Abandon gift in Will to keep pension?

The Financial Planner carefully structures Mary’s affairs.

Mary receives a $1 pension and Concession Card. But then, Mary’s mother dies.

Mum’s Will leaves everything to Mary. The inheritance costs Mary her $1 pension and Concession Card. Mary has money from her superannuation. She doesn’t want the inheritance. Mary desperately renounces the gifts under the Will. Mary’s children get the inheritance instead.

Does Mary keep her Centrelink Benefits?

Sadly, no. Centrelink deems monies abandoned or given away still yours for the next five years.

The two exceptions:

  1. $10,000 rule – gifts under $10,000 per year are not means tested
  2. $30,000 rule – gifts under $30,000 over a five-year period are within the gifting free area. However, a gift cannot exceed $10,000 in any year.

Gifts above $10,000 are ‘deprived assets’. ‘Deprived assets’ are given away but still deemed yours for the next five years. Sure, Mary can abandon the gifts under her Mum’s Will. However, Centrelink deems the gifts still hers for the next five years.

So what can you do?

Let’s pretend Mary’s mother is still alive. There are many strategies available to them. For example, an Accountant or Financial Planner can go on a legal website (we recommend Legal Consolidated - www.legalconsolidated.com.au) and easily build a 3-Generation Testamentary Trust Will.

The 3-Generation Testamentary Trust Will names Mary and her children as beneficiaries. The 3-Generation Testamentary Trust is flexible. Each beneficiary can receive a portion or none of the estate.

Mary then successfully retains her $1 pension and all-important Concession Card.

Companies and Family Trusts would require a slightly different approach.

Rick Maggi