Recent widow- How max pension.

These expenses are something she has been putting it off.
Car = $50K-$70K
Carport = $10K-$20K
House Renovation = $20K
Backyard = 10K
Gift = 10K (more like a reserving money for emergency)
Holiday = $15K
Solar panel = $6K

To me, none of the above is over the top or unreasonable. Now her husband is gone, she will be spending more time with house, backyard and car. So, why not make that place more pleasant?

BTW, is there any tax on the incoming husband's super? I assume there is none except for the 'yield' part.

 

Like it!

 

Yes if she wants to do them anyway that is fine. But I see some people who just try to get rid of assets to get a pension increase.

 

Sorry to hear that @Angel.

Yes. Solicitor is dealing with it get a lump sum.

I thought, by now all these procedures would be streamlined. Choices are not too many and people die all the time. I don't see why a solicitor needs to get involved and cost people.

 

No need for a solicitor. The spouse can apply to the super fund to be paid out the death benefits as a dependant. The Super Trustee has a fiduciary duty though to find out all the potential beneficiaries of the death benefits and to consider who to give to.
The decision of the trustee can be challenged in the Superannuation Complaints Tribunal (unless a SMSF) and that is when you would need a lawyer.

But it may also pay to get advice on whether the trustee should be requested to pay the estate rather than the spouse directly as many different consequences.

 

Does a person aged 64 qualify for a Centrelink pension?

 

Basically no (as far as I am aware). My SIL had to wait until she became eligible for the Aged Pension in her own right, which was only recently. Once their teenage son grew beyond parenting payment age, she went onto some other scheme where she was required to do paid/voluntary work so many hours per week just to access the same as the Dole/unemployment amount once her son was past "parenting payment" age. Given the women's rights movement, there is no such thing as a widow's pension any longer, and we all know how difficult it is to enter paid employment in our grey years.

 

That is what I thought.
I was just puzzled to see discussions on maximising pension, assets test etc when I did not think the person even qualified.

 

Yes, she goes to local schools teaches kids. She is thrilled when local kids acknowledge her outside school. It's not a bad system.
@Marg4000, the answer is no. I'm trying to set her up from now on. For her, she needs to be 66 years and 6 months.

 

Half the county's population dont understand the difference between a Superannuation Pension and a Centrelink pension. Half the country's population dont understand the difference between Superannuation Preservation Age and Centrelink Pension age.

 

Hi Devank

You are doing a great job for your Aunt

Just to satisfy my curiosity about the impact of a PPOR on the pension..

Say PPOR is worth 1.2 million; loan is 1 million and offset is 990 K ( and therefore net loan is 10K)

Does Centrelink look at :
a) you have an offset of 990K and pension is denied OR

b) you have a debt of 10k (ignoring the value of the million dollar PPOR ) and grant the pension.

 

Why not move the money into a redraw facility? This way,
1. you don't have a separate 'savings' account (offset)
2. Your interest is reduced anyway
3. You can draw money whenever you want without qualifying for a loan

It takes a few steps (a couple of mins) to get the money. Eg: Move money into a savings and then actually withdraw.

From ANZ,
What’s the difference between redraw and offset? | ANZ
" There may be different tax implications with using your redraw feature and offset account if you decide to rent out your home in the future. If you decide to rent out your home as an investment property, the interest charged on the loan may be tax deductible. But you may not be able to claim any portion of the loan you have redrawn from your redraw facility for non-investment purposes like a holiday or a private car.

On the other hand, withdrawing amounts from your offset account won’t affect the tax deductibility of interest charged on your loan. If there is a possibility that your first home could one day become an investment property, we suggest you seek financial advice on the best way to reduce interest on your loan with using a redraw or offset account."

If it is your home loan then tax issues isn't a problem.

 

There are different estate planning implications to paying off a loan v offset account.

Legal Tip 244: Death, Offset Accounts with Loans fully offset Legal Tip 244: Death Offset Accounts with Loans fully offset

 

Regarding @virgo 's question, any issues with leaving the funds in the 'redraw' facility?

 

I don't think this would affect the pension and they could draw down funds if needed and no have it count as income. the borrower could live off equity so to speak.

 

This might depend on whether or not the loan and redraw is with ME Bank, in which case the amount of redraw might reduce substantially, according to recent AFR articles...