Protecting your assets
When it comes to buying a new property together, couples need to consider the best ownership structure. “As joint tenants, the property automatically passes to the surviving spouse and they have total control of where it passes on his or her death,” notes Lucas.
“As tenants-in-common, you can nominate the percentage of ownership you each have and that percentage passes to the estate and is dealt with under the terms of the Will, giving you greater control.”
For some couples, a ‘life interest’ in a tenants-in-common property is worth considering. This allows the surviving partner to reside in the property for life, with the other partner’s share of the asset passing to their nominated beneficiaries on the survivor’s death.
With super representing a major asset for many older couples, it is important to ensure you consider making a binding death benefit nomination in favour of your children, your new partner, or other preferred beneficiaries.
“A binding nomination means you can decide which of your eligible beneficiaries will directly receive your super benefits, so it’s a nice, clean way to handle your super,” explains Lucas.
Another option is to nominate your legal personal representative to receive your super so it is dealt with through your Will and a testamentary trust. “You can then include provisions such as your children needing to attain a certain age to get the money, or your spouse getting the benefit of the income but not the capital from your super benefit,” says Lucas.
Communication is also vital to avoiding unpleasant shocks at retirement.
Lucas remembers a couple in their early sixties who had been together for several years and had bought joint investment properties, but had never discussed what would happen if one was forced into early retirement.
Despite the joint investments, the working partner was unwilling to subsidise the other’s lifestyle for three or four years until retirement, leaving the retired partner no choice but to access their super earlier than planned. “They had not discussed what would happen in retirement and it turned out their expectations were very different,” he says.
Planning for your estate
According to the NSW government, studies show an average of 45% of Australians don’t have a valid Will2, and with more and more Wills being challenged by family, friends or estranged spouses, an up-to-date document is essential. Otherwise your children or new partner may not receive the appropriate assets if you die.
Careful estate planning not only protects your assets, but also ensures they are distributed in the most tax effective and equitable way. In most cases leaving your super to your new partner ensures they receive it tax-free.
“To equalise your estate, it may be better to leave your children cash – not super – as there is then no tax payable for them,” explains Lucas.
New relationships are hard enough without worrying about money. If you are looking for more information about any concerns you might have, you can find an adviser here.