How to pass on your assets without losing your pension

Font Size:

Many parents these days are keen to help their kids enter the property market, but Centrelink has very strict rules regarding gifting assets to the next generation.

There are, however, ways to get around them.

You are currently allowed to gift just $10,000 a year – or $30,000 over five financial years – without affecting your pension payments.

If you gift more than that Centrelink starts to look at reducing your government entitlements.

There is, however, a loophole when it comes to property, which can allow you to transfer your property to the next generation, without negatively affecting your Age Pension, although it does require a change to your living arrangements.

If you stay in the property to live on the land you are transferring (whether in a granny flat out the back, or a room in the house), Centrelink does not consider the transaction a gift.

Instead, it considers the transaction an exchange, where you receive the right to live there for the rest of your life without having to board or pay the bills, and where your offspring have taken the title of the property.

While this arrangement may not seem attractive now, if the Government ever changes the assets test to include the family home, this will quickly become quite a popular arrangement.

The obvious drawback to the shared living requirement is when you have more than one living child who you would like to receive your assets.

In this situation, you could keep a portion of the property to bequeath to your other children, but that also could create problems when you die as it can force your co-dwelling child to sell their family home at what will already be a fairly stressful time. If you consider this option, it is important to include all of your children in the discussion and consult with an estate lawyer.

Another headache when transferring your property involves aged care. If your co-dwelling child can no longer cater for your needs and you need to move to aged care, you will have little say as to where you end up.

When you have no assets to meet the aged care accommodation payment, you could end up last on the list for location preferences.

Would you ever consider a granny flat arrangement to pass your assets on to the next generation?

Join YourLifeChoices today
and get this free eBook!

Join
By joining YourLifeChoices you consent that you have read and agree to our Terms & Conditions and Privacy Policy

RELATED LINKS

Giving your assets away could reduce your Age Pension

Being overly generous by giving your assets away could compromise your Age Pension.

Gift or income?

Is the money Brian received from his son a gift or income?

Gifting – how does it work

As YOURLifeChoices subscriber Allan considers his options for retirement, he's keen to know where

Written by Ben

30 Comments

Total Comments: 30
  1. 0
    0

    Just transfer your excess assets 5 years before you become eligible for the OAP instead.

    • 0
      0

      That is the way most people I know have done it; another way to
      enjoy the fruits of your labours is to spend the money before you
      get to 65 years of age. People may realise they can live on super from 55 years on and spend the stuff for the next 10 years without
      Centrelink breathing down their neck. People will always find a way
      when they realise they’re being done over.

    • 0
      0

      That’s the trouble with our present system – it encourages grift and not thrift….. stupid really for a system to differentiate between when you gift to your kids.

      A no assets test pension will cure that….

    • 0
      0

      So Trebor, you are advocating that multi millionaires should get a pension? How ridiculous! Why not give them the dole too, before they reach age pension age? What is your argument against that, and how therefore can your position be consistent? The current scheme is flawed, I am sure we all agree on that. But I don’t see how handing those that don’t need it, a pension, is a smart or sensible way of correcting the present unwieldy situation.

    • 0
      0

      It is what you have when you reach OAP age that counts so if you divest yourself of enough assets to get the full OAP and benefits then you are well within the rules. I know of many people who have done that and are now living very well on the OAP.

    • 0
      0

      You missed it, BA – they get a pensions but they pay tax on all other income strands and fringe benefits etc including free gift from their own companies…

      Think it through… how many politician retirement perks will be paying tax? (snuckles under armpit)…

    • 0
      0

      They don’t get unemployment benefits because they have an income and a job.

      Nothing to do with re-arranging pensions and recouping tax on income.

    • 0
      0

      Friends who could just built new retirement houses and spent down including gifting before the 5 year period to receive a worry free OAP and concessions. Makes a great deal of sense.

    • 0
      0

      Many people are now retiring early, spending down their assets, buying a more expensive house and gifting their assets so they get a worry free pension plus benefits.

  2. 0
    0

    Ah -good thinking, 99 – but don’t be too sure The Good Colonel won’t chop that one off.

    Never let the bastards know you’re coming…

  3. 0
    0

    Max OAP plus super income can get is around $54k for a couple and $32k for single

    Comfy if you dont plan on extravagant holidays every year and replacing your BMW every 3.4 years

    Otherwise hang on to your assets and keep giving $5k every year by bank transfer and a few grand here and there as petty cash

  4. 0
    0

    I would be very wary of Granny flat arrangements. Friend did this and now her daughter and son in law have broken up and my friend is left with very little. It would be political suicide for any government to include the family home in the Asset test. Right wing think tanks might suggest it, but I doubt it will happen

  5. 0
    0

    Just a really dumb idea to get rid of your home asset and financial power with it for the rest of your life!
    Sundays, your comments are also very true.

    • 0
      0

      I agree with George, you are better off with monetary assets and a part pension than giving it all away or spending it and being miserable for the rest of your life.

  6. 0
    0

    In Victoria I believe the recipient would have to pay the stamp duty

  7. 0
    0

    If I sold my house and divided the amount between my two children, and then lived with one of them, paying a nominal rent, would I still be able to receive the pension?

    • 0
      0

      You can establish a “granny Flat Right” with the child you would be living with, the amount o the other child received would be considered a gift though. Unless you made them both Granny Flat rights and spent equal time with them.

  8. 0
    0

    What if your offspring don’t want to live in the property but are happy to own it and pay the outgoings and let you live there for the rest of your life, knowing that the transaction benefits all parties in the long term?

    • 0
      0

      You can transfer them the title, remain living there, but need to produce a document stating that in exchange for this, you have the right to reside there for life.

    • 0
      0

      I’ve seen situations where the right to reside for life has been very stressful when circumstances have changed. A friend had this clause in her Partners will. When he died, his children harassed her so much to move, so they could have their inheritance. The stress wasn’t worth it! You may trust your children, but what about their partners? Transferring title should not be done lightly.

    • 0
      0

      Yes Sundays I agree, must get advice and a water tight document, but in terms of the Age Pension, very doable and happens every day.

  9. 0
    0

    I knew a retiree who gave her house to her daughter. As the daughter already had EPOA and was her ‘carer’, it was very easy to settle her estate. The daughter would not let her mother go in a nursing home even though the doctors recommended she did.

    • 0
      0

      I also knew a pensioner who let her daughter and family live in her house rent free while she lived in the granny flat. the idea being that the daughter provided transport when needed. I think you can guess what happened.

    • 0
      0

      The other problem is if your kids are married and then seperate, I have seen this end in tears with mum much worse off,financially

  10. 0
    0

    What if your children are on a pension as well

Load More Comments

FACEBOOK COMMENTS



SPONSORED LINKS

continue reading

COVID-19

Government reveals details of unit established to bust vaccine myths

With 300,000 doses of the AstraZeneca COVID-19 vaccine arriving in Australia on Sunday, the rollout is starting to speed up,...

Finance

Making it easy to buy Australian

Research shows that since the pandemic an overwhelming number of Australians want to buy locally produced products to support the...

Finance

What your car costs - the surprising costs of driving a ute or SUV

Recent research by Finder shows Australians could be paying thousands of dollars more than necessary to keep their car running....

Finance

Best grocery shopping apps

For those aiming to reduce their weekly grocery bill, there are many ways to save at the supermarket.  While the...

Aged Care

Government releases five-year road map to fix a 'national disgrace'

The federal government has delivered its 'initial' response to the Aged Care Quality and Safety Royal Commission findings, with a...

Aged Care

Aged care, death and taxes after the royal commission

Anna Howe, Macquarie University The governor-general was handed the report of the aged care royal commission on Friday. It will...

Health

Honey drinks could be a tasty cold remedy

If you're feeling under the weather, something as simple and accessible as honey could be a tasty remedy. New research...

Prevention

How to find and exercise your pelvic floor muscles

Do you wet yourself a little bit when you laugh, cough or sneeze? Then you might be among the one...

LOADING MORE ARTICLE...