Could you take further your recent advice to the 75-year-old
grandmother with questions about her will? I am wondering why you
advised that shares and investments given to children under 18
should be held in the grandmother's name alone, rather than in
joint names the grandmother's and the individual grandchild's. I
have 12 grandchildren aged two to 30. All have already had a
handout, though the very young ones' investments are in their
mother's name. I chose insurance bonds, shares and a managed fund
(joint with me), while one used the money for mortgage reduction
and another for paying out HECS debt. M.W.If money is gifted to
children under 18, they are taxed highly on any income above $416,
raised to $772 by the use of the $235 low income earner offset. The
latter figure represents a 5 per cent return on about $15,400.
If they receive the money from a deceased estate, they are taxed
on it at adult rates, which makes it more tax efficient but
deprives you of the pleasure of seeing their reaction.
I'm all in favour of giving money to over-18s on the proviso
that they invest rather than spend. But they usually don't see it
that way as young adults can always use extra money and generally
need to spend it rather than save it.
Keep on with what you are doing, it seems to be working
well!
Take a trip and relax
MY husband and I are approaching 70. We have a family company
which owns the three residential properties that supply our income.
We would like to dispose of the company, which owes us $500,000. We
like the security of property but we have been advised we must sell
the houses to end the company. Is there a more cost-effective way
to implement our objective, so we can retire? M.H.You ask a very
complex question and, if you don't like what you're hearing from
one source of tax advice, get another one, if only to confirm what
the first one is saying.
Certainly, to wind down the company, you would need to sell or
transfer its assets so it may be cheaper to keep it going for a
while longer. Besides, why would you sell all three properties at
once? Why not sell one and go for a long, luxurious trip? When the
money runs out, sell another!
· If you have a question for George, forward it to Personal
Investment, PO Box 3001, Tamarama, 2026.
