My wife and I are in our late 60s, have investment assets of $1.8 million, and are contemplating transferring $1 million into a newly established family trust and use $500,000 to purchase a lifetime annuity. This would entitle us to receive a part-age pension. Do you think this would be a smart strategy and would a family trust with $1 million in investments be cost-effective?

Unfortunately, it’s not that simple. Centrelink looks closely at any transfers to family trusts to ensure people can’t do the strategy you are contemplating – in most cases they will still count the assets transferred to the family trust as your assets.

Family trusts cannot be used to reduce your assets and make you eligible for the age pension.Credit: Simon Letch

You are way above the limit to receive the age pension, but would probably be eligible for the Commonwealth Seniors Health card.

Despite having reasonable knowledge of superannuation, there is one question that I have not been able to find an answer to. If or when, my wife and I sell and downsize, I know that the amount that we can contribute to our super is limited by law, however are we further limited to our original transfer balance, in our case $1.6 million, or will we be able to top up to the transfer limit applying at that time?

No contributions to superannuation are allowed once you reach 75, or if your total superannuation balance exceeds $1.9 million. The down-sizer contribution is a one-off exception.

You can contribute up to $300,000 each from the sale of your residence provided certain conditions are met. The contribution can be made irrespective of your age or total superannuation balance.

Having used up your transfer balance cap of $1.6 million, no more transfers to pension mode are allowed – however your pension account can grow without limit provided you take the mandatory pension each year.

I have an offset account against my home loan. This offset account balance is over $115,000, while my home loan debt is $80,000. My bank is still debiting my personal account. Why would this be? I thought that with an offset account, you are only charged for the difference between the amount owing and the amount in your offset account.

When you take out a loan, you are required to make the required monthly payments – an offset account is just a useful device that lets you use surplus funds to reduce the interest payable and so reduce the loan faster. I see no point in having the offset account with the balance higher than the loan. All you are doing is wasting the earning you could be making on the excess funds.