Noel Whittaker answers your money questions

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Finances in retirement can be confusing so we’ve turned to finance expert Noel Whittaker to answer your questions. This week he deals with inheritance and gifting rules.

Spending an inheritance

Q. Jennie

I am due to come into a considerably large inheritance, approximately $300,000. While this is indeed welcome, I’m worried about the effect it will have on my Age Pension once the asset thresholds change in January. I’m considering buying a more expensive house so that it doesn’t count as an asset – but is this the best thing to do?

Answer. The costs of selling and buying a new home will be more than $50,000 – this would be far more than any money you could gain by getting an increased pension. You could reduce your assets by gifting $10,000, and by placing $12,500 in a funeral bond, but just keep in mind that every hundred thousand dollars you dispose of increases your pension by just $150 a week. Therefore it takes 13 years to get back the money you spend or give away. I suggest you just live normally, and enjoy the fact that as your assets reduce due to normal spending your Age Pension should increase.

When do gifting rules start?

Q. Mary

I understand that Centrelink has certain rules around gifting but I was wondering, if I give away some of my savings to my family before I apply for the Age Pension, would Centrelink regard this as a deprived asset? I would like to reduce my assets as the new thresholds that apply from 1 January 2017 mean I will receive less Age Pension.

Answer. Any money given away in excess of the limits ($10,000 a year with a maximum of $30,000 over five years) is treated as a deprived asset and will be subject to deeming for the next five years. This includes any money gifted in the five-years prior to your Age Pension claim.

Do you have a question you’d like Noel to tackle? Email us at [email protected]

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Written by Noel Whittaker


Total Comments: 19
  1. 0

    Sorry but I am a bit dumb here. I can’t work out whether you mean that Jennie should buy a more expensive property or not? I ask this because at the moment I receive the full pension but would like to move into a better property but not lose my full pension? Can anyone help me with this please?

    • 0

      The best way to work it out Stormy is to go see a Centrelink officer.

      Then see a trustworthy solicitor and accountant/independent financial advisor that charge by the hour.

      It is worth paying for advice. You don’t want problems when on a pension.

      Everyone has a different situation.

      If you want and can afford a better property then ask, get the information and then you can be confident.

  2. 0

    Am completely confused with Neil’s answer!!!! . Stormy you are not dumb – I would like an answer too!!!!

  3. 0

    As the family home is not counted as an asset., surely this is a good strategy????? . Can anyone give some useful advice

  4. 0

    He has answered another question!
    Not the one posted here.
    Come on YLC

  5. 0

    Thanks guys. I don’t feel quite so dumb now.

  6. 0

    Selling the house you will pay for advertising, estate agents commision, and conveyancing.
    Buying another house will cost you conveyancing, stamp duty and then removal expenses.
    Add it up, not cheap, as Neil says cost around $50,000-00. Not to mention the cost of a new phone line, internet, gas, electric and mail redirection. Better have some good holidays.

  7. 0


    • 0

      Stormy and others

      The information in the article is not sufficient to answer that Question

    • 0

      The point Noel is making is that the transaction costs are higher than the benefits from rearranging affairs to maximise pension entitlements.

    • 0

      If she sells her existing home and upgrades then the new home is not counted in the asset test by Centrelink as your home is exempt. Yes, the buying and selling costs are high, but with an extra $200k to $250k she may be able to upgrade to something more suitable. It’s a personal choice and some might prefer it to just spending the money.

  8. 0

    First comment, from Jan 1 2017, pension will decrease by $300 per fn not $150. I believe it is a good strategy to upsize ( buy a more expensive home) which will increase your pension and your asset test exempt equity amount, if you run out of disposable income in future years then you can downsize, win win situation. Important not to stress too much over this, spend the cash and enjoy your last few years.

  9. 0

    I’m a little late in getting back to this but thank you to Sundays and Cruiser for actually getting to the point. I hope it satisfies Jennie as well as me.

  10. 0

    G’day everybody;

    My 85 yr old mother will be moving into “managed care” hopefully before the end of 2016 at best, & early 2017 at worst. Her “assets” have been tallied up & being over the so-called “magical figure of . . . . $800K” She subsequently has lost her (part-pension) entirely. Her assets do include her retirement village home which my late dad & her purchased in 2008.
    It will be sold back to the owners of the retirement village & what she receives in monetary terms, will be assessed as liquidable.

    So the point that a retiree’s home, supposedly isn’t considered by the relevant authorities as an assessable part one’s assets is a very big Furphy they don’t want you to know about.

    Can I wish everyone “Cheers” regarding the above?

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