Ask Paul: How can I keep supporting my son after his workplace injury?

Dear Paul,

A few years ago, my son sustained a workplace injury. He had to change jobs and accept a significantly reduced income ($60,000pa). To counter this loss of income we developed a plan. 

The plan involved him moving out of his rental property and moving back home, where he lives rent-free.

His income is now continuously invested in exchange traded funds for dividends and capital appreciation in an effort to build his wealth and income.

In our plan he will also inherit my home so that he will have a place to live. The plan has worked well so far.

The problem is, I may become frail with advancing years and my home may be lost to pay for my care.

The alternatives that I have considered are:
1. I help my son buy a unit (he would struggle with the costs of maintaining a property at this time); or
2. I gift a share of my home to him (probably a third) so that he could live here regardless of what happens to me.

I don't know what to do and I would really appreciate your thoughts on our dilemma. - Phil

Phil, your son is both unlucky and lucky.

Clearly, the work-related injury was traumatic and greatly impacted his earning potential and I am sure other parts of his life.

But he is lucky when it comes to having your support and determination to build and help implement a long-term plan for him.

Moving home and then investing most of his earnings is a terrific wealth-creation plan for him.

Presumably he also continues to get some employer-based super contributions, which will also add to his investment pool.

I was curious that there does not seem to be significant compensation for his injury, but you clearly understand the world of money, so I am sure that you have looked at that.

With a job, where he can save pretty much all of his income, he is already on a good path.

But now we come to the tricky bit, which you have identified: your need for future care. If I were in your shoes, I'd be meeting with an aged care expert.

This would build up the set of facts you need to make a good decision. Critical things are your age, your health, your family health history, the value of your home and other investments you may have.

Then an aged care expert can discuss with you what is available and the cost. Sure, you have no idea if you will ever need high-level care, or how long you will live. But I would not be happy to see you make decisions without a solid consultation with an expert in this area.

It may well be that half your home would cover any care you need, or it may need most of your home's value, but as a fully refundable amount upon your death.

You are miles in front of most people in your situation. You already have a strong plan to ensure your son is moving to be financially independent.

Now, though, is the time to think about you. Once all the facts are considered, I think the answer to the two ideas you outline will become far more obvious.

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