My granddaughter’s father (my son-in-law) died when she was 10 years old, and left her a legacy. She is now 19 and has a share portfolio worth $105,000 earning (around $7,000 fully franked) and cash investments of $30,000. She attends uni and has part-time work earning $20,000 p.a. All good. But for the past year she has been seeing a boy who only works part time and lives with his mother. I think they may be planning to move in together. How can she protect her assets if this relationship fails?
You could encourage them both to sign a cohabitation agreement, which is a legal document between a couple who choose to live together. Honestly, though, it’s not ironclad and it doesn’t necessarily stop things from getting messy if he’s got dollar signs in his eyes. You could choose to transfer the shares into a trust, or invest via an investment bond for another layer of asset protection, though you’d need to consider the capital gains tax implications of doing so.
For my money, the best way to protect your granddaughter is to explain, in as many ways as you can, what the money represents, namely her father’s dying wish that his daughter be financially secure. It’s her job (with your loving guidance) to honour him, and the way to do that is by learning to become a good money manager. She may need to hear it 30 times before it really sinks in: it’s not just shares and cash in a bank, it’s a bond she shares with her father. No one else.