Provided that the home was the principal place of residence for deceased person, there is no CGT payable upon the transfer of a property following death. The following video details the differences between joint tenancy and tenancy in common: The main alternative to joint tenancy is for two or more people to own a home as tenants in common. This means that most wills for home-owning couples will still contemplate the family home as an asset, if only in the event that the willmaker is predeceased by their partner. Where a couple own a home as joint tenants, the home will eventually form part of the estate of the second member of the couple to die. It is only when there is one surviving owner, at which point the property ceases to be a joint tenancy, that estate planning for the property becomes an issue. There is nothing left to the estate of the deceased. By far the most common such form is ‘joint tenancy.’ Joint tenancy is subject to the principle of survivorship, whereby the remaining joint tenants automatically acquire a deceased person’s share of a property upon death. Instead, individual members of a family own the home under some form of co-ownership. Therefore, ‘the family’ cannot own an asset. The entity that is ‘the family’ is not a legal person. The first thing to note is that not all family homes are included in a deceased’s estate. Inheritances upon death – estate planning and the family home. This increase was entirely due to the fact that older Australians were more likely to own homes, and more likely to own those homes outright, then their younger counterparts.Īmongst other things, this tells us that there is about to be a very significant transfer of wealth from older Australians to their younger children and grandchildren. The wealth of Australians aged between 25 and 34 decreased on average over the same period. The report contains some very significant findings, including the observation that the wealth of Australians aged between 65 and 74 increased by an average of $200,000 in the eight years to 2014. In December 2014, the Grattan Institute published ‘The Wealth of Generations.’ The research paper can be viewed here. This is often a good reason for older people to retain the family home, even beyond the point when they move into aged care. In addition, if and when an owner needs to move into an aged care facility, only a portion of the family home is counted in the assets test used to calculate the means-tested components of the accommodation and care costs. One of the key benefits of a family home is that its value is exempt from calculations used to determine Centrelink aged pension benefits.
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We explore three particular aspects of the family home – how to manage it upon retirement, how to help other adults (be they your adult children or your parents) purchase their own and how to manage a home upon entry into the aged care system The Family Home and Retirement Planning Given the current crisis in housing affordability, we think this is a great time to discuss how family homes should be managed when thinking about the transfer of wealth across the generations.
This ebook discusses one of the critical elements in IFP: housing and how best to manage it. Often the extra time reveals important facts, hopes and attitudes that can then be blended into our advice and strategies, making them better than ever. We always spend a little extra time with every client, during which we find out a bit more about the person, their life views and their relationships with friends and family. We see all of our clients as potential candidates for IFP. Put simply, homes are critical to the financial aspirations of most people. What’s more, around 70% of Australians live in a home they own themselves (with or without a mortgage). Homes account for 43% of Australian household wealth. This is particularly the case when it comes to homes. Most people think across the generations when it comes to their wealth management – and so advisers should too. Introduction Inter-Generational Financial Planning and the Family HomeĪs the name suggests, intergenerational financial planning (‘IFP’) aims to treat a family as what it usually really is – a single vertically-integrated economic unit.
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