I have relatively simple finances, do I really need a will?

My situation is simple: I am 66, I am a cardiac patient (quite mobile still), have assets of about $200,000 entirely in bank accounts. I know who the beneficiaries will be. Do you think I need a will?

You definitely need to do a will – immediately. Regardless of your intentions, if you die without a valid will the rules of “intestacy” would apply, which is essentially a list of people (developed by the government) as to who would receive your estate. This list may not match who you want your assets to go to and can produce some unintended outcomes.

Planning your will is essential, even if you think your assets are relatively simple.Credit: Simon Letch

One of the other important purposes of a will is to appoint an executor to administer your estate. Again, if you die without a will then someone will need to apply to the court to be appointed as your administrator, adding another process, complication and cost.

With you having more than $200,000 in bank accounts your bank will definitely not release any funds on your death without being satisfied as to the legal appointment of your personal representative and, even if you have a will, they may still require probate (given the level of funds).

I also recommend, while you are looking at your estate planning, that you consider doing an enduring Power of Attorney – to appoint a trusted person or people to make decisions on your behalf regarding financial and personal/health matters if you were to become incapacitated.

Can you tell me, if you rent your home out under the six-year rule and work casually as you travel, does your home then become part of the assets test when applying for an aged pension?

Yes, the house will count as an asset, but you will be assessed under the non-home-owner assets test. It would be a good idea to seek advice.

Recently you wrote about someone who had a city home, which was their main residence, and an investment property in the country (with a CGT liability) they wanted to move into. You commented that a smart strategy may be to sell their city home while it was completely covered by the main residence exemption and then live in the country home as their main residence until they die. By doing this, all the CGT that would have applied if they sold the investment property in their lifetime would be forgiven and forgotten.

A person may happily follow this strategy but, due to unforeseen circumstances, may have to move into alternative accommodation such as a nursing home and live there for a number of years before eventually passing away. Assuming the country home is not sold before death, is there a limit to the time in the nursing home in which the heirs can inherit the property with a cost base of market value at date of death?

Julia Hartman of Bantacs tells me Section 118-145 ITAA 1997 can apply in this case, which will allow them to continue to cover the property with their main residence exemption for up to six years if they use it to produce income, or indefinitely if it is not producing income.

If one partner receives the age pension and the other is under pension age, are assets halved?

It doesn’t work like that. When one partner applies for the pension, the entire assets and income of both partners are considered for the assets test and the income test. The partner of pensionable age will then receive 50 per cent of the pension they would receive if they were a couple.

Noel Whittaker is the co-author of Downsizing Made Simple with fellow finance expert Rachel Lane, available here. Email: [e-mail]

• Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.

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