Ask Paul: My son is on a disability pension, how can I provide for him after I'm gone?

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Dear Paul,

I just read your excellent answer to the reader aged 70 who is happy to forgo a government pension after inheriting a considerable sum of money. 

I am 74 and have three sons. The youngest is almost 40 and on a disability pension (mental illness). After years of struggle he has finally found a job he loves.

ask paul clitheroe buy house for son on disability pension

He is in his sixth year on casual contracts in a lovely Catholic primary school as a teaching and learning assistant (what was known as a teacher's aide) for children with special needs. He gets a part disability pension. 

He has an arts degree and two diplomas in library studies and teaching. I am so very proud of him. He is the loveliest young man. He manages independent living and work with quite a lot of help (financial and practical) from me.

I fully supported him for over 10 years to help him reach this point. I hide it but I am worried about when I'm no longer around. Or if his job is no longer funded.

Like the reader you helped, my son will inherit when I die. He knows he will lose his pension. That is not an issue.

But his medication is expensive and I wonder, will he also lose his concession card? He has very little in his own superannuation.

My dream is to help him own his own home before I die. But with current prices that may remain a dream.

What advice, if any, could you give us? His age makes his case quite different to the one you wrote about. I feel guilty asking this question right now with so many people in dire straits, but I need to make a plan. - Veronica

Please don't feel guilty, Veronica. I am so pleased things are going well for your son and even more pleased you are thinking about a long-term plan now.

Yes, it would be great if he could own a home now, but, as you say, prices make that hard to achieve. With his casual job and disability pension, I am sure he finds it hard to save.

So, property ownership in the short term will fall on your own resources. This is a challenging issue as I am sure you will want to find a way to assist all three of your sons as equally as possible. What I think is important is clarity in your estate planning for all of your sons.

What would be a good outcome would be a strategy you all agree with. It may be that one or more of your sons is in a very strong financial position and would prefer the family home to go to your youngest son, who needs more help.

Regardless of how you plan your estate, the value in your home is likely to be your son's opportunity to own a home at the time of inheritance. As he is working and living independently, he has strong skills, with support and guidance from you.

So, what I think you need to do is to document in your estate planning how this support continues after you die. This is very personal and needs to respect the situation of all of your sons, but it may be that a certain percentage of your home goes towards buying a smaller property for your son.

I would really love him to be in a position in the future to own a home. First is the permanent security this gives him. Second, a home is an exempt asset and he maintains access to his pension.

Estate planning with a number of children is a very sensitive and potentially disruptive family issue if handled badly. But I do think the way to get your son into his own home one day will rely on you doing your planning today.

They say we can't control our money after we die, and there is some truth in this. But discussing this with your sons individually and then as a family can allow you to document in your will a way to continue to support all your sons and make a huge impact on the youngest one's future.

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Paul Clitheroe AM is founder and editorial adviser of Money magazine. He is one of Australia's leading financial voices, responsible for bringing financial insight to Australians through personal finance books, the Money TV show, and this publication, which he established in 1999. Paul is the chair of the Australian Government Financial Literacy Board and is chairman of InvestSMART Financial Services. He is the chair of Financial Literacy at Macquarie University where he is also a Professor with the School of Business and Economics. Click here to ask Paul your money question. Unfortunately Paul cannot respond to questions posted in the comments section. Please view our disclaimer here.
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Money magazine
May 18, 2022 9.58am

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