Financial Matters Affecting Elders

Elderly lady looking at her financial issues and how she has been affected.

Financial Issues Affecting Elders

Many Australian Elders have a significant asset pool, by the time they reach retirement. The relative affluence of Elders today is a result of a combination of factors, such as the Government’s mandatory superannuation scheme, rising property values, and a period of relative economic prosperity in Australia. The economic circumstances of this day and age, as well as the vulnerabilities of Elders results in particular risks and opportunities.

With the housing market being increasingly difficult to enter, it is relatively common for Elders to guarantee loans for family members, or loan money to family members, so that family members can buy homes and/or businesses. Conflicts arise when the creditor (either the elderly person or the bank) wants the loan to be repaid, and the recipient of the loan is either unwilling or unable to do so.

In circumstances where the Elder has agreed to be the guarantor of a loan for a family member (for the purchase of a house, a business or other asset) issues arise when the person who received the money, defaults on the loan agreement – and the creditor then demands that the Elder, as guarantor, repays the loan.

Mossensons can advise as to:

  • the risks involved in entering into a loan between family members and friends,
  • ensuring that there is adequate security over the loan,
  • recovering of any monies paid out by the Elder.

We can also provide you advice as to forgiveness of debts in your Will.

Whether you are considering –

  • investing in a business (owned or operated by a friend or relative, for example)
  • purchasing an asset (property or shares, for example)
  • preparing a family trust
  • consolidating or selling your existing investments (in preparation for retirement)

Mossensons, together with your trusted financial advisers (such as your accountant) can advise you about the risks, benefits, and opportunities of each situation and prepare the necessary documents to effect the task.

Superannuation and life insurance are often the subject of binding nomination, which directs to whom the benefit of these monies is to be paid. Where there is no binding nomination, these monies may be dispersed at death by a Will. Mossensons can advise you further on these aspects, and assist you in organising your affairs, in the most suitable ways for you.

Where an Elder has lent money to a family member, the Elder may not wish to have the monies repaid, and wish to release the family member from the repayment of the debt, on the Elder’s death. This may require amendment to the Elder’s Will, by altering the amount of the gifts to be given to other family members, so that there is a balancing of the bequests to all family members. We are able to advise in relation to include the release of the debt, in the Elder’s Will and the issues that flow from there.