I don't know if this can help ....could it possibly be done with your parents included in any venture but at a very small percentage? Anyone on a pension can earn a certain amount of dollars before it cuts out. so maybe through a trust or conpany and Mum and Dad have 1% and the rest of you have 99%. I am pretty sure that if they lend you the money it needs to be done up through a solicitor and have interest payable ( that's what my parents always did on DVA pension when loaning to the kids). Good luck with it all, sounds like a great family.
Using Parents Equity - Will It Affect Their Veterens Pension?
- Thread starter Kath Russell
- Start date
Thanks very much Joan! Great idea.
Just waiting for Dad's written authority to go through with DVA for me to enquire 100% on his file.
Got lots more ideas since reading through this forum too to put to DVA.
Just waiting for Dad's written authority to go through with DVA for me to enquire 100% on his file.
Got lots more ideas since reading through this forum too to put to DVA.
Speaking to the WA Income Support Unit at DVA today felt somewhat opposite to the last conversations, as noted in above posts. Each scenario I mentioned, she'd counter by saying "we can't give you advice on what you should do. Send us a letter or fax (they don't do email
) advising us what you want to do & we'll look at it".
That's what I was trying to do over the phone!! Last call to DVA they told me once I have authority on Dad's file they'll be able to tell me more about structures & how he can keep the pension, or at least most of it. In a round about way, she was asking me what my personal investing philosophy / plan was, and my brother's (which is different to mine of course because I'm not him!), what we're going to do with the money. I basically asked her - please advise me what we need to do in order to use 80% of my parents equity for our own personal use (not theirs) in order for them to retain their full pension.
I just K N O W she had no idea about what I was talking about & mentioned how risky she believed it may be (using equity to buy investment properties), she couldn't understand why I would only pay IO & not pay off my own PPOR, does my Dad know of the risks, am I sure he knows what I'm enquiring about. Then I asked her if she invests in property. No. Nothing wrong with that. But that's why I knew he didn't know where I was coming from.
Plus, obviously she doesn't know us & is looking out for my parents, so that's not such a bad thing.
It's as simple as this. Here's an example of the letter from Dad & I :
"Dear blah, blah, blah, etc, etc.........
I would like to allow my children to use the equity in my unencumbered home to the extent that it will not affect my Veteran's Pension.
The funds will be used for their individual private business use which I will have no involvement. I seek no and expect no financial incentive, income, title, deed or otherwise.
I will allow the property to be used as security against their proposed financial credit facility to obtain, maintain & conduct their desired investment / business dealings.
We have previously participated in a similar proposal with our daughter for her successful business prior to my retirement. Our children are experienced professionals in their chosen fields, are currently both investors & have been involved in our past investment experience.
We have discussed all matters at length in this regard & we fully understand the possible perceived risks involved. The property will eventually be bequeathred to them both, in the meantime (long time!) we wish to assist them further with their goals towards financial independance.
Simply put, this is our desired outcome :
Property to remain in our names (if this is the best structure for ensuring our pension remains unchanged)
40% use Daughter
40% use Son"
Will keep you posted...............
) advising us what you want to do & we'll look at it".That's what I was trying to do over the phone!! Last call to DVA they told me once I have authority on Dad's file they'll be able to tell me more about structures & how he can keep the pension, or at least most of it. In a round about way, she was asking me what my personal investing philosophy / plan was, and my brother's (which is different to mine of course because I'm not him!), what we're going to do with the money. I basically asked her - please advise me what we need to do in order to use 80% of my parents equity for our own personal use (not theirs) in order for them to retain their full pension.
I just K N O W she had no idea about what I was talking about & mentioned how risky she believed it may be (using equity to buy investment properties), she couldn't understand why I would only pay IO & not pay off my own PPOR, does my Dad know of the risks, am I sure he knows what I'm enquiring about. Then I asked her if she invests in property. No. Nothing wrong with that. But that's why I knew he didn't know where I was coming from.
Plus, obviously she doesn't know us & is looking out for my parents, so that's not such a bad thing.
It's as simple as this. Here's an example of the letter from Dad & I :
"Dear blah, blah, blah, etc, etc.........
I would like to allow my children to use the equity in my unencumbered home to the extent that it will not affect my Veteran's Pension.
The funds will be used for their individual private business use which I will have no involvement. I seek no and expect no financial incentive, income, title, deed or otherwise.
I will allow the property to be used as security against their proposed financial credit facility to obtain, maintain & conduct their desired investment / business dealings.
We have previously participated in a similar proposal with our daughter for her successful business prior to my retirement. Our children are experienced professionals in their chosen fields, are currently both investors & have been involved in our past investment experience.
We have discussed all matters at length in this regard & we fully understand the possible perceived risks involved. The property will eventually be bequeathred to them both, in the meantime (long time!) we wish to assist them further with their goals towards financial independance.
Simply put, this is our desired outcome :
Property to remain in our names (if this is the best structure for ensuring our pension remains unchanged)
40% use Daughter
40% use Son"
Will keep you posted...............
If your last venture was so successful, why can't you finance your own path?
Sorry, but I think this sort of stuff stinks. Your parent now have themselves in a nice position for a carefree (long) retirement, and you want to put that at risk because you're too lazy too work your own way up the ladder.
I've seen a few well meaning family guarantor type situations go wrong. Very ugly. Aside from the serious financial pain caused to the parents, bitter resentment develops between siblings, further busting apart a family.
You should think VERY, VERY carefully before proceeding. There are lots of variables that could go wrong, and YOU ARE NOT THE ONE AT RISK.
Sorry, but I think this sort of stuff stinks. Your parent now have themselves in a nice position for a carefree (long) retirement, and you want to put that at risk because you're too lazy too work your own way up the ladder.
I've seen a few well meaning family guarantor type situations go wrong. Very ugly. Aside from the serious financial pain caused to the parents, bitter resentment develops between siblings, further busting apart a family.
You should think VERY, VERY carefully before proceeding. There are lots of variables that could go wrong, and YOU ARE NOT THE ONE AT RISK.
The way I see it is pretty simple. Most families live in a state of bitter resentment as it is, the high divorce rate we have in Australia and it's shameless culture make it the standard.
If your parents are offering you capital to get ahead in a system where 90% of the Australian dollar has lost its purchasing power over the last 43 years then more power to you for thinking of taking on this jungle system as a team effort.
The only reason people have negative experiences with this sort of activity is because it's all they have ever known family to be. If you have a strong foundation then realise you are already streets ahead even before any money has changed hands.
A classic example is the Jewish society, a family of 12 will all buy one house and the entire family will work to pay it off. If successful everyone will own their own house in milliseconds however if you don't pull your weight you are immediately ostracised and you lose family support.
With the mainstream media always picturing sitcoms with family infighting and social isolation to the point where we don't even talk to our neighbours you stand as a beacon to others showing the world what can be done when people stick together as opposed to the self reliance the world preaches.
All the best for your future endeavours and if there is any leftover cash please send some my way
If your parents are offering you capital to get ahead in a system where 90% of the Australian dollar has lost its purchasing power over the last 43 years then more power to you for thinking of taking on this jungle system as a team effort.
The only reason people have negative experiences with this sort of activity is because it's all they have ever known family to be. If you have a strong foundation then realise you are already streets ahead even before any money has changed hands.
A classic example is the Jewish society, a family of 12 will all buy one house and the entire family will work to pay it off. If successful everyone will own their own house in milliseconds however if you don't pull your weight you are immediately ostracised and you lose family support.
With the mainstream media always picturing sitcoms with family infighting and social isolation to the point where we don't even talk to our neighbours you stand as a beacon to others showing the world what can be done when people stick together as opposed to the self reliance the world preaches.
All the best for your future endeavours and if there is any leftover cash please send some my way
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From what you have said it sounds as if your fathers pension is means tested?
As some have said some pensions from DVA are not.
It could make all the difference to what is possible and what is not.
Expert advice is required in this matter before decisions are made. Of course rules change too and this could complicate your situation further.
There are different rules for DVA pensions to centrelink ones.
There are other issues, for example if means tested, how will his super be treated once he is over 65? Sometimes the super balance is not considered until over age 65 when assets/income are tested for a pension.
Your mother is younger so she would have longer before her assets in super would be considered. Once both are 65 then all assets in super, combined would be.
If means tested, the super balance would be part of the calculation when assessing a pension is my understanding.
For example it not unknown for couples where one is much younger than the other, to put super into the name of the younger one to enable the older one, who is age pension aged, to be eligible for a centrelink age pension. The younger persons super balance is not considered until they are 65.
I think you said they have enough super for eternity?? Which would suggest a goodly amount! If so over time it maybe over the asset level for a pension?
However you need expert advice re all these issues. I am surprised this has not been done given the intention of the family to cooperate in pooling resources?
Your parents are young retirees and many things could occur that may impact on this plan to mortgage their PPOR.
Did you say you intend giving them $20000pa? Or funds for an overseas holiday?
How will that be funded and how will your parents explain their windfall if asked by the powers that be? could be tricky.
Leaving the country, any period of absence has to be disclosed to the govt if getting a pension?
Its great your parents want to help but for the sake of $200000 each for you and your brother, i wonder if there is not a better plan?
good luck anyway.
regards.
As some have said some pensions from DVA are not.
It could make all the difference to what is possible and what is not.
Expert advice is required in this matter before decisions are made. Of course rules change too and this could complicate your situation further.
There are different rules for DVA pensions to centrelink ones.
There are other issues, for example if means tested, how will his super be treated once he is over 65? Sometimes the super balance is not considered until over age 65 when assets/income are tested for a pension.
Your mother is younger so she would have longer before her assets in super would be considered. Once both are 65 then all assets in super, combined would be.
If means tested, the super balance would be part of the calculation when assessing a pension is my understanding.
For example it not unknown for couples where one is much younger than the other, to put super into the name of the younger one to enable the older one, who is age pension aged, to be eligible for a centrelink age pension. The younger persons super balance is not considered until they are 65.
I think you said they have enough super for eternity?? Which would suggest a goodly amount! If so over time it maybe over the asset level for a pension?
However you need expert advice re all these issues. I am surprised this has not been done given the intention of the family to cooperate in pooling resources?
Your parents are young retirees and many things could occur that may impact on this plan to mortgage their PPOR.
Did you say you intend giving them $20000pa? Or funds for an overseas holiday?
How will that be funded and how will your parents explain their windfall if asked by the powers that be? could be tricky.
Leaving the country, any period of absence has to be disclosed to the govt if getting a pension?
Its great your parents want to help but for the sake of $200000 each for you and your brother, i wonder if there is not a better plan?
good luck anyway.
regards.
That's what I like to hear! We're so alike dannyhc
It is, to what extend we're figuring that out along the way too. We'd like to get as much information as possible from DVA so we're better informed before getting the 'expert' advice. Plus, we all live thousands of km's from each other, so I'm the rep doing all the background work first. We're in no rush, but obviously putting this money in the market for longer is going to return more in the end. This is going to be additional to our current investing portfolios.
Great question! Thanks for that point. Will add that to the list. My parents are nearly self sufficient living on their hobby farm spending money on only red wine, staples, fuel & holidays. They've packed ALOT in their years. They're very young, but they just like to potter and volunteer alot now.
We've always openly discussed our investing & personal matters with each other. Nothing's sacred in our home. We don't see the big deal. It's very 'normal' for us. Our parents are our friends but we still have the utmost respect for them as our "Mum & Dad". We've always told our parents we're using the equity once the property's bequeathed to us, so since they've watched us with our investing and life in general, they know what we're like with our finances so they said we might aswell use it now if we can. They understand our investing principal's of time IN the market so understand why it would help us by using it now..........instead of when we're their age.
Apart from the odd country "contra" deal, everything to do with our finances is by the book. It's not worth doing anything on the side. Dad wouldn't have it. My brother's too straight & we'd rather sleep at night. We've been talking more & more about what they want out of all this & the last conversation had them wondering what on earth they'd do with any extra money anyway. I know exactly what we can do with that extra money!
Thanks for your concern units4me. I'm certainly not offended. We've seen A L O T of family financial dramas. It's disgusting & seriously, none of us can even understand it. All but one has involved cash for fun, toys and not to invest so I think that's worse. We don't see this as risk. Actually, I WAS a bit offended last night when I first read you thought we're lazy. We're far from that. We think it's smart. We currently finance ourselves quite well and have always got something on the go. I nearly felt obligated to justify myself then!
Anyway, we see this as an opportunity to further excel us to the financially independant life we have always planned on. The sooner the better so I can hang out with people like ozperp financing entrepreneurs in poor countries & saving the world in other ways. There's more to this life than investing! To us, investing makes money, which creates time. Time to do whatever we want, whenever we want. I'm sure we're put on this planet to help others & I can't wait to be in the position to do that without having to think twice about bills coming in & putting food in the fridge.
Thank you Somersoft for this forum.
It's probably timely to point out that I'm definitely still accumulating, I'm not "there" yet, but thankfully you only need to lend US$25 for a minimum 4 months in order to help fund third-world entrepeneurs via Kiva.
Well after all that, we have received a reply in the mail yesterday.
"I can confirm that your service pension will not be affected should your children wish to use the equity in your home. As long as you remain residence in your home, this property will be exempt from the assets test for service pension purposes."
That's it. The answer is as simple as our original question.
LMAO, this is part of the email response from our parents :
".....now you just have to work out how to use it to the best advantages possible for both your families futures............as long as you periodically keep us informed on how its going in language we understand will be sufficient, we don't need to know the ins and outs......we are not expecting anything in return but of course when you lot are rolling in it, the odd family trip (all expenses paid of course) 1000 count sheet-sets, designer clothes & a boob job would not go astray"
To everyone who are currently in the same situation using your parents equity while they're on the DVA pension, you might like to check your records. I've had a few PM's (and I'll msg you again privately) with a few different scenarios & assistance from forum members in a similar situation, but ours seems very simple in comparison.
Now, onto the plan............................
"I can confirm that your service pension will not be affected should your children wish to use the equity in your home. As long as you remain residence in your home, this property will be exempt from the assets test for service pension purposes."
That's it. The answer is as simple as our original question.
LMAO, this is part of the email response from our parents :
".....now you just have to work out how to use it to the best advantages possible for both your families futures............as long as you periodically keep us informed on how its going in language we understand will be sufficient, we don't need to know the ins and outs......we are not expecting anything in return but of course when you lot are rolling in it, the odd family trip (all expenses paid of course) 1000 count sheet-sets, designer clothes & a boob job would not go astray"
To everyone who are currently in the same situation using your parents equity while they're on the DVA pension, you might like to check your records. I've had a few PM's (and I'll msg you again privately) with a few different scenarios & assistance from forum members in a similar situation, but ours seems very simple in comparison.
Now, onto the plan............................
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