I gave one of my children $100,000 to help buy a property. The other child said no, thank you

I gave one of my children $100,000 to help with buying a property. I offered the same amount to the other child. He said no, thank you! They are both in their 40s. I wish to be equal in what I give them. Is it possible for me to make an investment in his name or with both our names?

That way, it would be separate and he could have it later, and I would know that he was getting the earnings on that money over time. I am a 75-year-old single woman and not likely to get the age pension so any investment income would be taxable.

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I think the perfect investment would be an insurance bond in your name with him as a nominated beneficiary. As this is a tax-paid investment, there is nothing to be declared on anybody’s tax return and you could transfer the bond to him at any stage free of CGT when the time is right. It would sit outside your will and would be safe from any challenges to your estate.

You rarely mention gifting limits if one is a blind age pensioner – this category of people receives the age pension but is not means or asset tested. Are they excluded as a special concession from the normal age pensioner gifting limit of $30,000 over five years? I have had conflicting answers as this appears to be a grey area.

Regan Welburn of My Pension Manager says technically you are correct when you say that gifting would not affect the payment rate of the blind age pension. But he recommends you seek personalised advice as there are a few exceptions. If a pensioner is in receipt of rent assistance, their pension is means tested, and furthermore, if they enter aged care (or receive a home care package), they would need to have a means test. Gifted assets above the limits would form part of this assessment.

I understand that I need to start an account-based pension when I turn 75. I now have an accumulation account in a SMSF. Do I have to convert the whole accumulation account into a pension mode at 75 or can I turn only a portion to a pension fund while still keeping an accumulation account?

I am 74, divorced and under the $1.9 million superannuation cap. The reason for wishing to turn only a portion of the super fund into an account-based pension at 75 is to retain a Commonwealth Seniors Health Care Card (CSHC), which is useful to me.

Is this the correct approach or is it better to turn the whole accumulation fund into an account-based pension fund in a tax-free environment?

There is never any requirement to move your superannuation from accumulation mode to pension mode. To be eligible for the CSHC, your total assessable income limit for a single person is $95,400 a year. If your superannuation balance was $1.8 million and it was all in pension mode, it would be given a deemed value of $39,248 a year – this means you could earn another $57,000 as adjusted taxable income before losing eligibility for the CSHC. Unless you have a large taxable income outside superannuation, I see no problems in moving the whole fund to pension mode.

We have been renting our primary residence to our daughter for two years. We have bought and live in a home we downsized to – there are still mortgages on both houses. I want to transfer the first home to our daughter and the idea is that her repayments to her loan from the bank will pay off our main residence loan and eventually half of our downsizer. After four years, she will extend her loan to pay off any remaining debt.

The two loans in total are far less than we paid for the property six years ago and a lot less than the current values. However, we want to help her now and consider it to be her future inheritance. We thought the ownership could be split 60 per cent to us and 40 per cent to our daughter and her husband.

What are the tax implications for us and them?

The problem with holding part of the property in your name is that at some stage, you may want to give your daughter full ownership. If that happens, there will be capital gains tax implications for you. If your main goal is to protect her interests in the case of a relationship breakdown, you should seek legal advice about possibly giving the money to her as a loan and not a gift, while keeping your names off the title deed.

Noel Whittaker is the author of Retirement Made Simple and other books on personal finance. [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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