Our credit card was in my deceased partner’s name, what do I do?

What can be done to prevent the bank cancelling your credit card when your partner dies and it’s in their name?

This is becoming an increasing problem as the population ages. Many couples have one credit card in the name of the primary breadwinner, with the partner having a supplementary card that is linked to the primary card. If the primary cardholder dies, the supplementary card becomes inoperable.

If your partner was the primary holder of your credit card, make sure you have a plan in place for when they pass away.Credit:Simon Letch

The way around this is for a couple to have cards in their own individual names, and this should be done sooner rather than later. Once they retire it’s almost impossible to get an individual credit card.

The solution then is to use a debit card that is readily available – the only drawback is most debit cards don’t give you reward points, but in my experience, most reward points are useless anyway.

Is it better to boost contributions to superannuation or go for investment real estate?

They are very different assets, and your best course of action depends on several factors. If you are older and trying to build assets for retirement I believe boosting your superannuation contributions would be the best strategy, as you can contribute from both pre-tax and after-tax dollars and grow money in a low-tax environment.

Furthermore, superannuation is a better asset for most retirees than investment property because you have immediate liquidity once you have reached your preservation age, you can get access to your funds in full or in part, and there is never any worry about vacancies or repairs.

However, if you are young, and you find a property with potential, it may be a good strategy to borrow with an interest-only loan to maximise the leverage effect. The repayments of interest-only would be tax-deductible, just like concessional superannuation contributions, and there would be no loss of access to your equity if you sold the property. Of course, the success of this strategy would depend on you finding a property with good potential.

Is it correct that capital gains tax can be deferred on shares transferred as part of a will that instructs the executor to transfer shares into the name of a beneficiary? If so, can the nominated beneficiary be an SMSF?

A superannuation fund cannot be the beneficiary of a will. When assets are left under a will, the capital gains tax liability moves to the beneficiary – no CGT will be payable until they dispose of the asset.

My partner and I are thinking of selling our investment property in the country in the following years. Before selling it we also considered going and living in it as we are both now retired and could rent out our home in the city for more than the rent we get for the rural property. What are the CGT implications for doing this – how would CGT be calculated on investment property once we live in it? Would our main home be also subject to CGT?

I assume the properties were acquired post-CGT. If you rent out your city home, and until that time it had been fully covered by your main residence exemption, the cost base is reset to market value at the date it becomes available to rent. All prior capital gain is protected. Once you move into the country home you have a choice between the two homes to cover with your main residence exemption. However, you do not need to make this election until you sell one of the properties.

The CGT exemption for the property you are now renting out, only lasts for six years, but if appropriate you could move back into it again and make it your home and the six years would start once again. If you decided to cover the country property with the main residence exemption it becomes a pro-rata calculation. You work out the total capital gain and then apportion it between the days covered with your main residence exemption and the days not. You can increase the cost base by expenses while you are living there, such as rates, insurance, interest, repairs and maintenance.

A smart strategy may be to sell your city home while it is completely covered by your main residence exemption then live in your country home until you die. If it is your home at the date of death your heirs will inherit it with a cost base of market value at the date of death which means all the CGT that would have applied if you sold it in your lifetime is forgiven and forgotten.

  • Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.

Noel Whittaker is the author of Retirement Made Simple and numerous other books on personal finance. Email: [email protected]

How to grow and keep your money always

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  • What happens when you want to revert back from a SMSF to a superannuation fund? How do you do it? And why would you? Plus, how CGT is calculated on shares outside a SMSF.
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