Can you avoid gifting rules by making will bequeaths?

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Circumstances can change considerably when your partner dies. You may find yourself exceeding the Age Pension asset threshold, but does gifting apply if you bequeath in a will?

Q. Alison

My husband and I are homeowners awarded part Age Pensions on the basis of valued our joint assets. I understand that we will still be eligible for reduced part Age Pensions once the asset thresholds change, but believe that when one of us dies the survivor will no longer be entitled to an Age Pension unless the assets are below $541,200.  

What is the situation if the assets are reduced by gifts to our three children as beneficiaries of the will of the deceased spouse?

I’m not sure how gifts through a will relate to the rules governing other gifts. I imagine quite a lot of pensioner couples will be in a similar situation and would welcome clarification.

A. Provided by Centrelink

When a member of a couple dies, the surviving partner inherits assets that were held jointly. Assets held as tenants in common are distributed under the conditions of the deceased person’s will.

However, the gifting provisions would apply to the remaining member of the couple if assets held as joint tenants were given away to another person, whether that person is part of the family or not. Therefore you should also consider carefully the implications of passing on assets to children or other family members and friends and bypassing yourself, as this can affect your asset position and may result in changed payment rates.

You must advise Centrelink of any changes to your income and assets, as such changes may have an impact any payment you receive or for which you become eligible. 

If you have further questions, we encourage you to contact a Centrelink Financial Information Services (FIS) Officer to discuss your individual circumstances. FIS is a free and independent service and the FIS Officer will be able to help you explore your options. You can contact Centrelink’s Financial Information Service on 132 300.

RELATED LINKS

Centrelink gifting rules for Age Pensions

How will a monetary gift of $10,000 affect the recipient's Age Pension?

Is a will worth the paper it’s written on?

We often read sensational stories about wills being challenged.

Written by Debbie McTaggart



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