Knowing how your SMSF assets can be strategically used as your needs change will give you more choices.
Investment plans should not be “set and forgot”. Your plans need to be monitored and adapted to suit your changing needs and circumstances, especially as you progress through retirement and face aged care decisions., the legislation requires you to review your investment strategy at least once a year.
Aged care can be expensive, but the government may subsidise some costs. An assessment of your financial capacity is undertaken by Services Australia when you access care to determine the split between how much of the cost you pay and how much the government pays. If you are moving into residential care, this assessment considers both your assets and your income. If you are accessing home care, under current rules only your assessable income is considered. How an SMSF would be assessed is summarised below, depending on the account phase.the account balance is an assessable asset if the owner is age/service pension age or older. Assessable income is calculated under deeming rules.
. Understanding how to use your money effectively may help you to afford the care you need. Three strategic impacts include:if care needs occur at an early age, or one spouse is under age/service pension age, transferring assets into superannuation can reduce assessable assets and income and reduce your contributions towards the cost of care .if you need to increase cash flow to pay for care, consider increasing how much you draw from your account-based pension.
Superannuation, taxation, estate planning, age pension and aged care involve complex sets of rules on their own, but when intertwined mean a complex maze that needs to be navigated. Before making decisions, financial advice from an adviser who is accredited in aged care advice is critical to ensure your full situation is considered, and the right choices are made.
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