Should I Transfer My Assets to My Sister to Avoid Will Dispute?

I have a terminal illness and don’t expect to live more than 12 months. I went through an unpleasant divorce nine years ago and the family is still fractured. As a result, I am concerned that my will may be contested. My main asset is my home. I also have some super. Should I transfer my home to my sister, who I trust fully? She is both the executor of my estate and also the primary beneficiary. I am 68 and live off a combination of age pension and superannuation.

First, I’m very sorry to hear of your illness. I hope you can enjoy some happy times in the months ahead. Second, this is primarily a question for your solicitor, so please recognise that my comments are limited to the financial planning realm.

Centrelink implications are an obvious place to start. In transferring your home to your sister, there is the potential for you to get caught in the gifting rules, inflating your asset test position and harming your pension entitlement. Speak to your solicitor about a granny flat arrangement, which might solve this issue for you.

Potentially more challenging would be the impact on your sister if she was also reliant on the age pension. Upon acquiring your home, she would have significantly more assets under the asset test, yet no associated income flowing from those assets. This would probably have negative implications for any entitlement she received.

According to the source: The Age.