By Melissa Jenkins
(Australian Associated Press)

It's probably going to be among the tougher conversations you'll have with your mum and dad but it's one of the most important.

Discussing your parents' financial affairs with them to ensure they are protected as they age can be a delicate conversation but it shouldn't be avoided.

Protecting their assets, understanding how the pension works and arranging who they would like to handle their money should they be unable to are all things best worked out while they are in good health.

Seniors Rights Service solicitor Tim Tunbridge says it's important older people understand the rules surrounding divestment of assets and how that can affect their pension entitlements.

Any verbal family agreements, such as a person selling their home and then investing and living in a granny flat on their adult children's property, should be formalised to ensure the elderly person is protected should a relationship turn sour, he says.

"A great deal of care needs to be taken when entering into an arrangement like that," Mr Tunbridge says.

"There needs to be independent legal and financial advice to ensure that if the relationship breaks down in the future or something unforeseen happens that the older person can get their money back."

Mr Tunbridge said older people should also be wary of putting their house up as a guarantee for things like their children's business ventures.

"Not only can people lose their house if the business fails but at the point where the bank or financial institution calls in the loan then Centrelink will deem that payment under the guarantee to be a gift, and they can lose part of their pension as well," he said.

For aged pension recipients, the maximum fortnightly payment to a single person is just over $800, while the most couples can be paid is around $600 each.

However how much aged pension a person can receive depends on the value of their assets, excluding the home in which they live, and how much income they are receiving from investments.

Another important thing to plan for is the type and cost of care your parents may need and this can range from in-home support to staying in a residential aged care facility.

The cost of care, which is typically shared between the receiver and the federal government, can range from around $1,000 each year for basic at home support to tens of thousands of dollars annually for residential aged care, according to the Productivity Commission.

IT"S TIME TO TALK WITH YOUR AGEING PARENTS

• Ensure they have an updated will prepared by a lawyer.
• Arrange an enduring power of attorney. This is a legal document where your parents choose someone to manage their assets and financial affairs if they are unable to do so themselves due to illness or an accident.
• Your parents can also choose an enduring guardian, who is someone with the authority to make lifestyle decisions on their behalf if they lose capacity.
• Discuss what your parents preferences are should they need home support or other care options.

Sources: www.humanservices.gov.au/individuals/older-australians, Caring for Older Australians, Productivity Commission Report 2011, www.australia.gov.au, www.moneysmart.gov.au

(Feedsy Exclusive)

If you pass away suddenly, your superannuation may not necessarily go to the people you want. Many people do not realise that under Australian law, the trustee of your super fund could actually have control over who gets your money when you die. So how do you make sure your super goes to the right people?

The law on super fund death benefits

Unlike the rest of your assets, your super fund is not covered in your will. This is because you don't actually own your super fund it is being held for you by a trustee. Legally, the trustee has responsibility for how your death benefit is awarded.

Most super funds allow you to nominate the person or people you want your death benefit to go to, and depending on the type of nominations you make, your super fund trustee may legally have to abide by your wishes.

However, if you fail to nominate anyone, the decision will be made by your trustee. While your trustee will usually award your death benefit to one or more of your dependants or to your estate, there are no guarantees of this. Even if they do, it is likely to take a lot longer for the beneficiaries to receive their money. It can also be the cause of fighting within your family, as some of your dependants may not receive what they think they deserve.

This is why it's highly advisable to nominate the people you want your super money to go to in the event of your death.

Who can be a beneficiary of your super fund?

Legally, only your dependants can be named as beneficiaries of your super fund. Super death benefits recognise dependants as:

• A spouse
• Children of any age, including adopted children
• Anyone else who depends on you financially, or who you have a mutual financially dependant relationship with, such as a relative who lives with you.

You can't nominate anyone who isn't classed as a dependant to benefit from your super fund. The only way non-dependants can benefit is if you name them in your will and nominate your estate as the beneficiary of your super fund.

Nominating your estate means that your super fund becomes an asset when you die, and can be divided up according to your instructions in your will, by your personal legal representative.

How to nominate beneficiaries

The first step is to check that your super fund allows you to nominate beneficiaries. If so, there are two types of nomination you can make:

• A Binding Nomination. Under a binding nomination, your trustee legally has no say in where your super death benefit goes they have to pay it to either the dependants you have nominated, or your estate. Binding nominations only last for three years, and your super fund should let you know when a binding nomination is about to expire. If you die without renewing it, your death benefit will automatically be paid to your estate and divided up according to your will.
• A Non-Binding Nomination. A non-binding nomination only acts as a guide to where your money should go your trustee still has the final say, and is not legally obliged to abide by your wishes, although most will take them into account.

Can you change your super fund beneficiaries?

You should review your nominations every time your personal circumstances change, to make sure your money will actually go to the people you want. If you get married or have children, you're likely to want to include your spouse and children as beneficiaries. Equally, if you get divorced, it's advisable to remove your ex-spouse as a beneficiary otherwise, if you die, they could benefit and your new family or other chosen dependants could lose out.

Do different super funds have different policies?

While most super funds will allow you to nominate your chosen beneficiaries, they can have different policies on this. Ultimately the decision about how your death benefit is paid, and who it is paid to, depends on the governing rules of your individual super fund. You should contact your fund to find out what their policies are.

Melissa Jenkins
(Australian Associated Press)

The central bank has opted for the safe bet and left interest rates on hold, as it continues to balance its expectations of improving economic growth with weak wages growth and high household debt.

Leaving the cash rate unchanged at 1.5 per cent for a 15th consecutive month, Reserve Bank of Australia governor Philip Lowe said the bank's forecasts for the economy's growth were largely unchanged.

But he also highlighted slow wages growth and rising debt levels.

"One continuing source of uncertainty is the outlook for household consumption," Dr Lowe said in a statement on Tuesday

"Household incomes are growing slowly and debt levels are high."

Dr Lowe said the RBA board expects inflation, which remains below the bank's target range of two to three per cent, to lift gradually as economic growth improves.

"In underlying terms, inflation is likely to remain low for some time, reflecting the slow growth in labour costs and increased competitive pressures, especially in retailing."

The RBA governor also noted the recent easing in Sydney house prices, but said prices remain little changed elsewhere, and continue to rise in Melbourne.

Royal Bank of Canada chief economist Su-Lin Ong said the RBA had, to some extent, played down recent economic data, including soft retail sales and lower than expected inflation.

"Given the recent developments, this discussion was not as dovish as it could have been," she said.

The RBA remained upbeat about the jobs market and observed that both employment and labour force participation have been rising, along with an improved outlook for non-mining investment.

AMP Capital chief economist Shane Oliver said the RBA had to balance its forecasts of improving stronger growth and employment against ongoing low inflation, weak wages growth, uncertain consumer spending and a high Australian dollar.

"The RBA remains stuck between a rock and a hard place on interest rates," he said.

"We remain of the view that the RBA will leave the cash rate on hold until a probable rate hike late next year."

The Australian dollar rose to a two-day high of 76.95 US cents following the RBA's rate announcement, though quickly fell back and ended the local session at 76.80 US cents.

(Feedsy Exclusive)

Many of us want to care for our ageing loved ones; but this isn't always straightforward especially for the "sandwich generation" who have the added pressure of caring for children at the same time. This is why it's essential to be aware of the issues that can arise, particularly if you have power of attorney for a senior. Here we take a look at the legal implications and the questions you should be asking if you're going to take on this responsibility.

What is a Power of Attorney?

Powers of Attorney are legal documents through which someone often an elderly relative gives you the authority to make important decisions on their behalf if they are no longer able to do so. There are two main Powers of Attorney you can be granted:

• Enduring Power of Attorney. This gives you the authority to manage the financial affairs and in some cases, personal affairs of someone who has nominated you, if they are unable to do so.
• Medical Power of Attorney. This makes you responsible for decisions about the medical treatment of the person who has nominated you if they have become mentally or physically unable to make these decisions themselves.

However, the rules on Powers of Attorney differ between states and territories it's important to check the law where you live before you agree to anything.

Considerations before agreeing to be someone's attorney

Taking on power of attorney for someone is a serious, legally binding responsibility. If someone wants to nominate you, make sure they are willing to discuss it thoroughly with you first so you can decide if this is something you really want to do. It's important to understand exactly what they expect from you taking on responsibility for their finances, for example, could mean they expect you to take over a business they run, or even pay their debts.

Remember, this responsibility might not come into effect straight away the person who nominates you chooses when your power of attorney should start. This may not be for many years if they continue to be capable of making their own decisions. It's important to think about what you want from your own life in the future before you accept the responsibility.

Once you've accepted, you can't then delegate the responsibility to anyone else. However, the person nominating you can nominate more than one attorney. You are all obliged to act in that person's best interests at all times but sometimes attorneys can disagree over decisions and a consensus has to be reached. If the other attorneys are family members or close friends, this can cause a strain in your relationships with them.

Perhaps the most important thing to think about is that having power of attorney for someone means you are likely to have to make some very difficult decisions on their behalf from how their money is spent to where they are going to live, and possibly even what medical treatment they should receive. It is a lot of responsibility and can be painful to act as an attorney for someone you're close to. However, it can be a huge relief to the person who has nominated you if you agree.

What are the responsibilities of an attorney?

Your responsibilities depend on what powers of attorney you have been granted. It's essential that you do not overstep these at any time the wishes of the person who has granted you powers of attorney have to come first at all times. Most people retain some decision-making capacity for the whole of their lives; so even if the Power of Attorney has already come into effect and you have the legal responsibility for decisions, their wishes should still be respected.

Just because someone is old, it doesn't mean they don't know their own mind. If you suspect they might have lost the capacity for decision-making, you should have them assessed by a medical professional. Once their incapacity is confirmed, you should start acting as their attorney straight away to make sure their rights and assets are protected.

What are the legal obligations of having power of attorney?

You have a legal obligation to act honestly at all times. You should keep detailed records of any decisions or transactions you make on the other person's behalf so everything is completely transparent.
You are also legally obliged to obey the wishes of the person who nominated you. If you deviate from them at all, even if you believe you're acting in their best interests, you can have legal action brought against you. You would then be liable for the cost of any compensation the court decided was owed.

As soon as you sign a Power of Attorney document, it becomes legally binding. It's vital that you talk it over thoroughly and think about it carefully before agreeing to take this step.

(Australian Associated Press)

The federal government insists its plan to allow first-home buyers to save for a deposit through their superannuation won't undermine Australia's retirement savings system.

The coalition used its numbers in parliament's lower house to pass the measure announced in the May budget on Wednesday.

The legislation also allows older Australians to contribute the proceeds of the sale of their family home to their super.

Labor and the Greens are against the proposal, with the opposition claiming it will do nothing to address housing affordability.

Shadow treasurer Chris Bowen argues it will instead work to undermine the country's superannuation system, labelling it a "sham".

Assistant minister to the treasurer, Michael Sukkar, accused Labor of deliberately peddling misconceptions about the scheme.

He told MPs it was not an attack on superannuation but simply provides people with an opportunity to save more money that wouldn't otherwise be used for super.

"It's quite shocking and surprising to see any political party take a view that a tax cut for first home buyers is something that they cannot support," Mr Sukkar said.

Labor, however, said it won't stand in the way of two other housing affordability bills, both of which were announced in the 2017 budget.

They include limiting deductions investors can claim in relation to residential properties and imposing an annual fee on foreign owners if their property is vacant for at least six months during a one-year period.

Mr Bowen said there was nothing to oppose because the measures were ineffective.

"What we see here is some minor tinkering which won't do anything for housing affordability," he told parliament.