However, short-term past performance is not an indication of future returns and the coronavirus pandemic has produced a “new normal.” All trends eventually break.
Like the writer of the first letter in your column on February 7, I took up the federal government’s offer regarding home downsizing, selling my property and purchasing one of lesser value, thereby gaining extra money in the bank. One of my granddaughters, aged 14, recently received a diagnosis that, due to a neurological condition, she will never walk and will need a wheelchair for the rest of her life. Her parents need to buy another house, as their property has too many steps. The new house most likely would also need some modifications. Sadly, partly because of COVID-19, they are not in a good financial position. I am thinking of contributing a large amount – say $80,000 – as a gift to help with these costs. I heard that you can also make a special provision in your will to help this child – hopefully by then a young adult – pay for her care or adjustments to a property where she could live independently. However, the family needs the money now, not when I pass away in another 20 years or more. M.S.
You might be thinking of Special Disability Trusts (SDTs), which can be set up to receive gifts or inheritances on behalf of a disabled person and, for the donor, shelter money from Centrelink’s means tests.
An SDT can shelter as much as $694,000 from the assets test (indexed higher each year) and also allow family members to gift as much as $500,000 without affecting their Centrelink entitlements.
You do not state that you receive an age pension, which is subject to gifting provisions, so I presume you do not and are free to give the money away.
It sounds as though your gift is needed now for equipment and building alterations.
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However, first check to see whether the parents receive any Centrelink benefits that might be affected by your gift. If so, you can directly pay for their home improvement builders’ invoices, or buy needed equipment for your granddaughter, rather than donating cash.
If the parents have not already done so, you might help them get in touch with Centrelink, the National Disability Insurance Scheme (1800 800 110) and various charities designed to help disabled children, such as Variety (03 8698 3900 in Victoria) and Starlight (1300 727 827).
If you are thinking about the long-term future, contact your solicitor about establishing an SDT in your will. More information can be found at the Department of Human Services Special Disability Trust team on 1800 734 750.
If you have a question for George Cochrane, send it to Personal Investment, PO Box 3001, Tamarama, NSW, 2026. Help lines: Australian Financial Complaints Authority, 1800 931 678; Centrelink pensions 13 23 00. All letters answered.
