Category: Advice Library

A range of resources to assist advisers deliver great advice; SOA wording, checklists and department forms.  Up to date and easy to access resources for all our members.

SOA INSURANCE BOND WITHIN TRUST

Strategy Overview  Centrelink/DVA are responsible for determining your capacity to contribute towards the cost of your care through the Means Tested Care Fee. This assessment is carried out after you move in to residential aged care as a permanent resident.  Financial assets held in a Trust or Company structure are assessed differently to those held in your own name and can be very different to the legal or tax treatment of a trust or company.  Centrelink assess trusts and companies against two tests: a source test and a control test.  The source test determines where the asset or monies used to purchase assets in the trust originated. The control test determines who controls, or could reasonably expect to control, the trust. Based on the outcomes of these tests, the asset value will be attributed to an individual or to a group of people in percentage terms and any income earned by the trust is attributed according to the same percentages.   As a financial planning strategy, the key benefit of using a trust is that the monies held within the trust are not subject to deeming, they are assessed on the taxable income earned. Because of the tax paid accumulation nature of

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SOA GIFTING

Strategy Overview Gifting within the allowed limits is a legitimate way to reduce your assessable assets, where the funds used are financial investments it also reduces your level of assessable income. The gifting rules allow gifts of: $10,000 in a financial year (for a single person or couple combined) and $30,000 over a five year rolling period. The rolling five year period is the current financial year plus the previous four financial years. Any unused limits may not be accumulated from year to year. Gifts include: Money or assets transferred to family members Gifts to individuals, organisations and charities Gifts to or relinquishing control of a private trustor company where you are not attributed with the assets under the source and control tests Assets sold or transferred for less than their market value Gifting within the allowed limits can also reduce the maximum amount of accommodation payment you can be charged at <Facility Name> Gifts do not include: Transferring up to $500,000 to a Special Disability Trust for an eligible family member Transferring a house in exchange for a Granny Flat Right Buying birthday and Christmas presents Selling or reducing assets to meet expenses for example, to buy a car,

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SOA FUNERAL EXPENSES

Strategy Overview You may choose to prepay your funeral expenses and receive an exemption for the full amount paid. For more expensive funerals, the prepaid expenses may give a higher exemption and may lead to a greater increase in Centrelink benefits. However, this option is a contract with a funeral director/provider and the monies may be non-refundable if you move away from the designated funeral service area or have a change of mind. Funeral bonds are investments of up to $13,000 per person (as at 1 July 2018) that are exempt from Centrelink/DVA asset and income tests as well as aged care means testing. Any growth on your funeral bond is also exempt even if this takes the balance over $13,000. Each member of a couple may invest up to $13,000 in a funeral bond effectively making up to $26,000 exempt for a couple. Benefits can be paid to your estate or directly to a funeral director, giving your family the peace of mind in case funds are not immediately available via the estate. If the amount of the funeral bond is greater than the expense, a refund will be directed to your estate, however, if your funeral bond is

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SOA COUPLE ENTERING CARE

Strategy Overview For a couple the timing of an aged care asset and income assessment can affect the calculation of assessable assets and income. The formula used to calculate your ability to contribute towards the cost of your accommodation and care is based on your assets and your income. As a couple, the assessable assets are considered on a 50/50 basis, irrespective of in whose name the asset is held and the minimum assets amount ($52,500) is deducted from each share. The income assessment will also capture half of each person’s income. Some people will have their accommodation costs met in full or in part by the Australian Government, while others will need to pay the accommodation price agreed with the aged care home.  The outcome of the income and the asset test are added together, if the amount is less than the threshold then you are classified as a Low Means resident. The timing of the assessment can create very different outcomes when dealing with a couple because of an exemption that applies to your former home when your spouse still lives there. A couple who both enter care on the same day will each have 50% of the

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Legal Checklist for Planners – Victoria.pdf

When advising clients who are moving into aged care or who may look to do so in the future, there are various important legal issues of which you, the financial planner, need to be aware. Below is a list of “conversation starters” for your clients which will assist. If you have any questions or concerns about your client’s situation, please give us a call. Family loans? Your financial planning strategy for your client may involve borrowing money from their spouse or children to fund the RAD. Please remember it is crucial that any such family loan arrangements are properly documented, particularly from the perspective of (a) Centrelink; (b) avoiding estate issues or disputes; (c) transparency between family members; and (d) addressing any shortfall in the amount ultimately refunded. Wills Who is the executor? Ensure that your client has appointed an executor who is still alive and who has capacity (and will likely have capacity when the client passes away). Also, check that your client has appointed a substitute executor (i.e. somebody to act if the executor predeceases them or loses capacity). “I love you” Wills If your clients are a couple who give all their assets to each other in

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Legal Checklist for Planners – QLD.pdf

When advising clients who are moving into aged care or who may look to do so in the future, there are various important legal issues of which you, the financial planner, need to be aware. Below is a list of “conversation starters” for your clients which will assist. If you have any questions or concerns about your client’s situation, please give us a call. Family loans? Your financial planning strategy for your client may involve borrowing money from their spouse or children to fund the RAD. Please remember it is crucial that any such family loan arrangements are properly documented, particularly from the perspective of (a) Centrelink; (b) avoiding estate issues or disputes; (c) transparency between family members; and (d) addressing any shortfall in the amount ultimately refunded. Wills Who is the executor? Ensure that your client has appointed an executor who is still alive and who has capacity (and will likely have capacity when the client passes away). Also, check that your client has appointed a substitute executor (i.e. somebody to act if the executor predeceases them or loses capacity). “I love you” Wills If your clients are a couple who give all their assets to each other in

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