On the 16th and 22nd of October, The Investment Collective hosted Client Seminars in Melbourne and Rockhampton. The seminars brought together clients to explore the important topic of how you can help your adult children financially. This is a common question that our clients ask us, and so it was not surprising that we had record-breaking attendance at both events. Each seminar hosted over 50 clients who enjoyed an in-depth market and economic update, followed by panel discussions focused on providing practical tips to guide their children while safeguarding their own financial wellbeing.

Kicking off the client seminars was an update on Australian and Global Markets presented by Danny Wong (Manager, Research, Alteris Financial Group). Danny’s presentation provided attendees with insights into various industry trends, highlighted current economic opportunities, and discussed potential prospects.

We were very fortunate to have Chris Hill (Senior Lawyer, Hill Legal and Inherit Australia), Katina Kyreakou (Special Counsel, Swanwick Murray and Roche Lawyers) and our financial advisers Cheng Qian, Liz Whalley, and Allan McGregor, join our panel discussions.

The panel explored pre-inheritance and the “Bank of Mum and Dad,” covering topics such as gifting money to children or grandchildren, setting up loans, and understanding the differences and implications of each option. Chris and Katina also discussed the importance of contracts when financially assisting children, as well as the value of clear communication and setting expectations throughout this process. Additionally, the panel emphasised the importance of regularly reviewing estate plans and shared common considerations they encounter when working with families.

‘’Watch and be aware, things change. Family gifts/loans are very complex – get advice!’’ – Event Attendee

Thank you to everyone who joined us, and to our speakers for sharing their wealth of knowledge with all in attendance. We look forward to hosting our next client seminars in the new year and continuing to provide a platform for clients, staff, and guest speakers to come together and discuss important financial topics.

Discussing financial education and practical tips with your financial adviser can help you create a roadmap that supports your children’s financial future while ensuring your own financial wellbeing remains secure. If you have a friend or family member who could benefit from personalised financial advice and education, please reach out to us—we’re here to help.

Planning for what happens when you pass away or become incapacitated is an important way of protecting those you care about, saving them from dealing with a financial and administrative mess in the future.

Your will gives you a say in how you want your possessions and investments to be distributed. But importantly, it should also include enduring powers of attorney and guardianship as well as an advance healthcare directive in case you are unable to handle your own affairs towards the end of your life.

At the heart of your estate plan is a valid and up to date will that has been signed by two witnesses. Just one witness may mean your will is invalid.

You must nominate an executor who carries out your wishes. This can be a family member, a friend, a solicitor or the state trustee or guardian.

Keep in mind that an executor’s role can be a laborious one particularly if the will is contested, so that might affect who you choose.

Around 50 per cent of wills are now contested in Australia and some three-quarters of contested wills result in a settlement. ⁱ

The role of the executor also includes locating the will, organising the funeral, providing death notifications to relevant parties and applying for probate.

Intestate issues

Writing a will can be a difficult task for many. It is estimated that around 60 per cent of Australians do not have a valid will in place. ⁱⁱ

If you don’t have a valid will, then you are deemed to have died intestate, and the proceeds of your life will be distributed according to a statutory order which varies slightly between states.

The standard distribution format for the proceeds of an estate is firstly to the surviving spouse. If, however, you have children from an earlier marriage, then the proceeds may be split with the children.

Is probate necessary?

Assuming there is a valid will in place, then in certain circumstances probate needs to be granted by the Supreme Court. Probate rules differ from state to state although, generally, if there are assets solely in the name of the deceased that amount to more than $50,000, then probate is often necessary.

Probate is a court order that confirms the will is valid and that the executors mentioned in the will have the right to administer the estate.

When it comes to the family home, if it’s owned as ‘joint tenants’ between spouses, upon death your share automatically transfers to your surviving spouse. It does not form part of the estate.

However, if the house is only in your name or owned as ‘tenants in common’, then probate will need to be granted. This process generally takes about four weeks.

Unless you have specific reasons for choosing tenants in common for ownership, it may be worth investigating a switch to joint tenants to avoid any issues with probate.

You will also require probate if there is a refund on an accommodation bond from an aged care facility.

Rights of beneficiaries

Bear in mind that beneficiaries of wills have certain rights. These include the right to be informed of the will when they are a beneficiary. They can also expect to hear about any potential delays.

You are also entitled to contest or challenge the will and to know if other parties have contested the will.

Estate planning can be tricky and emotional, particularly when your circumstances are a little more complex. So, get in touch with us to ensure your estate plan meets your wishes and takes account of all the issues, and be sure to revisit it if your circumstances change.

Sources

 i Success rate of contesting a will | Will & Estate Lawyers

ii If you don’t, who will? 12 million Australians have no estate plans | Finder

On 12 September 2024, the Government proposed legislation and aged care fee changes aimed at enhancing the quality of aged care in Australia. These proposed reforms are also set to impact the fees associated with home care and residential care services.

Whether you’re currently receiving care or supporting a loved one on their care journey, it’s essential to understand what these changes could mean for your situation. This article will guide you through the recent fee adjustments and the proposed changes to the aged care system from 1 July 2025. We’ll break down everything you need to know so that you can feel confident and well-informed.

Aged care fee changes from 20 September 2024 (existing residents)

As of 20 September 2024, existing aged care residents will experience changes to the aged care fees charged.

• The Basic Daily Care Fee has increased to $63.57 per day (previously $61.96).
• The thresholds for means-tested fees have been raised, which may result in a reduction in your means-tested care fee.
• For residents assessed with a Daily Accommodation Contribution (DAC), this amount may also change.

The Basic Daily Care Fee is set at 85% of the single age pension rate. On 20 March and 20 September each year, this fee is adjusted in line with cost-of-living changes. Means-tested fees, including the means-tested care fee and/or Daily Accommodation Contribution, are calculated based on your assessable assets and income, using specific thresholds. These thresholds are reviewed quarterly, so even if your assets and income remain unchanged, your means-tested fees may vary.

Proposed aged care fee changes from 1 July 2025

On 12 September 2024, the Government proposed legislation for a new aged care system, expected to come into effect on 1 July 2025. For residents already in the current system, fees are expected to remain unchanged under the new legislation.

Accommodation

The main changes proposed:

1. Refundable Accommodation Deposit (RAD) retention: From 1 July 2025, providers will be able to apply a retention (non-refundable) fee of 2% per annum on the RAD for up to 5 years, with a maximum retention of 10%.
2. Indexing daily accommodation: For residents choosing to pay a daily fee instead of a RAD, the Daily Accommodation Payment (DAP) will be indexed twice a year in line with CPI.
3. There will be no changes to the treatment of the family home in the aged care means test assessment process. If a spouse or “protected person” resides there, it remains exempt; otherwise, approximately $208,000 of its value (indexed) will be included in financial assessments.

Daily Care Fees

Home Care (Support at Home)

From 1 July 2025, the Home Care Package framework will transition to the Support at Home Program, with funding categorised into three areas: Clinical Care, Independence, and Everyday Living.

1. New classification system: Recipients will be assessed into one of the ten funding classifications to better align funding with individual needs.
2. Independence and Everyday Living Contributions: While the government will pay 100% of clinical care services, individuals may be required to contribute up to 50% of the price for independence services and up to 80% of the price for everyday living services. The amount payable will be based on Age Pension status or Commonwealth Seniors Health Card eligibility.
3. Home Care grandfathering: Individuals with a Home Care Package on 30 June 2025 will keep the same funding and any unspent funds under the new Support at Home program. Those on the National Priority System or approved for a package by 30 June 2025 will get a Support at Home budget equal to their approved package level when available. If a future assessment entitles a recipient to more funding, they will move to the new Support at Home classification when it’s available.
4. Contribution arrangements: If you were receiving a Home Care Package, on the National Priority System, or assessed as eligible for a package by 12 September 2024, you will not pay more because of the reforms. Your contributions will stay the same or be lower than before. When you move to residential care, your contribution arrangements will remain the same unless you choose to switch to the new program. However, changes to accommodation payments in residential care will still apply, as these are agreed upon between the resident and their provider.

What does this mean for those already in care?

If you’re already part of the current aged care system, fees are expected to remain unchanged under the new legislation. The proposed legislation includes grandfathering provisions, ensuring that the existing rules continue to apply.

It’s helpful to reflect on what happened the last time the rules changed. The current aged care laws, which came into effect on 1 July 2014, did not impose the new fee arrangements on those already in aged care or receiving a home care package. Those looking to move between aged care homes were given the choice to either opt into the new system or stay under the existing rules.

Where can I find out more?

On 12 September 2024, the Australian Government introduced the Aged Care Bill 2024 to Parliament. Once passed, this Bill will become the new Aged Care Act, expected to take effect from 1 July 2025. You can find additional details by clicking the following link. https://www.health.gov.au/our-work/aged-care-act

We are here to help, every step of the way

The proposed reforms to residential aged care and home care are significant. If you’re unsure about your current situation or how these reforms might impact your care situation moving forward, our advisers can put you in touch with Alteris’ Lifestyle and Care team.

Alteris’ specialist division of financial advisers are accredited in aged care advice and can talk you through all available options and explain the various financial considerations. The team can also provide full support with ensuring the fees and pension are correct by working directly with your accommodation provider, Services Australia and the relevant government departments. Learn more about Alteris’ accredited aged care financial advisers.

As parents, one of the most valuable legacies you can leave your children is the gift of financial literacy. Providing practical, tailored advice can set your children on a path to financial stability and success.

Here are five essential financial tips to share with your children:

Importance of insurance

Insurance is a critical safety net that protects against unexpected events. Encourage your children to consider various types of insurance:

• Health Insurance: In Australia, while Medicare provides basic health coverage, private health insurance can offer additional benefits, shorter waiting times, and coverage for services not covered by Medicare.
• Income Protection Insurance: This can provide a percentage of their income if they are unable to work due to illness or injury.
• Life Insurance: Especially important if they have dependants, life insurance can provide financial support to loved ones in the event of their untimely passing.
• Home and Contents Insurance: Protects their home and belongings from damage or theft.

Managing cash flow

Effective cash flow management is the foundation of financial health. Guide your children through these steps:

• Create a spending plan: Help them create a realistic plan that includes all their regular income, essential living expenses (housing, food, utilities), savings, and an allowance for discretionary spending (entertainment, travel, hobbies).
• Emergency fund: Encourage setting aside at least three to six months’ worth of living expenses to cover unexpected costs.
• Review regularly: Advise them to review and adjust their spending plan regularly to accommodate any changes in their financial situation.

Setting and achieving financial goals

Goal setting is vital for financial success. Encourage your children to:

• Define clear goals: Whether it is saving for a house deposit, a car, or a holiday, having specific, measurable, and achievable goals can make saving easier and more motivating.
• Short, medium, and long-term goals: Help them categorise their goals to plan appropriately. Short-term goals might include saving for a holiday, while long-term goals could be saving for a home or retirement.
• Regularly review goals: Encourage them to review their goals regularly, adjusting them as needed to stay on track.

Managing and reducing debt

Debt can be a significant financial burden if not managed properly. Share these strategies for effective debt management:

• Understand different types of debt: Explain the difference between good debt (e.g., student loans, home loans) and bad debt (e.g., high-interest credit card debt and car loans).
• Prioritise high-interest debt: Advise your children to focus on paying off high-interest debt first to minimise the amount paid in interest over time.
• Avoid unnecessary debt: Encourage living within their means and using credit cards responsibly.
• Consolidate debt: If they have multiple debts, consolidating them into a single loan with a lower interest rate might be beneficial.
• Seek professional advice: If debt becomes overwhelming, suggest seeking advice from one of our financial advisers.

Understanding superannuation

Superannuation (super) is a crucial part of the Australian retirement system. Superannuation is an asset that you need to take care of, so understanding the principles outlined below is vital:

• Choosing the right fund: Advise them to research and choose a super fund with low fees and good performance.
• Investment options: Educate them on the different investment options available within super funds and the importance of choosing a fund that aligns with their risk tolerance and retirement goals.
• Super contributions: Explain the importance of making additional contributions and taking advantage of employer contributions.
• Regularly review super: Encourage them to check their super statements regularly and make sure their employer is making the correct contributions.

By instilling these financial principles in your children, you are equipping them with the tools needed to build a secure and prosperous future. Financial literacy is a lifelong journey, and the sooner they start, the better prepared they will be when navigating the complexities of the financial world.

Discussing financial literacy and practical tips with your financial adviser can help you create a roadmap that supports your children’s financial future while ensuring your own financial wellbeing remains secure. If you have a friend or family member who could benefit from personalised financial advice and literacy, please reach out to us—we’re here to help.

Interest rate speculation is rife after the Reserve Bank of Australia (RBA) kept rates on hold at 4.35% last month. Economists now predict it may be several months before rates fall. It’s a different story in the United States, where the Federal Reserve slashed interest rates by half a percentage point in September and forecast two more cuts before the end of the year.

Australia’s inflation rate fell to 2.7% in August, down from 3.5% the previous month, marking the lowest reading in three years. Falling petrol prices and energy bill relief helped drive the slowdown. The jobless rate remained steady in August at 4.2%, with the number of unemployed people falling by 10,500 in seasonally adjusted terms. While spending may be down, our net worth rose for the seventh consecutive quarter. Total household wealth was 9.3% higher than a year ago, largely due to rising house and land values. Consumer confidence is also positive, with an increase in the ANZ-Roy Morgan index compared with last year’s figures.

The S&P/ASX 200 index hit an all-time high near the end of the month at 8,862 points, after reaching a low of 7,687 a few weeks earlier. It closed the month at a respectable 8,266, up 2.2% for the month and 7.89% for the year. China’s plan to stimulate its economy has led to stronger commodity prices, with mining and energy stocks being the main beneficiaries.

If there is something affecting your financial situation that you would like to discuss, please do not hesitate to reach out to our team.