How does an inheritance affect the Disability Support Pension?

Jewel expects to receive an inheritance and wants to know how her DSP will be affected.

How does an inheritance affect the Disability Support Pension?

Jewel expects to receive an inheritance soon and wants to know how her Disability Support Pension (DSP) will be affected.

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Q. Jewel
My stepfather has passed and I am the only living heir. I am wondering how this will or will not affect my DSP pension? Would I have to give the pension up and live just on the inheritance or can I retain the pension and buy a unit with it and invest the rest?

A. An inheritance is not included in the income test, however what you do with the money could see it included in the Centrelink means tests.

If you spend the money on an exempt asset it won’t affect you under the assets test. This includes your principal home, mortgage or medical equipment.

If you buy a non-financial asset it will count in the assets test. This includes things like artwork or a holiday home.

If you buy a unit, as you suggest, and that becomes your principal home, and you don't own any other property, it will be exempt from the assets test. Any leftover money that you invest will be included in the assets test and will have deeming applied for the income test.

Deeming applies if you use the lump sum you get to buy or add to your financial assets. The deemed income counts in the income test. The assets may also count in the assets test.

If you invest the leftover money in a super fund and are under Age Pension age and haven't started drawing down on your super, it will not be included in the income or assets test. If you are over Age Pension age, or are already drawing down from your super, the money will be included in the income and assets tests.

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    Disclaimer: All content on YourLifeChoices website is of a general nature and has been prepared without taking into account your objectives, financial situation or needs. It has been prepared with due care but no guarantees are provided for ongoing accuracy or relevance. Before making a decision based on this information, you should consider its appropriateness in regard to your own circumstances. You should seek professional advice from a Centrelink Financial Information Services officer, financial planner, lawyer or tax agent in relation to any aspects that affect your financial and legal circumstances.





    COMMENTS

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    Blossom
    25th Nov 2019
    11:35am
    I was advised by Centrelink and also a Lawyer that you will not be taxed on the lump sum you get as an inheritance but you will be taxed in the interest you receive on it.
    Blossom
    25th Nov 2019
    11:35am
    I was advised by Centrelink and also a Lawyer that you will not be taxed on the lump sum you get as an inheritance but you will be taxed in the interest you receive on it.
    Mariner
    25th Nov 2019
    3:21pm
    I suppose it is treated roughly the same as a lottery win or other windfall. If you have not got a home now it is the time to buy one. If you have a small one, maybe it is time to up-scale into a bigger property. Not knowing what you are receiving the DSP for you might as well consider making your new place assistance friendly (no stairs and steps, extra handles in bathrooms etc). Friends had to do that and it was not cheap. If the inheritance is sizeable it would not hurt to get professional advice first and look at the different options available to you. C/L financial councillors could also be approached and they are free of charge.


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