Baby Boomers are retiring in record numbers, and seniors need to know how to best plan for both themselves and their loved ones.
There are definitely some sure-fire approaches to take – as well as some serious pitfalls to avoid.
1. Put Your Affairs In Order
The first step to putting your affairs in order is to take specialist advice: a lawyer who specialises in estate planning; a financial planner who specialises in retirement planning’ an accountant who specialises in tax planning.
Your estate planning lawyer will work in with your other advisers, to coordinate an overall plan to help protect you, your family and your assets.
At the very least, you need a properly drafted and up to date Will, Enduring Power of Attorney and Advance Care Directive. These are not DIY projects.
A careful professionally-prepared financial plan is very important. This should consider all your current and future financial needs for yourself and your partner.
It should consider your real estate, superannuation and investments. It should take into account your pension, health and Centrelink situation.
2. Maximise Your Pension Entitlements
Most senior citizens are familiar with the age-pension, a government program that pays a fortnightly pension to eligible people. But what many of them don’t realise is that if they exceed the Centrelink eligibility limits in savings and property, the Government will reduce or even stop completely the amount of pension you and your spouse can receive.
In order to legally minimise or avoid this problem, you can rearrange your assets with the help of your lawyer and financial planner to lawfully maximise your legitimate pension entitlements.
However there is a catch – Centrelink has a five-year look-back, which is a federal law that means any assets you give away or transfer within five years of claiming a pension will still be used to evaluate your eligibility for that 5 year period.
Therefore you need to think and plan ahead. If you make a transfer now, you may be able to legally avoid having those assets taken into account by Centrelink after a 5-year waiting period.
3. Minimise Your Retirement Accommodation Costs
Similar to the Centrelink issues, your retirement accommodation costs can be legitimately organised ahead of time to minimise you having to use some of those assets to pay for nursing home care.
You can also assist them with other long-term planning options such as outright gifts or annuities/pensions.
4. Put Assets In Trust
When taking control of their estate planning, most seniors think a Will is the way to go.
However, placing assets into a trust while you are still living can bring a variety of benefits, such as: trusts allow for control over who gets what – including specific circumstances; trusts permit for private disposition; trusts can provide asset protection, asset management, income splitting and tax advantages.
5. Downsize, Declutter And Start Giving Stuff Away
If you are contemplating distributing your wealth to your loved ones while you are still alive, you should do this at least 5 years before your already to claim Government benefits such as the age pension.
This can be an effective, tax-free way for your clients to begin their asset distribution.
Remember the 5-year lookback period. Don’t leave this too late, or your gifts could cost you.
6. Reverse Mortgages: Be Careful
There’s been a good deal of recent news coverage about reverse mortgages, a special type of loan that allows a homeowner to convert a portion of the equity in their house into cash.
But unlike a traditional home equity loan, a reverse mortgage does not have to be paid back until the person no longer lives in the home and/or does not keep the taxes and insurance current.
Those who opt to pursue a reverse mortgage can receive the money as a lump sum, monthly cash advance, or a combination of the two.
Since they’re available to anyone regardless of current income and don’t have to be paid back until the homeowners either sell the house, pass away, or fail to keep taxes and insurance up-to-date, many people think that a reverse mortgage is a great idea – but it’s a decision that still needs careful consideration.
There are definite downsides to setting up a reverse mortgage.
Since the loans have to be paid back once the house is sold or the homeowner passes away, those who stand to inherit the homeowner’s equity will be unable to do so – meaning that you will be unable to use their home equity to care for their loved ones.
Reverse mortgages may also impact your eligibility for Government benefits. They have higher interest rates than a regular loan and have higher fees associated with them – and there have been some disreputable lenders becoming involved in the reverse mortgage business, viewing it as easy money.
Be very careful before embarking upon a reverse mortgage, and make sure you take professional advice before doing so.
7. Women Need To Be Prepared To Manage The Money By Themselves
On average, women live six years longer than men. You and your family need to know that. If wives live longer than their husbands and he is the one who handles all of the financial decisions, the wives will be at a disadvantage once they have to manage things by themselves.
Women in this circumstance should seek out financial literacy programs in their area so that they can educate themselves on financial matters in order to better prepare them should they have to make financial decisions on their own.
Preparing for retirement needs to start early to have maximum benefits. As part of this process, it’s a very good idea to look at putting all your affairs in order and explore your estate planning options, by contacting a specialist lawyer who is experienced in estate planning in South Australia.
Founded in 1848, Genders & Partners is the oldest law firm in South Australia. They choose to specialise in just a few areas of law closest to most families, so that they can provide the legal services that matter most to you and your family.
Their experienced estate planning team can discuss many estate planning tools and techniques including:
- helping you to identify, understand and manage risks in your legal and financial affairs;
- protect your digital assets;
- creation of protective trusts;
- titling of assets for joint ownership;
- consideration of insurance options.
Choosing the right estate planning lawyers can make a huge difference in ensuring proper distribution of your assets after death, minimising or avoiding any legal issues that may arise, and protecting your hard-earned assets.
Most importantly, it helps save your family all the trouble, as well as thousands of dollars in legal fees and taxes, after your death.
Genders and Partners is the oldest law firm in South Australia, established 1848. Contact them to learn how to protect yourself, your family and your assets through modern integrated estate planning solutions, by visiting our website today and schedule a free no obligation telephone consultation to find out how they can help you and yours.
To learn how to protect yourself, your family and your assets, by creating a professionally-made estate plan, claim your FREE 15 minute Telephone Consultation .
PS For a strictly limited time Genders and Partners are giving away for FREE their Digital Assets Protection Pack with the purchase of any Gold Estate Planner package. Find out how to Protect Your Digital Assets here.
Protecting Your Digital Assets
What will happen to your online accounts, profiles, data, subscriptions and memberships, if you die or become incapacitated?
With data breaches, elder abuse and digitalisation all on the increase, read these important insights from senior Australian specialist lawyer Rod Genders to help protect yourself, your family and your assets.