Legal Tip 271: Rejecting and inheritance and Centrelink Pensions

Discussion in 'Wills & Estate Planning' started by Terry_w, 14th Feb, 2020.

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  1. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker Business Member

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    Refusing a gift under a will is possible. Gifts can be rejected, and this includes inheritances.

    But if you are thinking of doing this to get around the social security laws – such as not losing a pension, then you might need to rethink your strategy.

    This is because rejecting a gift is considered a disposal for social security law.
    See:
    4.1.5 Deprivation Related to Deceased Estates, Superannuation Funds & Separation | Social Security Guide


    Example

    Thelma is on the pension and her mother dies and leaves her $500,000. Thelma doesn’t want to receive this as she will lose her pension.

    Thelma tells the executor of the mother’s estate she will not accept the gift and under the terms of the will the gift goes to Marge.


    For Social Security Act purposes, such as calculating the pension, Thelma is considered to have made a $500,000 gift – given away $500,000 of her assets.

    This means the $500,000 will be treated as if she still held it for a period of 5 years – for the assets test, and she will be deemed to be earning the deeming rate of income from this $500,000 for 5 years.
     
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  2. Marg4000

    Marg4000 Well-Known Member

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    Thelma is crazy.
    She should accept the inheritance and live it up!
    When her funds decrease, she can go back on the pension.
    Or, if the pension is so important to her, simply buy or upgrade her PPOR.
     
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  3. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker Business Member

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    There are many Thelmas out there. To some people getting the pension is their most important goal, even if it comes at great financial expense.
     
  4. Marg4000

    Marg4000 Well-Known Member

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    True, and sadly they suffer for it.
    Many told my parents they should be keeping any money in a no-interest cheque’s account would they would not lose any pension. Sure, mum lost 50c in the dollar, but also gained 50% of the interest (and rates were higher than today). Overall they were quite a bit better off.
     
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  5. Scott No Mates

    Scott No Mates Well-Known Member

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    I know of one LOL, inherited the house her husband had as his office & her son/grand kids lived in. Lo and behold, land tax, loss of pension, world is going to end scenario.

    Decided the house had to be sold, made her son move in with her (she wouldn't relocate to the larger house), still gets no pension as the house sold for $$$.
     
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  6. balwoges

    balwoges Well-Known Member

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    If an inheritance is rejected and not taken, how on earth would Centrelink know?
     
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  7. Beano

    Beano Well-Known Member

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    From the website of the society "we take inheritances no one wants " lol :)
     
  8. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker Business Member

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    Good question.prnsions are basically self assessed like tax returns you could record anything by making a false declaration. But there are checks and audits. But even then it may not be detected in most instances
     
  9. datto

    datto Well-Known Member

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    Centrelink conducts many many checks. It's got the power to cross match data with a zillion sources.

    But they are public servants and they make mistakes eg robo debts lol. How dumb are they. Rubbish data in, pain in the butt out.
     
  10. TMNT

    TMNT Well-Known Member

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    centrelink are spastic

    5 years ago, I had some shares that were worth like $0.001 but had like 7,000,000 of them to be worth $7k,

    I have had them for years, the value had stayed the same, I hadnt bought/sold/traded them, in fact I forgot about them

    one day I got a "Please explain" from official centrelink letters of my shares being worth $700,000 AUD

    I called them up and told them, theyre only worth $7k, repeatedly

    their reply

    "we use the latest ATO data matching technology, there is no way we are wrong, the data is confiremd with several government databases"

    even after sending them a statement of the shareholdings, they didnt beleive me


    FFS
     
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  11. datto

    datto Well-Known Member

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    Classic example. If they tried to give you a bill I'd be objecting and telling them to check the share price history otherwise it's off to the MP for harassment.
     
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  12. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker Business Member

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    so TMNT what happened after that?
     
  13. Paul@PFI

    [email protected] Tax Accounting + SMSF Business Plus Member

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    We encounter valuation issues and former assets all the time. Online Centrelink services allow real time updating. If you speak to someone or send a letter it will NEVER be acted on. We see duplicated super and all sorts of errors.
     
  14. TMNT

    TMNT Well-Known Member

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    good question, I dont actually remember, will call them right now on my lunch break,

    see you in 4 weeks of hold music!
     
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  15. TMNT

    TMNT Well-Known Member

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    wow, only 56 mins on hold!

    Centrelink confirmed that I have no shares on my file,

    and that my one property thats under my personal name is generating rental income of $38k per year, (its currently rented for $250 per week)

    im taking another panadol
     
  16. Paul@PFI

    [email protected] Tax Accounting + SMSF Business Plus Member

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  17. TMNT

    TMNT Well-Known Member

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    im not receiving any form of payment from them. but it scares me how so wrong the info they have on me is!!