaker 3: with half of my two hundred thousand dollars, So that's 270 00:12:37,120 --> 00:12:41,079 Speaker 3: something to consider. So my view, I think if you're 271 00:12:41,080 --> 00:12:44,240 Speaker 3: going to make large gifts, a be in a financial 272 00:12:44,280 --> 00:12:47,320 Speaker 3: position to do so, and be consider making it a 273 00:12:47,360 --> 00:12:49,480 Speaker 3: loan rather than a gift, so you've got some sort 274 00:12:49,520 --> 00:12:51,920 Speaker 3: of clawback on that money if something were to happen 275 00:12:52,160 --> 00:12:53,600 Speaker 3: to your loved one. 276 00:12:53,800 --> 00:12:56,480 Speaker 1: So let's say you've structured as a loan to me, 277 00:12:56,559 --> 00:12:58,440 Speaker 1: so you get to loan me two hundred thousand dollars. 278 00:12:58,840 --> 00:13:03,120 Speaker 1: Then my husband and I bullit when it comes to 279 00:13:03,240 --> 00:13:05,320 Speaker 1: the asset division. That's treated as. 280 00:13:05,240 --> 00:13:08,600 Speaker 3: A oh if it's a loan, Yeah, it's a loan, 281 00:13:08,760 --> 00:13:12,360 Speaker 3: So it's a liability that you have, and me, as 282 00:13:12,360 --> 00:13:15,080 Speaker 3: the lender, can say, oh, hang on, jewels, you're getting 283 00:13:15,280 --> 00:13:17,680 Speaker 3: you're getting divorced, or you've split up with your husband. 284 00:13:18,040 --> 00:13:18,920 Speaker 2: I want my money back. 285 00:13:20,120 --> 00:13:20,640 Speaker 1: I see. 286 00:13:20,960 --> 00:13:23,600 Speaker 3: So while when you're splitting everything up, pay me first, 287 00:13:24,040 --> 00:13:25,200 Speaker 3: then you can split the rest up. 288 00:13:25,280 --> 00:13:31,079 Speaker 1: Does that then mean that my husband could get less 289 00:13:31,200 --> 00:13:35,839 Speaker 1: from the asset pool because there's a two hundred thousand 290 00:13:35,880 --> 00:13:37,959 Speaker 1: dollars loan and instead of that being one hundred thousand 291 00:13:38,000 --> 00:13:40,199 Speaker 1: dollars each, I actually get two hundred thousand dollars outcause 292 00:13:40,240 --> 00:13:42,160 Speaker 1: of a liability. But that will then reduce the. 293 00:13:42,320 --> 00:13:44,880 Speaker 3: Yes, you pay me back as the lender when your 294 00:13:45,200 --> 00:13:49,520 Speaker 3: divorce or financial settlement is settled, legally, I can relend 295 00:13:49,559 --> 00:13:51,520 Speaker 3: you that I can't I and do it again. So 296 00:13:51,800 --> 00:13:55,000 Speaker 3: it is a good way to protect family money. So 297 00:13:55,160 --> 00:13:57,360 Speaker 3: it is one thing to consider when making a gift. 298 00:13:57,880 --> 00:14:00,360 Speaker 1: Sure, I'm looking forward to you having those discussions with 299 00:14:00,400 --> 00:14:01,000 Speaker 1: your daughters. 300 00:14:03,080 --> 00:14:06,720 Speaker 3: They're only getting loans, there's no gifts. 301 00:14:06,920 --> 00:14:11,880 Speaker 1: Okay, so we probably need to explore We need to 302 00:14:11,880 --> 00:14:13,760 Speaker 1: explore that a little bit further. I think in terms 303 00:14:13,800 --> 00:14:19,600 Speaker 1: about how to protect the transfer of wealth through the generations, 304 00:14:19,960 --> 00:14:22,720 Speaker 1: But just on gifting itself. Is there are some sort 305 00:14:22,760 --> 00:14:23,240 Speaker 1: of caps so. 306 00:14:23,280 --> 00:14:25,840 Speaker 2: They're not too there are yet that then can. 307 00:14:25,680 --> 00:14:28,800 Speaker 1: Affect your eligibility for the age pension. 308 00:14:28,880 --> 00:14:29,920 Speaker 2: Yes, yep, so there are. 309 00:14:30,000 --> 00:14:32,360 Speaker 3: And in your example where you your dad has lent 310 00:14:32,440 --> 00:14:37,320 Speaker 3: you no gifts you fifty thousand dollars if he is 311 00:14:37,360 --> 00:14:41,480 Speaker 3: on an age pension. Weirdly, part of that gift, forty 312 00:14:41,520 --> 00:14:43,640 Speaker 3: thousand dollars of that gift is treated as an asset 313 00:14:43,680 --> 00:14:45,800 Speaker 3: for five years. So you need to be careful if 314 00:14:45,800 --> 00:14:48,760 Speaker 3: you're on an age pension and giving money away, because 315 00:14:48,800 --> 00:14:51,520 Speaker 3: even though you give it away, essentielic is still going 316 00:14:51,560 --> 00:14:54,840 Speaker 3: to assess you was owning most of that for five years. 317 00:14:55,160 --> 00:14:57,760 Speaker 1: Again, this is to try and stop people throwing their 318 00:14:57,760 --> 00:14:59,480 Speaker 1: money left front and center and get under. 319 00:14:59,440 --> 00:15:02,520 Speaker 2: Yeah, under the asset lest asset test limit. 320 00:15:02,640 --> 00:15:05,160 Speaker 3: So you're allowed to give ten thousand dollars a year, 321 00:15:05,280 --> 00:15:06,240 Speaker 3: which doesn't sound a lot. 322 00:15:06,360 --> 00:15:08,800 Speaker 1: It doesn't really sound like much. Has that been changed 323 00:15:08,840 --> 00:15:09,320 Speaker 1: over the years? 324 00:15:09,400 --> 00:15:11,960 Speaker 3: Has that really kept up with twenty You should ask, 325 00:15:12,080 --> 00:15:15,360 Speaker 3: because it hasn't. Two thousand and two was the last 326 00:15:15,360 --> 00:15:20,080 Speaker 3: time the gifting limits were meddled with, So ten thousand 327 00:15:20,080 --> 00:15:22,760 Speaker 3: dollars you're only allowed to give a year or thirty 328 00:15:22,800 --> 00:15:26,160 Speaker 3: thousand dollars over five years for the last twenty three years. 329 00:15:26,400 --> 00:15:27,280 Speaker 1: Do they need to change that? 330 00:15:27,880 --> 00:15:30,560 Speaker 2: They probably should, at least inflate it. So I did 331 00:15:30,640 --> 00:15:31,240 Speaker 2: some numbers on it. 332 00:15:31,360 --> 00:15:34,760 Speaker 3: So in twenty twenty five that ten thousand dollars should 333 00:15:34,800 --> 00:15:37,160 Speaker 3: have roughly doubled, So you should be allowed to give 334 00:15:37,200 --> 00:15:40,560 Speaker 3: now twenty thousand dollars or sixty thousand over three years. 335 00:15:40,960 --> 00:15:45,120 Speaker 3: But it hasn't changed. So it means that you can't 336 00:15:45,120 --> 00:15:47,400 Speaker 3: give much away and or you. 337 00:15:47,280 --> 00:15:51,080 Speaker 1: Have to do it five yes. 338 00:15:50,480 --> 00:15:51,720 Speaker 2: Or give yourself a run up. 339 00:15:51,760 --> 00:15:54,800 Speaker 1: Before sixty seven. So you have to do it before 340 00:15:54,840 --> 00:15:55,840 Speaker 1: you turn sixty two. 341 00:15:56,120 --> 00:15:57,720 Speaker 3: Yes, So if you've plan it out and if you 342 00:15:58,000 --> 00:15:59,920 Speaker 3: and we see this lot, I've paid tax all my life, 343 00:16:00,200 --> 00:16:02,200 Speaker 3: you know I'm entitled to my age pension. 344 00:16:02,480 --> 00:16:03,640 Speaker 2: If that's where you want to head. 345 00:16:04,160 --> 00:16:06,320 Speaker 3: And you say you've got a million dollars in super 346 00:16:06,560 --> 00:16:08,880 Speaker 3: and at sixty two you're retired, you can give five 347 00:16:08,960 --> 00:16:11,640 Speaker 3: hundred thousand dollars of that away. By the time you 348 00:16:11,720 --> 00:16:16,600 Speaker 3: hit sixty seven, that five hundred thousand dollars gift or alone, 349 00:16:16,640 --> 00:16:19,840 Speaker 3: if you get advice, is no longer an asset as 350 00:16:19,920 --> 00:16:21,320 Speaker 3: far as centling a concerner. 351 00:16:21,120 --> 00:16:22,560 Speaker 1: You do that before you're sixty two. 352 00:16:22,560 --> 00:16:25,040 Speaker 2: Yep, because they only assess it for five years. 353 00:16:25,400 --> 00:16:27,160 Speaker 1: Do you think they're likely to change that as this 354 00:16:27,200 --> 00:16:29,520 Speaker 1: intergenerational wealth transfers. 355 00:16:29,000 --> 00:16:32,520 Speaker 3: Moment, maybe like if enough people did it. And I've 356 00:16:32,720 --> 00:16:34,800 Speaker 3: done this for a long time, but I haven't seen 357 00:16:35,200 --> 00:16:37,600 Speaker 3: extreme examples of that. My view of that is, if 358 00:16:37,600 --> 00:16:40,800 Speaker 3: you never if you're fortunate enough to never have to 359 00:16:41,080 --> 00:16:44,440 Speaker 3: walk into a sentilink offers, you should accept that as 360 00:16:44,560 --> 00:16:48,760 Speaker 3: being a pretty good thing, and don't force your way 361 00:16:48,800 --> 00:16:51,240 Speaker 3: into an age pension just because you feel you're entitled. 362 00:16:51,400 --> 00:16:53,120 Speaker 2: I get it. We pay tax all our lives and 363 00:16:53,120 --> 00:16:53,400 Speaker 2: all that. 364 00:16:53,800 --> 00:16:55,800 Speaker 1: Yeah, sure, well I agree with you. I feel like 365 00:16:55,920 --> 00:16:59,680 Speaker 1: that there's if you can. If you can have financial 366 00:16:59,720 --> 00:17:02,120 Speaker 1: indep and you've worked very hard for it, and you 367 00:17:02,160 --> 00:17:04,120 Speaker 1: do not need to rely on the government. We all life. 368 00:17:04,200 --> 00:17:06,360 Speaker 1: That's a great thing, which is why I understand why 369 00:17:06,359 --> 00:17:09,000 Speaker 1: people get so worked up when the government goes to 370 00:17:09,080 --> 00:17:14,280 Speaker 1: change rules, particularly on that superannuation change. Talking about when 371 00:17:14,320 --> 00:17:15,840 Speaker 1: we come back from the break, we might talk a 372 00:17:15,880 --> 00:17:18,000 Speaker 1: little bit more about that. So there are some tricks 373 00:17:18,040 --> 00:17:22,119 Speaker 1: that people are making with sentling to try and that 374 00:17:22,160 --> 00:17:26,920 Speaker 1: we've highlighted at The Australian this week and it's really interesting. 375 00:17:27,560 --> 00:17:31,120 Speaker 1: It's a way around those asset tests and I want 376 00:17:31,160 --> 00:17:32,880 Speaker 1: to get your thoughts on that and whether it might 377 00:17:32,920 --> 00:17:35,359 Speaker 1: be a clever strategy to do it. Basically involves getting 378 00:17:35,359 --> 00:17:37,280 Speaker 1: a better property and getting the age pension at the 379 00:17:37,280 --> 00:17:39,800 Speaker 1: same time. But I also want to get your thoughts 380 00:17:40,200 --> 00:17:42,640 Speaker 1: on whether you should ever really pay off your mortgage. 381 00:17:42,640 --> 00:17:44,920 Speaker 1: There's this growing trend that you should never pay off 382 00:17:44,960 --> 00:17:49,359 Speaker 1: your mortgage. It sounds crazy, but we'll find out why 383 00:17:49,440 --> 00:18:07,840 Speaker 1: when we come back. Welcome back to the Money Puzzle. 384 00:18:07,840 --> 00:18:11,240 Speaker 1: I'm your host, Julianne Sprague, Wealth editor at the Australian 385 00:18:11,320 --> 00:18:14,240 Speaker 1: filling in for James Kirby. He is on a well 386 00:18:14,280 --> 00:18:17,399 Speaker 1: deserved break. He will be back with you shortly And 387 00:18:17,400 --> 00:18:20,199 Speaker 1: I'm chatting to Jason Featherby, head of financial advice and 388 00:18:20,240 --> 00:18:23,320 Speaker 1: a co founder of Lewin Wealth. He's been in the 389 00:18:23,359 --> 00:18:26,440 Speaker 1: game a long time. He's advised people on all sorts 390 00:18:26,480 --> 00:18:29,160 Speaker 1: of strategies and Jason, before we went to the break, 391 00:18:29,200 --> 00:18:31,680 Speaker 1: I mentioned to you about some of the strategies people 392 00:18:31,720 --> 00:18:34,800 Speaker 1: are using to make sure that they can get their 393 00:18:34,800 --> 00:18:38,640 Speaker 1: aged pension and it has raised my eyebrows. James Gerard, 394 00:18:38,880 --> 00:18:41,320 Speaker 1: well known financial planner. He has written about this for 395 00:18:41,359 --> 00:18:44,240 Speaker 1: The Australian about it sounds it sounds nuts to me, 396 00:18:44,320 --> 00:18:46,479 Speaker 1: but I can can't understand how this can work. So 397 00:18:46,560 --> 00:18:48,600 Speaker 1: it is all about getting access to the age pension 398 00:18:48,720 --> 00:18:51,560 Speaker 1: and there is an asset test in place and if 399 00:18:51,560 --> 00:18:54,760 Speaker 1: you don't meet the requirements, no age pension for you. 400 00:18:54,880 --> 00:18:57,679 Speaker 1: But there is some people have found a way around 401 00:18:57,720 --> 00:19:01,639 Speaker 1: and it involves, for Kim sake, taking four hundred or 402 00:19:01,640 --> 00:19:04,119 Speaker 1: five hundred thousand dollars out of your Super three hundred 403 00:19:04,119 --> 00:19:06,040 Speaker 1: thousand whatever it might be, taking a big chunk out 404 00:19:06,080 --> 00:19:09,919 Speaker 1: of Super and upgrading their property so they use a 405 00:19:10,040 --> 00:19:13,000 Speaker 1: huge chunk of money, get a better home, and reduce 406 00:19:13,040 --> 00:19:16,200 Speaker 1: their assets qualify for the age pension. 407 00:19:17,359 --> 00:19:18,120 Speaker 2: Yeah, I like it. 408 00:19:18,240 --> 00:19:22,159 Speaker 3: I mean to put it simply, if you're over the 409 00:19:22,200 --> 00:19:26,240 Speaker 3: asset test limit for an age pension as a couple, 410 00:19:26,240 --> 00:19:28,800 Speaker 3: every ten thousand dollars you can get rid of. 411 00:19:29,080 --> 00:19:31,359 Speaker 2: That means gifting, which we've spoken about. 412 00:19:31,560 --> 00:19:35,000 Speaker 3: Upgrading the house now that could mean literally just renovating it, 413 00:19:35,040 --> 00:19:38,080 Speaker 3: putting a new kitchen in, putting solar panels on, or 414 00:19:38,359 --> 00:19:41,840 Speaker 3: going to the extreme of actually moving house. You get 415 00:19:41,880 --> 00:19:44,880 Speaker 3: seven percent return on that money. So ten thousand dollars 416 00:19:45,400 --> 00:19:47,919 Speaker 3: gives you a seven percent return in extra age pension. 417 00:19:48,000 --> 00:19:52,200 Speaker 3: So in some instances it's actually a pretty good strategy. 418 00:19:52,600 --> 00:19:54,520 Speaker 1: That's not terrible, is it. 419 00:19:54,520 --> 00:19:56,240 Speaker 3: No, Because it's hard to get a seven percent return 420 00:19:56,280 --> 00:19:57,560 Speaker 3: guaranteed for anywhere else. 421 00:19:58,400 --> 00:20:01,919 Speaker 1: The system wasn't designed to do that though, right, like 422 00:20:02,040 --> 00:20:03,480 Speaker 1: the age pension is meant to. 423 00:20:03,400 --> 00:20:03,760 Speaker 3: Be this. 424 00:20:05,760 --> 00:20:07,880 Speaker 1: All people will argue with me. I've got to stay 425 00:20:07,920 --> 00:20:09,600 Speaker 1: safe to that. But I know there'll be lots of 426 00:20:09,600 --> 00:20:12,040 Speaker 1: people arguing that. You said, like people have paid taxes, 427 00:20:12,040 --> 00:20:14,040 Speaker 1: it's my right to it. I'm not sure it was 428 00:20:14,080 --> 00:20:17,520 Speaker 1: designed for this. It wasn't designed to go and get 429 00:20:18,160 --> 00:20:19,440 Speaker 1: marble bench tops that have. 430 00:20:19,440 --> 00:20:21,280 Speaker 2: The state of the art solar panel. 431 00:20:21,359 --> 00:20:23,120 Speaker 1: I'll get a twenty thousand dollars fridge. 432 00:20:22,800 --> 00:20:25,199 Speaker 3: Big holidays, you can go spend some money on holidays. 433 00:20:25,680 --> 00:20:30,200 Speaker 3: In our defense of those that provide these strategies. When 434 00:20:30,200 --> 00:20:34,120 Speaker 3: the age pension was introduced, people didn't live to get 435 00:20:34,160 --> 00:20:36,119 Speaker 3: the age pension, so they thought, we'll offer everyone an 436 00:20:36,160 --> 00:20:38,520 Speaker 3: age pension at sixty two wherever the original age was. 437 00:20:38,760 --> 00:20:41,480 Speaker 3: But I think the average life experience was probably fifty 438 00:20:41,520 --> 00:20:42,960 Speaker 3: eight or something, so it was never going to be 439 00:20:43,000 --> 00:20:45,600 Speaker 3: a big cost. Now it's sort of crept up on 440 00:20:45,640 --> 00:20:48,520 Speaker 3: the government and it's now a huge cost, and they 441 00:20:48,560 --> 00:20:51,159 Speaker 3: don't want us doing these things. But the rules are 442 00:20:51,200 --> 00:20:53,879 Speaker 3: in there to legitimately have a better house, get an 443 00:20:53,920 --> 00:20:57,439 Speaker 3: age pension, and for some people, and I think if 444 00:20:57,480 --> 00:21:00,160 Speaker 3: your marginal, so if you've got I don't know, eight 445 00:21:00,200 --> 00:21:02,679 Speaker 3: hundred thousand dollars, say, and you can get rid of 446 00:21:02,680 --> 00:21:05,280 Speaker 3: two or three hundred thousand and get a better house, 447 00:21:05,720 --> 00:21:08,159 Speaker 3: maybe make a gift to the kids, prepay a funeral, 448 00:21:08,280 --> 00:21:11,880 Speaker 3: other things that are not asset tested, and get paid 449 00:21:11,920 --> 00:21:15,879 Speaker 3: well to do it. Then why not if you have 450 00:21:17,119 --> 00:21:19,240 Speaker 3: three million dollars in super and you take two and 451 00:21:19,240 --> 00:21:21,080 Speaker 3: a half million dollars and buy a mansion in del 452 00:21:21,160 --> 00:21:23,840 Speaker 3: Keith to get a full age pension, I'd be saying, 453 00:21:24,000 --> 00:21:27,680 Speaker 3: what are you doing? So everyone should get their own 454 00:21:27,720 --> 00:21:29,960 Speaker 3: advice on this, But for some it's a really good 455 00:21:30,040 --> 00:21:33,400 Speaker 3: strategy and for some you just why is the risk? 456 00:21:33,440 --> 00:21:35,359 Speaker 1: Then if you pour all of that asset then into 457 00:21:35,960 --> 00:21:36,919 Speaker 1: climb a home or ice. 458 00:21:36,840 --> 00:21:39,520 Speaker 3: Property, you've got less money. So you've got less money 459 00:21:39,560 --> 00:21:42,359 Speaker 3: and you don't know exactly depending on your living costs. 460 00:21:42,560 --> 00:21:45,320 Speaker 3: The age pension sounds wonderful, but what is It's forty 461 00:21:45,320 --> 00:21:47,359 Speaker 3: odd forty five thousand dollars a year for a couple. 462 00:21:48,040 --> 00:21:52,320 Speaker 3: It doesn't meet on its own even enough to meet 463 00:21:52,480 --> 00:21:55,640 Speaker 3: and make a modest retirement living. So you don't want 464 00:21:55,640 --> 00:21:57,399 Speaker 3: to give all your money away just to get forty 465 00:21:57,400 --> 00:22:00,480 Speaker 3: five thousand dollars and have no money because you'll need 466 00:22:00,560 --> 00:22:03,800 Speaker 3: new cars, you'll have poor health, sadly to a lot 467 00:22:03,880 --> 00:22:07,000 Speaker 3: of people, you might want to go on holiday. Heaven forbid, 468 00:22:07,000 --> 00:22:08,480 Speaker 3: you might end up in age care and you might 469 00:22:08,640 --> 00:22:10,320 Speaker 3: end up in age care at the same time, So 470 00:22:10,640 --> 00:22:12,040 Speaker 3: where do you get the money to pay for that? 471 00:22:12,800 --> 00:22:15,520 Speaker 3: And so that's why I think again, if you can 472 00:22:15,600 --> 00:22:19,080 Speaker 3: avoid centre link because you have enough money. You're in 473 00:22:19,119 --> 00:22:21,560 Speaker 3: a really good position, and I certainly wouldn't go forcing 474 00:22:21,560 --> 00:22:23,399 Speaker 3: the issue just to get a bit more help from 475 00:22:23,440 --> 00:22:26,680 Speaker 3: the government if you are wealthy. 476 00:22:26,800 --> 00:22:29,359 Speaker 1: But when you're saying borderlines, So what's your view of, I. 477 00:22:29,359 --> 00:22:31,639 Speaker 3: Reckon scept Yeah, six to eight hundred thousand dollars of 478 00:22:31,680 --> 00:22:34,920 Speaker 3: accessible assets. That extra two or three hundred thousand dollars 479 00:22:34,920 --> 00:22:38,040 Speaker 3: can do a lot in terms of housing, solar panels, 480 00:22:38,520 --> 00:22:40,640 Speaker 3: gift for kids and things like that. And you are 481 00:22:40,920 --> 00:22:43,399 Speaker 3: by getting your assets down two or three hundred thousand 482 00:22:43,400 --> 00:22:46,440 Speaker 3: dollars and leaving yourself with five hundred thousand, for example, 483 00:22:46,640 --> 00:22:50,160 Speaker 3: it's still enough money to have access to and you're 484 00:22:50,200 --> 00:22:52,520 Speaker 3: going to get a much higher pension or bigger bang 485 00:22:52,560 --> 00:22:54,280 Speaker 3: for your buck in terms of the money that you 486 00:22:54,920 --> 00:22:59,159 Speaker 3: legally get rid of. If you've got three hundred thousand 487 00:22:59,160 --> 00:23:01,880 Speaker 3: dollars in super few other things and you're already getting 488 00:23:01,920 --> 00:23:03,920 Speaker 3: most of a pension and you go buy a new 489 00:23:03,920 --> 00:23:07,000 Speaker 3: house and you get a tiny bit more pension, you know, 490 00:23:07,200 --> 00:23:10,160 Speaker 3: I'd question why it makes sense. So it's when you're 491 00:23:10,160 --> 00:23:14,200 Speaker 3: in that sort of it's almost middle income, middle age 492 00:23:14,280 --> 00:23:18,080 Speaker 3: or middle wealth zone where you can do a bit 493 00:23:18,080 --> 00:23:21,200 Speaker 3: of clever stuff with assets and the age pension. 494 00:23:22,600 --> 00:23:23,440 Speaker 1: Right for the picking. 495 00:23:24,960 --> 00:23:28,159 Speaker 3: Great place to give advice, but don't go forced this 496 00:23:28,280 --> 00:23:30,560 Speaker 3: uear by spending a million dollars on an extra house, 497 00:23:30,680 --> 00:23:33,160 Speaker 3: or you know, giving a million dollars away to kids, 498 00:23:33,240 --> 00:23:36,040 Speaker 3: leaving yourself with four hundred and fifty thousand, because you 499 00:23:36,160 --> 00:23:37,880 Speaker 3: just don't know what's around the corner with your health 500 00:23:37,960 --> 00:23:38,920 Speaker 3: or with what you might need. 501 00:23:39,200 --> 00:23:41,840 Speaker 1: So before we get to why you might never want 502 00:23:41,840 --> 00:23:45,760 Speaker 1: to pay off your mortgage, can you articulate how you 503 00:23:46,400 --> 00:23:50,680 Speaker 1: can determine your financial position You mentioned earlier when you're 504 00:23:50,720 --> 00:23:52,879 Speaker 1: trying to work out gifting, So whether that's gifting a property, 505 00:23:52,920 --> 00:23:58,320 Speaker 1: gifting money to the kids, how do you determine that 506 00:23:58,400 --> 00:24:01,440 Speaker 1: you're in the financial actual shape to do it. Because 507 00:24:01,440 --> 00:24:04,800 Speaker 1: it's a very emotional, particularly when it comes to family 508 00:24:04,880 --> 00:24:07,320 Speaker 1: and kids, that there is this drive and this desire 509 00:24:07,440 --> 00:24:08,240 Speaker 1: to really help. 510 00:24:08,080 --> 00:24:10,040 Speaker 3: Them, to really help because they're our kids, so we 511 00:24:10,160 --> 00:24:13,359 Speaker 3: understand that, but look to put it really simply, you 512 00:24:13,440 --> 00:24:16,919 Speaker 3: should be in a financial position where you have no 513 00:24:17,080 --> 00:24:18,679 Speaker 3: debt or it's pretty much gone. 514 00:24:19,280 --> 00:24:20,840 Speaker 2: And if. 515 00:24:22,119 --> 00:24:26,480 Speaker 3: You didn't have this money because you've gifted it away 516 00:24:26,560 --> 00:24:29,000 Speaker 3: or lent it, it's not going to impact your ability 517 00:24:29,040 --> 00:24:31,119 Speaker 3: to generate an income in retirement. So you should have 518 00:24:31,240 --> 00:24:34,639 Speaker 3: enough other assets to generate a passive income for you 519 00:24:34,720 --> 00:24:37,639 Speaker 3: to live comfortably in the retirement that you want. So 520 00:24:38,040 --> 00:24:40,600 Speaker 3: they're the two basic ones. No debt and enough assets 521 00:24:40,640 --> 00:24:43,480 Speaker 3: to produce the income that you need. If you're not there, 522 00:24:44,000 --> 00:24:46,720 Speaker 3: then I'd think very carefully about giving money away to 523 00:24:46,880 --> 00:24:49,080 Speaker 3: kids that still have time to get there. 524 00:24:49,320 --> 00:24:50,560 Speaker 2: You're there, you know. 525 00:24:50,800 --> 00:24:52,720 Speaker 3: If you're not there, and if you've got debt or 526 00:24:52,720 --> 00:24:54,800 Speaker 3: if you haven't got enough insupor to live off, and 527 00:24:54,840 --> 00:24:57,480 Speaker 3: you're giving away or proposing to give away hundreds of 528 00:24:57,520 --> 00:24:59,920 Speaker 3: thousands of dollars, probably don't you. 529 00:25:00,000 --> 00:25:02,600 Speaker 1: We have to counsel clients then away from this. All 530 00:25:02,600 --> 00:25:04,600 Speaker 1: the time they've come to you, they are dead set 531 00:25:04,840 --> 00:25:06,960 Speaker 1: going to gift money or do whatever it was to 532 00:25:07,000 --> 00:25:08,560 Speaker 1: help their kids, and you've actually had to point out 533 00:25:08,600 --> 00:25:10,000 Speaker 1: you actually really aren't in. 534 00:25:10,200 --> 00:25:13,480 Speaker 3: Yeah, the financial and you do it from you're my clients, 535 00:25:14,080 --> 00:25:17,760 Speaker 3: and I'm here to help you and allowing this or 536 00:25:18,440 --> 00:25:22,000 Speaker 3: I guess indulging this or accepting this gift or loan 537 00:25:22,080 --> 00:25:24,360 Speaker 3: or whatever we want to do is going to leave 538 00:25:24,359 --> 00:25:26,720 Speaker 3: you short or it's going to put your own retirement 539 00:25:26,720 --> 00:25:28,320 Speaker 3: at risk, and you're mad. 540 00:25:28,760 --> 00:25:31,920 Speaker 1: And do they get concerned about what their kids will say? 541 00:25:31,960 --> 00:25:32,199 Speaker 3: I do. 542 00:25:32,720 --> 00:25:34,920 Speaker 1: I am worried about this sense of entitlement that's brewing 543 00:25:34,960 --> 00:25:36,040 Speaker 1: in a generation. 544 00:25:35,720 --> 00:25:38,360 Speaker 2: There is and they do, Yeah, they do. 545 00:25:38,480 --> 00:25:40,919 Speaker 3: And so some people don't want to draw down on 546 00:25:40,920 --> 00:25:42,480 Speaker 3: this super because they want to leave it all to 547 00:25:42,480 --> 00:25:44,359 Speaker 3: their kids and want to make sure they have every 548 00:25:44,400 --> 00:25:48,000 Speaker 3: cent left for their kids. And my view of that is, 549 00:25:48,040 --> 00:25:51,640 Speaker 3: like you were kids, we were kids, will be okay. 550 00:25:51,920 --> 00:25:54,920 Speaker 3: Generations of kids have been okay. Why do we suddenly 551 00:25:54,960 --> 00:25:57,800 Speaker 3: need to give everything up for our kids? Like, yes, 552 00:25:57,840 --> 00:26:01,239 Speaker 3: help them, love them, but don't do it to your 553 00:26:01,280 --> 00:26:01,880 Speaker 3: own detriment. 554 00:26:02,720 --> 00:26:04,680 Speaker 1: It's their time to make their way in the world, 555 00:26:04,800 --> 00:26:05,320 Speaker 1: their adults. 556 00:26:05,400 --> 00:26:07,280 Speaker 3: Now, that's what I think. Yeah, So unless you are 557 00:26:07,400 --> 00:26:10,240 Speaker 3: very comfortable, then I'm all for it. If you're not 558 00:26:10,359 --> 00:26:13,680 Speaker 3: comfortable yourself, then I'm dead against it. Don't do it 559 00:26:13,840 --> 00:26:15,639 Speaker 3: unless you are in a position to do so. 560 00:26:17,240 --> 00:26:20,600 Speaker 1: All right, let's move to this topic about paying your 561 00:26:20,600 --> 00:26:22,680 Speaker 1: mortgage off. I was always told it was the one 562 00:26:22,760 --> 00:26:25,840 Speaker 1: thing you should focus on. Pay off your mortgage. Don't 563 00:26:25,880 --> 00:26:28,480 Speaker 1: do anything else, pay it all off. 564 00:26:28,560 --> 00:26:31,440 Speaker 3: I still still think that's the thing to do well 565 00:26:31,560 --> 00:26:33,120 Speaker 3: to pay them off in the main. 566 00:26:33,440 --> 00:26:37,040 Speaker 1: Yes, but there is this theory that you should pay 567 00:26:37,200 --> 00:26:40,520 Speaker 1: it well off except never close it out. So just 568 00:26:40,640 --> 00:26:42,760 Speaker 1: have a little bit sitting in there, or maybe it's 569 00:26:42,760 --> 00:26:45,600 Speaker 1: technically paid off, you've just you have sitting in there 570 00:26:46,080 --> 00:26:49,360 Speaker 1: or something. Why would you not just close out your mortgage? 571 00:26:49,440 --> 00:26:55,359 Speaker 1: I picture a day, Jase, I picture a day. I 572 00:26:55,560 --> 00:26:57,359 Speaker 1: just I feel like there will be a ticket take parade. 573 00:26:57,480 --> 00:27:01,800 Speaker 1: I feel like there will be fireworks. Yes, it will 574 00:27:01,840 --> 00:27:04,399 Speaker 1: be a spectacular event. Paid off the mortgage, it is 575 00:27:04,440 --> 00:27:07,760 Speaker 1: a zero dollar balance. Close it out, Thank you very much, 576 00:27:07,920 --> 00:27:08,440 Speaker 1: see you later. 577 00:27:08,560 --> 00:27:10,720 Speaker 3: I don't even think you get your certificate of title anymore. 578 00:27:10,720 --> 00:27:12,320 Speaker 3: I think they're all digital, aren't they. So you know 579 00:27:12,359 --> 00:27:13,840 Speaker 3: you used to go to the bank and collect your 580 00:27:13,840 --> 00:27:15,159 Speaker 3: title when you're paid off your debt. 581 00:27:15,200 --> 00:27:18,600 Speaker 2: That's a symbolic event, but that digital. 582 00:27:19,240 --> 00:27:22,360 Speaker 3: I don't like it, sadly that touch and fairly aspect 583 00:27:22,400 --> 00:27:24,520 Speaker 3: that it's gone. Even with your certificate of title, you'll 584 00:27:24,560 --> 00:27:27,600 Speaker 3: never see it unless you sort of you've already got 585 00:27:27,640 --> 00:27:28,520 Speaker 3: it and long held it. 586 00:27:28,560 --> 00:27:31,080 Speaker 1: Why should I not ever close out the mortgage? 587 00:27:31,240 --> 00:27:32,280 Speaker 2: There is a school of thoughts. 588 00:27:32,280 --> 00:27:34,359 Speaker 3: So again my view is, if you've got enough in 589 00:27:34,440 --> 00:27:37,359 Speaker 3: super and you're comfortable. I can't see the harm in 590 00:27:37,400 --> 00:27:39,679 Speaker 3: closing off your mortgage, and I know we'll touch on it, 591 00:27:39,680 --> 00:27:42,200 Speaker 3: but I've got a different view on credit cards. But 592 00:27:42,600 --> 00:27:46,840 Speaker 3: so the mortgage is, if you leave it open, it's accessible, 593 00:27:47,600 --> 00:27:49,760 Speaker 3: and people think, oh, I just in case I need it, 594 00:27:49,800 --> 00:27:50,720 Speaker 3: just in case I need it. 595 00:27:51,119 --> 00:27:51,880 Speaker 2: But what if you're not. 596 00:27:51,840 --> 00:27:54,760 Speaker 3: Very good with money and you just need it way 597 00:27:54,800 --> 00:27:57,040 Speaker 3: too often? Then you can go from a period of 598 00:27:57,080 --> 00:28:00,359 Speaker 3: having paid off your mortgage left it open, then because 599 00:28:00,400 --> 00:28:02,120 Speaker 3: you're not very good with money, you've gone on three 600 00:28:02,160 --> 00:28:04,679 Speaker 3: overseas trips, bought the kids a car, and suddenly you've 601 00:28:04,680 --> 00:28:06,440 Speaker 3: got two hundred thousand dollars a debt that you didn't 602 00:28:06,440 --> 00:28:09,320 Speaker 3: know where it came from. So if you're not very 603 00:28:09,359 --> 00:28:11,240 Speaker 3: good with money, or you don't think you're going to 604 00:28:11,280 --> 00:28:14,280 Speaker 3: be very good with money, then keeping access to a 605 00:28:14,280 --> 00:28:16,520 Speaker 3: heap of debt is not the best thing. 606 00:28:16,600 --> 00:28:18,040 Speaker 1: Okay, So definitely close it out. 607 00:28:18,200 --> 00:28:19,960 Speaker 2: Oh if you can, Yes, I would. 608 00:28:20,520 --> 00:28:24,959 Speaker 1: But what happened. So as much as I would love 609 00:28:25,000 --> 00:28:26,800 Speaker 1: to tell you I'm so far ahead of my mortgage 610 00:28:26,800 --> 00:28:28,560 Speaker 1: and it will be sometime in the next year I've 611 00:28:28,560 --> 00:28:31,960 Speaker 1: paid it off, I have Buckley's chance of that it 612 00:28:32,080 --> 00:28:37,560 Speaker 1: will be as I'm older, and then I get concerned 613 00:28:37,560 --> 00:28:39,680 Speaker 1: about access to a line of credit. So if I 614 00:28:39,720 --> 00:28:40,360 Speaker 1: close out the. 615 00:28:40,320 --> 00:28:43,400 Speaker 3: Mortgage, where do I get emergency or rainy day money from? 616 00:28:43,560 --> 00:28:45,480 Speaker 1: Yes, something comes out of left field, and all of 617 00:28:45,520 --> 00:28:47,200 Speaker 1: a sudden, I go to the bank and say, hey, 618 00:28:47,360 --> 00:28:49,880 Speaker 1: you know need alone. And where they're a bit agist. 619 00:28:49,560 --> 00:28:53,360 Speaker 3: Banks, they're very agist, and they're very incomist, which they yeah. 620 00:28:53,240 --> 00:28:55,440 Speaker 1: That's probably what they are. They're incomist from which. 621 00:28:55,320 --> 00:28:57,920 Speaker 3: I don' have no issue with being incommistries. 622 00:28:58,040 --> 00:29:00,800 Speaker 1: Inventor worked he did incomist Okay, I don't mind it either. 623 00:29:01,680 --> 00:29:02,680 Speaker 1: They care about your income. 624 00:29:02,920 --> 00:29:05,000 Speaker 2: They care about your income and your ability to repay. 625 00:29:05,120 --> 00:29:08,240 Speaker 3: So even if you've got access to a million dollars 626 00:29:08,240 --> 00:29:11,520 Speaker 3: a super and you're retired because you've got no wage, 627 00:29:11,720 --> 00:29:14,480 Speaker 3: the bank, a bank will be very reluctant to give 628 00:29:14,520 --> 00:29:17,520 Speaker 3: you debt, which is to your point, not keep that 629 00:29:17,920 --> 00:29:22,440 Speaker 3: mortgage open. I prefer to keep a credit card available, 630 00:29:22,520 --> 00:29:25,360 Speaker 3: a low cost, not one of these fancy credit cards, 631 00:29:25,480 --> 00:29:27,040 Speaker 3: low interest rate credit card. 632 00:29:27,680 --> 00:29:29,240 Speaker 1: It is easy to it's easy to rack up a 633 00:29:29,240 --> 00:29:30,360 Speaker 1: bit of down on that it is. 634 00:29:30,320 --> 00:29:32,160 Speaker 3: But it might be five or ten thousand rather than 635 00:29:32,160 --> 00:29:34,480 Speaker 3: two unpaid mortgage just. 636 00:29:34,480 --> 00:29:36,880 Speaker 1: On credit cards. I had not thought about this, this 637 00:29:36,960 --> 00:29:38,720 Speaker 1: idea that you should have a credit card in your 638 00:29:38,800 --> 00:29:42,000 Speaker 1: own name rather be the secondary holder. Now, in my household, 639 00:29:42,040 --> 00:29:44,000 Speaker 1: we always have a secondary holder because you've bother with 640 00:29:44,040 --> 00:29:45,160 Speaker 1: all the paper work and mine. 641 00:29:45,760 --> 00:29:49,400 Speaker 3: Yeah, but if you and again, if you're both working, 642 00:29:49,440 --> 00:29:52,080 Speaker 3: not a problem of generally not a problem if you're 643 00:29:52,080 --> 00:29:56,640 Speaker 3: retired and you've got no income wage income, and you 644 00:29:56,720 --> 00:30:00,560 Speaker 3: have a credit card with a secondary card and the 645 00:30:00,600 --> 00:30:01,920 Speaker 3: primary card holder dies. 646 00:30:02,240 --> 00:30:04,160 Speaker 1: Yes, So, for argument's sake, my husband and I have 647 00:30:04,160 --> 00:30:06,280 Speaker 1: a credit card. He's a primary holder. I'm a secondary holder. 648 00:30:07,320 --> 00:30:09,640 Speaker 1: Love your honey. Something happens and then I think I 649 00:30:09,680 --> 00:30:11,560 Speaker 1: can continue to use this. I've used his cards for 650 00:30:11,640 --> 00:30:14,240 Speaker 1: however many years, but because he is the primary holder, 651 00:30:14,240 --> 00:30:16,360 Speaker 1: it is in his name, and so it gets extinguished, 652 00:30:16,400 --> 00:30:18,480 Speaker 1: and then it might be difficult for me to get 653 00:30:18,520 --> 00:30:19,080 Speaker 1: my own card. 654 00:30:19,160 --> 00:30:20,760 Speaker 3: It might be difficult for you, but you have a 655 00:30:20,840 --> 00:30:23,320 Speaker 3: job and your work. If you're seventy years old and 656 00:30:23,360 --> 00:30:27,400 Speaker 3: that happens, it's impossible. So it's I think it's important 657 00:30:27,400 --> 00:30:29,000 Speaker 3: to have just a low cost. 658 00:30:29,680 --> 00:30:33,400 Speaker 1: So low fee, low cost. It's a burnerchard it's pretty 659 00:30:33,440 --> 00:30:36,800 Speaker 1: much it's literally an emergency card. An emergency card, put 660 00:30:36,840 --> 00:30:38,520 Speaker 1: it in the bottom drawer, but make sure you've got 661 00:30:38,560 --> 00:30:41,400 Speaker 1: access to it. At what age do people be thinking 662 00:30:41,560 --> 00:30:44,360 Speaker 1: that they should do that? Every couple should have a card. 663 00:30:44,280 --> 00:30:46,560 Speaker 3: In therea while you're working, and you can so because 664 00:30:46,560 --> 00:30:48,680 Speaker 3: when you're not working, it becomes very difficult to get 665 00:30:48,880 --> 00:30:49,880 Speaker 3: a credit card, no. 666 00:30:49,800 --> 00:30:50,560 Speaker 2: Matter how old you are. 667 00:30:50,640 --> 00:30:53,320 Speaker 3: So while you're working, you can still have the main 668 00:30:53,400 --> 00:30:56,040 Speaker 3: credit card with a secondary card attached. But just for 669 00:30:56,120 --> 00:30:58,520 Speaker 3: that for your spouse, have another credit card that you 670 00:30:58,640 --> 00:31:01,800 Speaker 3: just never use, and just make sure it's low cost 671 00:31:02,040 --> 00:31:04,480 Speaker 3: or no cost. Don't need the frequent flowers and all 672 00:31:04,480 --> 00:31:08,080 Speaker 3: that stuff. No fees, no fees, so and you can 673 00:31:08,120 --> 00:31:09,280 Speaker 3: get them. 674 00:31:09,720 --> 00:31:11,600 Speaker 1: Jason, we need to get to a break and when 675 00:31:11,600 --> 00:31:14,240 Speaker 1: we come back, we have some listeners with some pretty 676 00:31:14,240 --> 00:31:17,680 Speaker 1: good questions. I reckon Andrew's written in about gifting rules, 677 00:31:18,360 --> 00:31:21,960 Speaker 1: and Brian wants to know if super automatically passes to 678 00:31:22,000 --> 00:31:25,160 Speaker 1: a spouse upon death, and so we will get to that, 679 00:31:25,600 --> 00:31:27,240 Speaker 1: all right, We'll have that discussion when we come back. 680 00:31:40,440 --> 00:31:43,360 Speaker 1: Welcome back to the Money Puzzle. I'm joined with Jason 681 00:31:43,520 --> 00:31:48,080 Speaker 1: Featherby from Lewin Wealth. I'm your host, Julianne Sprague, Jason. 682 00:31:48,320 --> 00:31:51,160 Speaker 1: We've had some listeners email the Money Puzzle. The Money 683 00:31:51,200 --> 00:31:54,360 Speaker 1: Puzzle at the Australian dot Com dot au is where 684 00:31:54,440 --> 00:31:56,960 Speaker 1: you can send your questions to. But Andrew has emailed, 685 00:31:57,600 --> 00:32:00,400 Speaker 1: and he has mentioned about this ten ten, one thousand 686 00:32:00,400 --> 00:32:02,959 Speaker 1: dollars gifting cap. He did want to know if they 687 00:32:03,000 --> 00:32:07,720 Speaker 1: had any if there had been any discussions about ever increasing. 688 00:32:07,920 --> 00:32:08,640 Speaker 2: I don't think so. 689 00:32:08,840 --> 00:32:10,800 Speaker 3: It is weird because we talk about deeming, we talk 690 00:32:10,800 --> 00:32:13,240 Speaker 3: about indexing the age pension rates, and we talk about 691 00:32:13,280 --> 00:32:16,320 Speaker 3: indexing the asset test limits. I don't know it would 692 00:32:16,360 --> 00:32:19,840 Speaker 3: have been discussed, but I've never heard anyone suggest that 693 00:32:19,960 --> 00:32:22,480 Speaker 3: it should be higher. But clearly, what did I say 694 00:32:22,520 --> 00:32:23,440 Speaker 3: twenty years. 695 00:32:23,440 --> 00:32:25,320 Speaker 1: We've put it on the agenda right here at the 696 00:32:25,320 --> 00:32:28,160 Speaker 1: Money Puzzle. We'll put it, Sir Jim Chalmers. Shall we 697 00:32:28,200 --> 00:32:31,920 Speaker 1: Andrew and we'll see what he's got to say about that? Okay, Andrew, 698 00:32:32,200 --> 00:32:36,600 Speaker 1: His question is around this gifting rule, and so, for 699 00:32:36,760 --> 00:32:39,480 Speaker 1: argument's sake, so he understands that the ten if you 700 00:32:39,560 --> 00:32:40,800 Speaker 1: gift ten thousand. 701 00:32:40,520 --> 00:32:43,120 Speaker 2: Dollars cash to someone, it's a gift. 702 00:32:43,200 --> 00:32:46,520 Speaker 1: That's a gift, and that's it and qualifies as a gift. 703 00:32:46,600 --> 00:32:52,440 Speaker 1: But Andrew says, what if this particular Soviet the pensioner 704 00:32:52,600 --> 00:32:56,960 Speaker 1: or parent was to pay for a child or a 705 00:32:57,000 --> 00:33:01,800 Speaker 1: grandchild's bill. So there's a bill to pay. Is that 706 00:33:02,240 --> 00:33:08,040 Speaker 1: a gift or is that simply kindness and helping a 707 00:33:08,080 --> 00:33:11,240 Speaker 1: family member out? I mean, surely if you're paying for 708 00:33:11,280 --> 00:33:13,720 Speaker 1: a family meal, that's not considered. 709 00:33:14,280 --> 00:33:16,640 Speaker 3: I think there's probably a materiality thing here. A meal 710 00:33:16,680 --> 00:33:18,320 Speaker 3: you'd get away with ord imagine. 711 00:33:18,400 --> 00:33:23,160 Speaker 1: So what if I I mean ten thousand dollars is 712 00:33:23,200 --> 00:33:24,240 Speaker 1: not is school fees? 713 00:33:24,280 --> 00:33:25,600 Speaker 2: Potentially that'd be a gift. 714 00:33:25,960 --> 00:33:27,640 Speaker 1: What do you mean it's a gift? They're paying a bill. 715 00:33:27,920 --> 00:33:29,760 Speaker 2: Yeah, well, you're gifting the money to pay the bill. 716 00:33:29,880 --> 00:33:30,200 Speaker 2: I think. 717 00:33:30,440 --> 00:33:34,640 Speaker 3: I think the rules are you're not receiving anything in return, 718 00:33:34,840 --> 00:33:38,760 Speaker 3: so therefore it's a gift. So buying a car, paying 719 00:33:38,800 --> 00:33:40,640 Speaker 3: school fees, things. 720 00:33:40,360 --> 00:33:41,240 Speaker 2: Like that gifts. 721 00:33:41,960 --> 00:33:44,040 Speaker 1: What if they were micro So what if they were 722 00:33:44,120 --> 00:33:47,120 Speaker 1: ten one thousand dollar lots? So what if the someone 723 00:33:47,120 --> 00:33:49,840 Speaker 1: said i'll pay your power bills for the year. Government's 724 00:33:49,840 --> 00:33:51,160 Speaker 1: been gifting that left right and center? 725 00:33:51,440 --> 00:33:54,280 Speaker 3: True, just call it a rebate or a supplement and 726 00:33:54,320 --> 00:33:55,120 Speaker 3: you might get away with it. 727 00:33:55,320 --> 00:33:57,440 Speaker 1: Does the taxman or centily how do they keep tabs 728 00:33:57,440 --> 00:33:57,760 Speaker 1: on this. 729 00:33:57,920 --> 00:34:00,760 Speaker 3: It's very much an honor system in terms of the gifts. 730 00:34:00,800 --> 00:34:02,760 Speaker 3: But they also do have access to your bank account. 731 00:34:02,800 --> 00:34:04,719 Speaker 3: So if you were giving someone a thousand dollars a 732 00:34:04,720 --> 00:34:06,480 Speaker 3: month and it was every month. 733 00:34:06,760 --> 00:34:07,560 Speaker 2: You'd get caught. 734 00:34:07,720 --> 00:34:10,520 Speaker 3: Okay, if it was a thousand here and a thousand there, 735 00:34:10,600 --> 00:34:13,960 Speaker 3: and it's a bit random and you paid for you 736 00:34:13,960 --> 00:34:16,359 Speaker 3: odd meal or even you did their shopping, you could 737 00:34:16,360 --> 00:34:19,799 Speaker 3: wouldn't even know that someone else's shopping. But when you're 738 00:34:19,800 --> 00:34:24,000 Speaker 3: buying school fees, cars, regular amounts their gifts and be 739 00:34:24,160 --> 00:34:24,840 Speaker 3: really careful. 740 00:34:25,760 --> 00:34:29,520 Speaker 1: Okay, Andrew, thank you very much for the question Brian 741 00:34:29,560 --> 00:34:33,560 Speaker 1: wants to know. Is super automatically passed to a spouse 742 00:34:33,680 --> 00:34:34,320 Speaker 1: upon death. 743 00:34:34,840 --> 00:34:38,600 Speaker 3: Not automatically, probably, is the answer, but not automatically. So 744 00:34:38,640 --> 00:34:42,479 Speaker 3: if you have a very clean life and you've only 745 00:34:42,480 --> 00:34:45,120 Speaker 3: had one spouse and there's not much room for error, 746 00:34:45,280 --> 00:34:47,160 Speaker 3: then it's likely that your super would go there. But 747 00:34:47,200 --> 00:34:50,920 Speaker 3: your super is where it goes is dictated by the 748 00:34:50,960 --> 00:34:54,320 Speaker 3: super fund trustee, So whoever's the boss of that fund 749 00:34:54,360 --> 00:34:56,799 Speaker 3: will decide where your money goes. So if you want 750 00:34:56,800 --> 00:35:00,480 Speaker 3: to be absolutely certain, spouse or otherwise, you make a 751 00:35:00,520 --> 00:35:03,759 Speaker 3: binding nomination in favor of your spouse, and then it 752 00:35:03,840 --> 00:35:07,399 Speaker 3: leaves no room for error, no room for judgment, and 753 00:35:07,440 --> 00:35:11,359 Speaker 3: no chance that an ex spouse or a challenge to that. 754 00:35:11,640 --> 00:35:14,120 Speaker 3: I guess that passing of that money will come about. 755 00:35:14,560 --> 00:35:16,719 Speaker 1: Okay, So it's not automatic. You have to do something 756 00:35:16,719 --> 00:35:17,160 Speaker 1: about it. 757 00:35:17,239 --> 00:35:20,320 Speaker 3: You don't have to, but you should, you really should so, 758 00:35:20,400 --> 00:35:21,959 Speaker 3: and it's not hard. So it's part of your super 759 00:35:21,960 --> 00:35:24,560 Speaker 3: fun setup. Or you just do a binding nomination in 760 00:35:24,600 --> 00:35:27,040 Speaker 3: favor of your spouse. It means that when that if 761 00:35:27,080 --> 00:35:31,200 Speaker 3: you pass away, the trustee will automatically pay that money 762 00:35:31,200 --> 00:35:34,359 Speaker 3: to the spouse rather than go and look for other 763 00:35:34,400 --> 00:35:36,239 Speaker 3: people to give it to first, which is what they 764 00:35:36,239 --> 00:35:37,440 Speaker 3: would do with no nomination. 765 00:35:37,920 --> 00:35:41,920 Speaker 1: Okay, notice binding nomination, easy enough to do. 766 00:35:42,960 --> 00:35:45,240 Speaker 2: One page, one tick wow spouse. 767 00:35:46,920 --> 00:35:49,480 Speaker 1: Jason, thank you very much for joining us on the 768 00:35:49,520 --> 00:35:50,080 Speaker 1: money Puzzle. 769 00:35:50,160 --> 00:35:53,040 Speaker 2: It's been a pleasure, it's been fun. Thank you. 770 00:35:54,560 --> 00:35:58,000 Speaker 1: Jason Featherby from lun Wealth and will be back with 771 00:35:58,040 --> 00:36:00,719 Speaker 1: the money Puzzle next week. I am Julie and Sprague, 772 00:36:00,760 --> 00:36:04,040 Speaker 1: wealth editor at the Australian. For more insights on what 773 00:36:04,080 --> 00:36:05,719 Speaker 1: the smart money is doing, you can go to the 774 00:36:05,800 --> 00:36:09,240 Speaker 1: Australian dot com dot au slash wealth